Steady fund flows have bolstered Hong Kong's asset, wealth hub status, SFC study finds

An increase in assets under management, a highly diversified investor base, globalised asset allocation and robust fund inflows have solidified Hong Kong's position as an asset and wealth management hub, according to an annual survey by the Securities and Futures Commission (SFC).

Hong Kong-domiciled funds authorised by the SFC saw net fund inflows of HK$33 billion (US$4.2 billion) in the first quarter of 2024 after rebounding by a robust 93 per cent to HK$87 billion last year, according to the SFC.

These funds' assets under management increased by 3 per cent in the first quarter after growing 5 per cent in 2023.

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"The survey's findings underscored the enduring strengths of Hong Kong's asset and wealth management industry, particularly the market's growing breadth and depth," said Christina Choi, the SFC's executive director of investment products.

An SFC survey showed Hong Kong's enduring strengths as an asset and wealth management hub. Photo: Yik Yeung-man alt=An SFC survey showed Hong Kong's enduring strengths as an asset and wealth management hub. Photo: Yik Yeung-man>

The survey looked at 1,192 firms, including SFC-licensed companies engaging in asset management and fund advisory, banks engaging in asset management, private banking and private wealth management, and non-SFC registered licensed insurance companies.

Asset managers in Hong Kong continued to take a global portfolio mix, putting 60 per cent of assets managed into markets other than mainland China and Hong Kong.

The SFC's survey comes after Financial Secretary Paul Chan Mo-po said in a blog post on Sunday that there are "no worries about a capital exodus" from the city.

Assets under management in Hong Kong grew 2.1 per cent year on year in 2023 to HK$31.19 trillion, while net fund inflows surged 342 per cent to HK$389 billion in the same period.

Investors from outside mainland China and Hong Kong accounted for HK$16.45 trillion at the end of last year, representing 54 per cent of the asset and wealth management business.

Chan said the figures showed that despite geopolitical tensions, investors still had confidence in the prospects of the mainland and Hong Kong markets.

The net inflows mostly came from private banking and private wealth management business, while the investor base is well diversified in terms of geography, according to the SFC study.

Mainland-related firms continued to expand their footprint in the city, as their asset and wealth management business grew 4 per cent to HK$2.68 trillion, outperforming the industry average.

Mainland firms' net fund inflows increased 16 per cent to HK$153 billion.

The wealth management industry showed "resilience" in the face of many unprecedented challenges and macro economic headwinds, said SFC's Choi.

"These unique advantages would place Hong Kong in an enviable position to forge closer connectivity with the mainland, regional and global markets, thus further consolidating its status as an international financial centre," said Choi.

The government is keen to bolster Hong Kong's status as a wealth management hub and attract more wealthy families to set up family offices.

A slew of measures have been released in recent years, including several tax and long-term residency incentives to pursue the target. The city had some 2,700 single-family offices at the end of 2023, managing US$10 million to US$100 million of assets.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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