Source: Zhitong Finance Author: Li Yunxin
Recently, news about Hong Kong's new investment immigration policy has continued. In February, the Hong Kong government's budget proposed that it would relaunch the “Capital Investment Entry Plan”; on August 18, members of the G19 Legislative Council proposed the Policy Report and implement the new investment immigration plan; according to market sources, the Hong Kong government may issue new investment immigration program rules in October.
Advanced technology, superior salary, a livable living environment, and an inclusive social environment are all important factors in attracting immigrants. In addition to popular destinations such as the United States, the United Kingdom, and Canada, the popularity of immigrants from New Zealand, Singapore, and Switzerland also continues to grow.
According to official data, as of July 31 this year, the HKSAR Government had received about 120,000 applications, with more than 75,000 being approved; as of June 30, the number of applications for Greek investment residency permits had increased by an astonishing 157% compared to last year, with mainland China leading the number of applicants; the “2023 Global Private Wealth Migration Report” published by investment immigration consulting firm Henley & Partners predicts that 122,000 high-net-worth individuals will apply for immigration in 2023. Henley & Partners CEO said that the number of millionaire immigrants has been growing steadily over the past ten years, and is expected to reach a record high in 2023 and 2024.
According to the Zhitong Finance App, investment immigration policies vary from country to country. Common requirements include purchasing local real estate, investing in business, making deposits or purchasing financial products, charitable donations, etc. In addition, there are also often requirements for age, length of stay, and net household assets. And in this wave of investment immigration, which listed companies will benefit?
The overseas real estate market continues to heat up
Many countries' investment immigration policies require applicants to buy local real estate. For example, the Greek investment immigration policy requires applicants to buy 250,000 euros of real estate, so they can obtain permanent residency for five years at once without having to live in the local area. It is popular with many investors due to its easy application procedures and the ability to obtain European residency at the same time. Data show that in the first five months of 2023, the total investment in the Greek real estate market reached 97.5 billion euros, a three-fold increase over the same period last year.
Turkey's real estate market is also gaining strongly due to the influx of overseas investors. According to the Zhitong Finance App, in May, Turkey's overall real estate price index rose 103.6% compared to the same period last year, and residential housing prices for ordinary residents in Istanbul, Turkey's largest city, doubled compared to 2019; in real estate sales in May this year, the number of overseas transactions and purchases was 3167 units, an increase of 24% over the previous month. Among them, Russian, German, American, British, and Chinese buyers were at the forefront of home buyers. The application conditions for Turkish investment immigration are relaxed, and the success rate is high. Starting from June 13, 2022, the purchase amount required for Turkish investment citizenship is 400,000 US dollars.
For immigrant countries, housing purchase policies are conducive to attracting foreign investment, boosting the prosperity of the local real estate market, boosting GDP growth, and creating employment opportunities and economic vitality for local communities. On the other hand, for immigrants, real estate investment is an important investment target to withstand inflation. Normally, properties purchased by immigrant investors are allowed to be resold after a certain period of time. Some high-quality properties may continue to increase in value in the future, which also contains opportunities to increase wealth.
Benefiting from the investment immigration boom, it is recommended to pay attention to relevant listed companies with overseas real estate layout:
$VANKE OVERSEAS (01036.HK)$: Engaged in asset management, investment property, and property development in Hong Kong, the United States, Singapore, the United Kingdom and other countries and regions. The company's revenue for the first half of the year was HK$182 million, and net profit fell 97% to HK$2,535,000, but revenue from asset management services increased slightly. The decline in revenue was mainly due to a decrease in interest income from investment instruments due to the withdrawal of the principal amount of investment instruments in the first half of the year. Revenue from Ryder Court, an investment property located in London, England, decreased due to the sale of the property in January 2022. The company's stock price has continued to decline in the past two months and has now hit a record low of HK$1.4;
$WANDA HOTEL DEV (00169.HK)$: In 2021, the first managed Wanda Mandarin Hotel was opened in Istanbul, Turkey, becoming the first Chinese luxury hotel brand to go overseas. Currently, the company has managed 6 high-end hotels overseas. In the next 5 years, the goal is to sign and manage 500 domestic hotels and 30 overseas hotels. The company's revenue for the first half of the year was HK$464 million, up 32.5% year on year, and profit for the period was HK$165 million, up 110.47% year on year, of which revenue from overseas was HK$2.304 million. Since March, the company's stock price has been in the HK$0.25-0.3 range, and the trading volume is small;
$FOSUN INTL (00656.HK)$: A comprehensive group with a multi-industry layout. Total revenue for the first half of 2023 was 97.06 billion yuan, an increase of 10.9% over the previous year. It achieved steady growth and maintained healthy financial conditions. Of these, overseas revenue was about 44.09 billion yuan, accounting for 45.4% of total revenue, and has an industrial layout in over 35 countries and regions. The cumulative increase in Hong Kong stock prices over the past 5 trading days is about 3.6%, and is currently above the 20-day EMA;
$CapitaLandInvest (9CI.SG)$: CapitaMall Group is a well-known large-scale diversified real estate group in Asia. CapitaMall's revenue for the full year of 2022 increased 25% year-on-year to SGD 2,876 billion (about 14.839 billion yuan), and net profit was 861 million Singapore dollars (about 4.443 billion yuan), a year-on-year decrease of 36.2%. As of December 31, 2022, listed entity, Cade Investment has managed a total of 6 listed REITs and more than 30 real estate private equity funds, with management fee revenue reaching 960 million Singapore dollars. The company's stock price has fallen by about 12.6% since this year.
