The UBS Global Family Office Report 2023, released in Zurich on May 31, 2023, surveyed 230 single family offices globally, with an average total net worth of USD 2.2 billion.
According to the report, family offices are planning the biggest shift in strategic asset allocation for several years. They are increasing their allocation to developed market fixed income, with almost four in ten (38%) planning to increase this allocation over the next five years. 37% of family offices are moving to high-quality, short-duration bonds for potential wealth protection, yield, and capital appreciation. Besides, family offices are also refocusing their allocations on hedge funds, with the number rising from 4% to 7%, while direct private equity allocations decreased from 13% to 9%. Reducing real estate allocations in the coming year is also part of their plan.
Additionally, family offices are increasing their allocations in regions that have been less favored in the past, such as Western Europe and the wider Asia-Pacific region. Moreover, family offices are cautious about current markets in the face of an uncertain growth outlook in developed economies, as well as tighter lending conditions and heightened geopolitical tension.
The Asia-Pacific region, specifically, where family offices have a home bias, saw the highest allocation to equities (37%), and almost half (46%) use hedge funds as a portfolio diversifier. Of those with private equity investments, they also make more direct investments than other regions (31%), and technology is the main area of investment. From an investment theme perspective, medical devices and health-technology resonate best (76%).
On June 8, CCB Trust Co.,Ltd and its partners jointly released the "Report on Sustainable Development of Family Wealth in China 2022-2023: Focus on the Status and Development of Equity Family Trusts" (the Report). The report, spanning nearly 70,000 words, is divided into six chapters and focuses on the themes of "inheritance of private entrepreneurs' businesses" and "application of equity family trusts," providing multidimensional insights and research findings for the inheritance of family wealth and the sustainable development of enterprises.
The report conducted surveys among dozens of entrepreneurs who intend to establish equity family trusts. Among the various functions of equity family trusts, the surveyed entrepreneurs placed the highest importance on risk isolation and asset preservation, accounting for 83.33% of the responses. Additionally, 25% of the entrepreneurs also expressed their concern for the functions of centralized management of equity and orderly succession.
According to the report, a staggering 75% of the surveyed entrepreneurs consider the shareholder background of trust companies when selecting trustees for equity family trusts, with a preference for trust companies with state-owned background. Furthermore, trust companies' reputation and service experience are also highly valued by entrepreneurs, accounting for 66.67% of the responses. Half of the surveyed entrepreneurs also pay attention to the capital strength of trust companies and service fees.
The report also points out that equity family trusts are expected to become a focal point of trust business. Trustees need to carefully consider and explore the balance of fulfilling their duties flexibly, and continuously learn from practical experiences. The new demands from settlors regarding the inheritance of equity assets pose higher requirements for trustees' own capacity building. In fact, enhancing the ability to plan trust schemes, improving the management of equity assets, implementing risk control measures, enhancing differentiated core competitiveness, and strengthening comprehensive wealth management services are all primary tasks for trustees to enhance their capacity building and meet market expectations.
On June 12, Invest Hong Kong officially launched the Network of Family Office Service Providers (the Network), a platform specially designed to help promote Hong Kong as a preferred destination of choice for global family offices. During the launch ceremony, Financial Secretary Mr Paul Chan stated that the Policy Address by the Chief Executive set a target of attracting at least 200 family offices to establish or expand their businesses in Hong Kong by 2025. Many family offices are currently considering Hong Kong as their base, and it is expected that the number will continue to increase.
The Network's launch event was officiated by the Financial Secretary, Mr Paul Chan, and the Secretary for Financial Services and the Treasury, Mr Christopher Hui. Over 100 representatives from a wide array of family office service providers participated in today's event, under the witness of key representatives from regulators and industry associations at the HKEX Connect Hall.
On June 13, Henley & Partners, a UK-based consulting firm, released the "Henley Private Wealth Migration Report 2023."
Based on data from January to June 2023, the report provides annual projections. It estimates that in 2023, there will be 122,000 high-net-worth individuals (HNWIs) immigrating globally, surpassing the 2019 figure of 110,000. The report also predicts that the number will continue to grow to 128,000 in 2024.
Of particular note, the report predicts that mainland China will have 13,500 millionaires emigrating this year, an increase of 2,700 individuals compared to the previous year, securing the top one position in terms of net outflows.
