HONG KONG (Reuters) – Hong Kong residents leaving the city to move to the UK could trigger HKD 280 billion (US $ 36 billion) of capital outflows from the Asian financial center this year, according to a new report from the bank of America (BofA).
Beijing's move to enact a national security law in June last year prompted the UK to offer refuge to nearly 3 million Hong Kong residents who are eligible for British National Overseas (BNO) passports as of January 31.
From that point on, these residents can stay in the UK for five years. From that point on, if the requirements are met, they can apply for an agreement, and ultimately citizenship.
A study by the UK Home Office published last year estimated that 153,300 people from Hong Kong could come to the UK in 2021 when the immigration changes went into effect.
The BofA estimated that if departures sold a Hong Kong apartment for HKD 7.53 million ($ 971,224.41) – the average price in the Kowloon neighborhood – the outflow could reach HKD 280.2 billion in 2021 and their pension savings withdrawn.
Emigration could reach as many as 321,600 residents in the next five years from January last year, according to the study by the UK Home Office.
The number of emigrants is expected to decrease in the next four years, according to the interior ministry study. As a result, the BofA forecast that the impact of the departing population on the Hong Kong dollar would be less.
Overall, over a five-year period, BofA said the capital outflow from Hong Kong could reach HKD 588 billion (US $ 75.8 billion).
"Emigration-related capital outflows could help push USDHKD away from 7.75, the low end of the band," BofA strategist Chun Him Cheung said in the research note.
He said the capital outflow should not affect Hong Kong's short-term interest rates as liquidity remains high due to low lending rates around the world.
($ 1 = 7.7531 Hong Kong dollars)