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

Goldman Sachs maintains a positive outlook for offshore wealth management despite heightened concerns over China's increasing scrutiny of cross-border money flows. The investment bank forecasts wealth fee income from Standard Chartered and HSBC to increase by 30% and 13% respectively in 2026, while projecting 16-25% growth for Singaporean banks. Analysts Melissa Kuang and Wayne Wang attribute the growth primarily to diversification benefits and access to a wider investment landscape, rather than tax considerations alone.

China's tighter regulations on offshore trusts, overseas insurance income, and other cross-border wealth activities have sparked market worries in Hong Kong. Beijing has recently increased tax collection on gains from offshore investment products, such as family trusts. However, Goldman's analysts view these measures as clarifications and enforcement of existing rules, rather than entirely new restrictions.

Wealth management fees at OCBC, Standard Chartered, and Singapore-based DBS surged more than 40% year-over-year in the second quarter, while HSBC and UOB reported growth of over 20%. DBS emerged as the top performer, with wealth fees rising by 42% to S$919 million (US$719 million) and wealth income increasing by 27% to S$1.71 billion.

DBS assets under management also climbed 17% year-on-year to S$516 billion at the end of June, making it the only bank in Goldman's coverage to raise its full-year fee-income guidance following its second-quarter results. The commercial-book non-interest income growth forecast for DBS was upgraded to the mid-teens from high single digits, driven by stronger wealth management activity and client flows.