In comparison, Hong Kong SAR is expected to have a slight decrease from the previous year, with an estimated 1,000 millionaires choosing to emigrate, ranking sixth in terms of net outflows.
On June 20th, the International Institute for Management Development(IMD) released the "World Competitiveness Yearbook 2023"（the Yearbook), which ranked Denmark, Ireland, and Switzerland as the top three countries. Hong Kong, China dropped two places to 7th globally compared to the previous year.
Among the four competitiveness factors in the Yearbook, Hong Kong maintained its 2nd position in "Government Efficiency" and gained an improvement in its ranking for "Infrastructure". However, due to the impact of the peak of the COVID-19 pandemic last year, Hong Kong's ranking in "Business Efficiency" slightly declined. The drop in ranking for "Economic Performance" was attributed to Hong Kong's significant economic downturn and negative growth in 2022.
In terms of sub-factors, Hong Kong continued to rank 1st globally in "Business Legislation" and achieved the top 5 positions in "Tax Policy", "International Investment", "International Trade" and "Technological Infrastructure."
According to Bloomberg News on June 26th, the heirs of Lee Kun-hee, the former chairman of Samsung Group and South Korea's richest person, have upped its share-backed borrowings to about $3 billion, to pay a substantial inheritance tax as of the end of May.
Lee Kun-hee, passed away on October 25th, 2020, leaving behind great wealth valued at around 26 trillion Korean won (approximately $19.5 billion). To inherit this wealth, his heirs had to pay the inheritance tax amounted to over 12 trillion Korean won (approximately $9.2 billion).
According to Yonhap News Agency, on April 30th, 2021, the heirs announced a plan to pay the tax and already paid around 2 trillion Korean won (approximately $1.5 billion), while the remaining about 10 trillion Korean won (approximately $7.7 billion) would be paid over the next five years in five installments.
Professor Park Sangin, from Seoul National University's Graduate School of Public Administration, stated that borrowing is the best way for Lee Kun-hee's heirs to pay the inheritance tax, as they won't sell their stakes as it could affect their control over the company.
In South Korea, the inheritance tax is implemented using a five-tier progressive tax rate, with the highest marginal rate of 50% for amounts exceeding 3 billion Korean won (approximately $2.25 million). The substantial inheritance tax poses a significant challenge to the succession of family-owned businesses.
Zhang Lan, the founder of South Beauty Group, filed an appeal after her family trust was "pierced" in a legal case. On June 27th, the Singapore High Court ruled to dismiss the appeal and affirm the judgement. During the appeal process, Zhang Lan and CVC Capital Partners(CVC) continued focusing on the question of whether Zhang Lan is the beneficial owner of the assets in the two disputed bank accounts, and the crucial issue of Zhang Lan's subjective intention to establish the trust.
The court documents reveal that Zhang Lan claimed to have established a family trust for her son, Wang Xiaofei, and other children, registering Success Elegant Trading Ltd(SETL) in the British Virgin Islands in 2014. She argued that the two bank accounts opened in Singapore under the company's name were solely for the benefit of Wang Xiaofei and his children, and that the funds were unrelated to her. Therefore, she asserted that CVC had no right to take control. Regarding the funds transferred to her accounts, Zhang Lan claimed they were mistakenly transferred and she couldn't recall the purpose of some of the transactions, while the remaining funds were actually intended for Wang Xiaofei. By examining Zhang Lan's transfer records, the judge concluded that Zhang Lan treated the assets of SETL as her own, using the trust to avoid the freezing of her own assets.
On June 23rd, CK Assets Holdings Ltd(CK Group) released an announcement stating that its subsidiary, Wellness Unity Ltd, has acquired the UK-listed real estate investment trust Civitas Social Housing PLC. As the acquisition conditions have been met, the offer is declared unconditional. In the press release issued by CK Group, Li Ka-shing's granddaughter, Michelle Li, the third generation of the family, made her media debut as the Manager of the Business Development Department.
In the press release, Michelle Li stated: "We are pleased to have acquired over 64% of the issued share capital of Civitas Social Housing PLC. Given the favorable response, we have decided to lower the voting threshold for this transaction from 75% to over 50%, and the offer for acquisition will continue for some time. Meanwhile, we will proceed with the administrative procedures for financial settlement."
Public records indicate that Michelle Li, is the eldest daughter of CK Group's current chairman, Victor Li Tzar-kuoi. She was born in 1996 and graduated from King's College London in 2017.