The private wealth management industry is expected to benefit
Under the trend of increasing numbers of immigrants year by year, some countries are tightening immigration policies or shifting immigration conditions from buying homes to investing a certain amount of money in local industries.
For example, the Irish Investment Immigration Program requires an investment of 1 million euros or investment in Irish companies approved by the Irish government, which cannot be used to purchase publicly listed securities or invest in commercial or residential real estate; the Portuguese Golden Visa requires about 500,000 euros to invest in technology institutions, cultural investment, fund investment or establishment of companies, and create employment opportunities;
Hong Kong's new investment immigration policy will not include real estate property investment, but will retain the previous requirements for stocks, bonds, post-repayment and collective investment, and encourage investors to invest in financial products or science and innovation enterprises, etc., and market sources say the investment amount may rise to HK$20-25 million;
The new US EB5 immigration policy issued in March 2022 allows applicants to simultaneously submit I-526E/I-526 immigration applications and I-485 status adjustment applications without a schedule. The new “double submission” or “simultaneous submission” clause is very beneficial to applicants. The law requires applicants to invest $1 million or invest 500,000 US dollars in suburban and high-unemployment areas, and creates at least 10 full-time employment opportunities. It does not require applicants' education, language, or work experience.
According to the Zhitong Finance App, for the local government, whether it is starting a company or directly investing in a local company, it is beneficial to promoting employment and economic development, while for applicants, choosing the right investment target is also an important part, so the private wealth management industry is expected to benefit from it.
Relevant listed companies involved in private wealth management business suggest paying attention to:
$HAITONG SEC (06837.HK)$: An established leading brokerage firm, with revenue growth of more than 40% in the first half of 2023. Among them, the wealth management business accounted for the highest share of revenue from its main business, which achieved revenue of 4.144 billion yuan, accounting for about 24.4% of revenue. The number and scale of the company's wealth management customers increased in the first half of the year, and the number of wealth management customers reached 17.77 million. Over the past year, the company's Hong Kong stock price has continued to be above HK$4.5;
$GUOTAI JUNAN I (01788.HK)$: One of the largest wealth management platforms in Hong Kong, with a rich overseas product line. In the first half of the year, it achieved revenue of HK$1,543 million, an increase of 28% over the previous year, and net profit of HK$119 million, demonstrating strong profit resilience and achieving continuous profit since listing in 2010. The company's Hong Kong stock price has risen by about 15.3% in the past 5 trading days;
$NOAH HOLDINGS (06686.HK)$: A comprehensive financial services group listed in Hong Kong and US stocks, contributed 710 million yuan in overseas business in the first half of 2023, up 104.1% year on year, accounting for 40.8% of total revenue; net income from wealth management increased 46.5% year on year in the second quarter, and net assets exceeded 10 billion yuan. As of October 4, the company's latest closing price was HK$190.2;
$STANCHART (02888.HK)$: Deeply involved in the field of digital wealth management, we continue to provide customers with efficient and convenient wealth management solutions through leading digital platforms. In the first half of the year, the company's revenue increased 18% year-on-year, and basic profit before tax increased by 29% to 3.3 billion yuan. The company expects the return on tangible shareholders' equity to reach 10% for the whole year. In the past month, the company's stock price has risen from HK$68 to around HK$72, which is at an all-time high;
$Citigroup (C.US)$: Revenue from the Asian wealth management business increased 20% year-on-year in the first quarter of this year, and the number of new customers joining Citibank Asia doubled compared to the same period last year; revenue for the second quarter was slightly higher than expected, but net profit fell by more than 30%. The company pointed out that it was mainly due to the macroeconomic environment and low volatility that affected customer activity and market performance. Compared to the same period$S&P 500 Index (.SPX.US)$It has risen by 5%, and the company's stock price has fallen by more than 11% in the past six months;
$Prestige Wealth (PWM.US)$: A small wealth management company headquartered in Hong Kong that provides services to a small number of high-net-worth individuals in China and Hong Kong. Its revenue mainly comes from the US. The company entered the NASDAQ market in July. On the day after the IPO, the stock price opened higher, with an intraday high of 349% higher than the issue price. According to the prospectus, revenue for the 12 months ending September 30, 2022 was 2 million US dollars, and both revenue and net profit for FY2022 declined markedly. The company's latest stock price is HK$4.73, which has been falling continuously for more than two months.
Secondary market risks and opportunities coexist. The rise of a new round of immigration may bring growth opportunities to related listed companies. On the risk side, we need to pay attention to risks such as political and regulatory risks associated with overseas investment, exchange control and exchange rate fluctuations, and economic cycle and market fluctuations.
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