Hong Kong fund management business achieves record high

Out-Law News | 15 Jul 2014 | 2:37 pm | 2 min. read

Hong Kong’s fund management industry grew 27.2% year-on-year to a record high of 16 trillion Hong Kong dollars (HKD) ($2.06tn) at the end of 2013, according to new figures from the territory’s Securities and Futures Commission (SFC).

SFC’s annual Fund Management Activities Survey said contributions from overseas investors in 2013 reached an “historic high” of HKD 11.38tn ($1.4tn), 72% of the total fund management business.

According to SFC, the survey indicated that Hong Kong “continued to be a preferred platform for international investors to invest in Asia”.

SFC’s deputy chief executive officer and executive director of investment products international and China, Alexa Lam, said: “The record high assets under management (AUM) of our combined fund management business at the end of 2013 ranks us among the top asset management hubs in Asia with the exception of Japan. Significant inflows of overseas capital underscore the value and attractiveness of our open markets and our role as an international asset management centre.”

Lam said: “Hong Kong's fund industry is trending up the value chain with more market professionals engaging in the high value end of the business. Hong Kong’s strength in product innovation and in particular our lead in renminbi product development are a key driver behind the growth of its fund management business.”

The SFC will continue efforts with regulatory authorities in mainland China “on arrangements in relation to the mutual recognition of funds between Hong Kong and the mainland”, Lam said. “This initiative will help promote Hong Kong domiciled funds. Increased AUM will further develop the ancillary professional service sectors engaged in the product development, investment management and distribution of sales of funds.”

Lam said the SFC must “take positive steps to ensure that we have a robust and attractive platform with sufficient expertise to capture the ever-growing opportunities in the region, with China as one of the key driving forces of economic growth”.

According to the survey, based on responses from 555 institutions, non-REIT (real estate investment trust) asset management business increased by 38.5% to HKD 11.42tn ($1.3tn). Of this amount, HKD 5.83tn (about $645 billion) worth of assets, some 51%, was managed in Hong Kong and 74.6% of those assets managed in Hong Kong were invested in Asia.

Other private banking business increased by 2.7% to HKD 2.75tn ($387bn) in 2013 while fund advisory business grew by 11.6% to HKD 1.67tn ($250bn). The market capitalisation of SFC-authorised REITs increased by about 1.7% to HKD 177bn ($23bn).

The survey said licensed asset management and fund advisory corporations “continued to contribute the largest proportion of the combined asset management business”. Their aggregate asset management and fund advisory businesses amounted to HKD 11.78tn ($1.6tn) at the end of 2013, an increase of 28.4% compared to the previous year.

Registered institutions recorded a 27.8% increase in their aggregate asset management and other private banking businesses to HKD 3.68tn ($500bn) at the end of 2013, the survey said. Insurance companies reported a 1.7% increase in their assets under management to HKD 364bn ($47bn) by the end of 2013.