China Fund News reporter Ye Shijie
On July 12, the Hong Kong Securities and Futures Commission (SFC) released the 2023 Asset and Wealth Management Activities Survey. The SFC believes that a number of key benchmark indicators in the survey reflect a high degree of diversification of funding sources, global asset allocation and strong inflows for investors in Hong Kong's asset and wealth management business, reaffirming Hong Kong's status as a preeminent asset and wealth management hub.
"The results of this survey demonstrate the continued strength of Hong Kong's asset and wealth management industry, particularly the increasing breadth and depth of the market, and its resilience in navigating unprecedented challenges and macro pressures. These unique favourable conditions put Hong Kong in an excellent position to deepen its ties with the Mainland, Asia and the global market, thereby further consolidating its position as an international financial centre. ”
Last year, Hong Kong's total assets under management increased by 2% and net capital inflow increased by 342%
The survey results show that in the past five years, assets of non-Chinese mainland and Hong Kong investors have consistently accounted for 54-56% of total assets under management, while 60% of assets under management in Hong Kong have been allocated to overseas markets. Over the past three years, the number of Type 9 (i.e. asset management) licensees in Hong Kong has steadily increased by 12% to 2,161 as at June 2024.
It is worth noting that Hong Kong's overall assets under management (GMA) increased by 2% year-on-year to HK$31,193 billion in 2023. Net fund inflows surged by 342% to HK$389 billion, mainly due to the significant contribution of private banking and private wealth management businesses.
In addition, SFC-authorized funds incorporated in Hong Kong also performed strongly, with net fund inflows continuing to improve in the first quarter of 2024, recording HK$33 billion (about US$4.2 billion), continuing the sharp rebound of 93% last year to HK$87 billion (about US$11.1 billion). The total assets under management of these funds increased by 5% in 2023 and rose by a further 3% in the first quarter of this year.
(Source: Screenshot of the SFC report)
In terms of fund types, the strong growth momentum of OFCs continued, with the number of registered OFCs increasing by 118% compared to 2022, indicating that AMCs continued to make good use of Hong Kong's corporate fund structure and related government funding.
The SFC believes that a number of key benchmark indicators in the survey reflect a high degree of diversification of capital sources, global asset allocation and strong inflows for investors in Hong Kong's asset and wealth management business, reaffirming Hong Kong's status as a preeminent asset and wealth management hub.
Assets under management of Mainland-related institutions and wealth management industry in Hong Kong increased by 4%
The report also shows that the relevant Mainland authorities continue to expand their presence in Hong Kong.
According to data from the Hong Kong Securities and Futures Commission, the assets under management (AUM) of the assets and wealth management business of relevant licensed corporations and registered institutions in the Mainland increased by 4% year-on-year to HK$2,676 billion, and recorded a net inflow of HK$153 billion, up 16% from 2022. The assets under management (AUM) of these LCs and RIs have shown an increasing trend, with an increase of 50% since 2019.
(Source: Screenshot of the SFC report)
There has also been an increase in the number of registered institutions and practitioners in the Mainland. According to the report, there were 149 Mainland-related licensed corporations and registered institutions engaged in asset and wealth management business in Hong Kong, and the number of their practitioners increased by 2% year-on-year. Since 2019, the number of Mainland-related licensed corporations and registered institutions engaged in asset and wealth management business has increased by 33%, and the number of their practitioners has also increased by 38% over the same period.
In addition, the asset management and fund advisory business of relevant licensed corporations and registered institutions in the Mainland grew by 6% year-on-year to HK$2,182 billion.
Hong Kong is well positioned as a preeminent offshore RMB centre
The report shows that Hong Kong, as a preeminent offshore RMB centre, has been offering a wide range of RMB financial products and a liquid RMB ecosystem.
According to the Hong Kong Monetary Authority, Hong Kong has the world's largest offshore renminbi deposit pool, accounting for more than half of all offshore renminbi deposits, with a total of RMB1,134 billion in May 2024.
Hong Kong has also been a premier offshore renminbi settlement hub, processing about 80% of the world's renminbi payments. Sufficient liquidity provides the necessary support for the development of Hong Kong's offshore renminbi bonds, also known as dim sum bonds. In 2023, offshore renminbi debt securities issued in Hong Kong increased by 18.2% year-on-year to RMB785.8 billion.
(Source: Screenshot of the SFC report)
In addition, the report notes that the HKD-RMB Dual Counter model was introduced to the Hong Kong stock market in June 2023. The mechanism enables investors to invest their renminbi in Hong Kong's local stock market and provides a new way for listed companies to absorb offshore renminbi funds in Hong Kong. As at 22 May 2024, the shares of 24 Hong Kong-listed companies were traded in the form of Dual Counter Securities. Since its launch, the average daily turnover of the RMB counter has exceeded HK$100 million.
Editor: Captain
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