China's tax crackdown has not dented J.P. Morgan AM's Asia fund inflows so far

what happened

Ayaz Ebrahim, J.P. Morgan Asset Management's chief executive for Singapore, Southeast Asia and India, said Beijing's drive to tax offshore income has not affected flows into the firm's Asian asset management business. He described the effects as a bump in the road and said flows remain decent, though he gave no figures. He spoke in an interview in Singapore, according to the publisher.

Wealth advisers, lawyers and others familiar with the matter say some of China's richest people are winding down offshore trusts, selling shares and even switching nationality ahead of a deadline to declare income booked overseas. Stockbrokers have linked the crackdown to weakness in Hong Kong's equity market and in Singapore bank shares, which have benefited from deposits and cash flows from wealthy clients in China and Southeast Asia.

why it matters

Two points matter for markets: capital leaving China because of tax rules could weigh on Hong Kong equities and on Singapore banks that depend on deposits. J.P. Morgan says it is expanding in Asia, with a two-person trading desk opened in Singapore and headcount expected to rise 20% to 25% by the first quarter of next year.

market impact

Hong Kong stocks and Singapore banks: outflows of wealthy Chinese clients pressure share prices and deposits

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