On 12 July 2024, the Securities and Futures Commission (SFC) released its Asset and Wealth Management Activities Survey for 2023, reaffirming Hong Kong’s position as a premier asset and wealth management hub. The survey highlights a highly-diversified investor base, globalized asset allocation, and robust fund inflows.

According to the survey, investors outside Mainland China and Hong Kong have consistently accounted for 54-56% of total assets under management (AUM) over the past five years. Additionally, 60% of the assets managed in Hong Kong are allocated to overseas markets. Over the past three years, the number of Type 9 licensed firms (asset management) increased steadily by 12%, reaching 2,161 as of June 2024.

Overall AUM grew 2% year-on-year in 2023, while net fund inflows surged by an impressive 342%. Hong Kong domiciled funds authorized by the SFC also demonstrated resilience, continuing to see net fund inflows of HK$33 billion (US$4.2 billion) in the first quarter of 2024, after rebounding by 93% to HK$87 billion (US$11.1 billion) last year. Their AUM further increased by 3% in the first quarter, following a 5% growth in 2023.

“The survey’s findings underscore the enduring strengths of Hong Kong’s asset and wealth management industry, particularly its growing breadth and depth, as well as its resilience in the face of unprecedented challenges and macro headwinds,” said Ms. Christina Choi, the SFC’s Executive Director of Investment Products. “These unique advantages position Hong Kong to forge closer connectivity with Mainland, regional, and global markets, thereby consolidating its status as an international financial center.”

The report also highlights that Mainland-related firms continued to expand their footprint in Hong Kong, with their asset and wealth management business growing by 4% to HK$2,676 billion (US$343 billion), outperforming the industry average for another year. Their net fund inflows increased by 16% to HK$153 billion (US$20 billion).

The strong growth momentum for open-ended fund companies (OFCs) persisted, with the number of registered OFCs more than doubling (up 118%) from 2022. This indicates that asset managers are increasingly taking advantage of the corporate fund structure in Hong Kong and the associated government grants.

These results showcase Hong Kong’s success as a financial hub, effectively attracting crypto businesses while ensuring robust regulatory checks. The city’s strategic location, regulatory framework, and strong financial infrastructure have made it an attractive destination for virtual asset companies. By fostering an environment of innovation and regulation, Hong Kong has positioned itself as a leading global center for both traditional and digital financial services.

Hong Kong’s allround approach to regulation has played a crucial role in attracting crypto businesses and maintaining market integrity. The SFC’s stringent regulatory checks and balances ensure that the financial market operates transparently and efficiently, safeguarding investor interests and promoting sustainable growth. This balanced approach has cemented Hong Kong’s reputation as a reliable and forward-thinking financial hub.

(Source: SFC Survey 2023 )