Goldman Sachs upbeat on wealth outlook amid market worries over China’s tighter scrutiny

Goldman Sachs remains optimistic about the outlook for offshore wealth management, despite recent concerns over China's stricter regulations on cross-border money flows. The investment bank forecasts a 30% increase in wealth fee income for Standard Chartered and an 13% rise for HSBC by 2026, with projections of 16-25% growth for Singaporean banks.

Analysts Melissa Kuang and Wayne Wang attribute the growth primarily to diversification benefits and access to a wider range of investments, rather than tax considerations alone. Recent tax hikes on gains from offshore investment products, such as family trusts, in mainland China have raised market concerns in Hong Kong, but Goldman's analysts view these measures as enforcement of existing rules rather than new restrictions.

Wealth management fees at OCBC, Standard Chartered, and Singapore-based DBS have surged over 40% year-on-year, while HSBC and UOB reported growth of over 20%. DBS led the pack with a 42% increase in wealth fees, while its assets under management jumped 17% to S$516 billion by the end of June. The bank also upgraded its fee-income guidance for the full year, citing stronger wealth management activity.

Additionally, both DBS and OCBC are expanding their presence in mainland China, and UOB remains confident in growing their wealth franchises in Hong Kong.