FINANCIAL SERVICES GROWING APACE

Associate Director-General of Investment Promotion Charles Ng says Hong Kong’s financial services sector is currently undergoing accelerated growth, thanks to the ongoing recovery seen in the city’s overall economy, as well as favourable government policies.

In the first eight months of this year, Invest Hong Kong (InvestHK) assisted 40 companies in the financial sector in setting up or expanding their operations in Hong Kong, a 60% increase compared to the same period last year.

Half of these companies are from Mainland China, followed by the US, the UK, Switzerland, Luxembourg, France, Malaysia, and five other economies.

The scope of the companies covers a broad spectrum, but a sizeable 14 among them provide asset management services. This aligns with Hong Kong’s position as Asia’s leading asset and wealth management hub and offers further demonstration that the city remains the region’s premier global financial centre.

Hong Kong’s unique geographical location and the advantages it enjoys under “one country, two systems” are hugely appealing to investors and companies.

Mr Ng noted an increasing trend among Mainland companies of using Hong Kong as a platform to expand their global reach. Complementing this, he said, firms from overseas markets continue to leverage Hong Kong to enter the Chinese market, particularly that of the Greater Bay Area.

“Through our international network, we are exploring strategies to help Mainland or overseas companies already established in Hong Kong tap into emerging markets, such as the Middle East and countries along the Belt & Road Initiative.”

Wealth management hub

Hong Kong's capital markets, boasting a total market capitalisation of about US$5 trillion, are among the most vibrant and liquid in the world. The city is also Asia’s biggest global offshore wealth management centre, and the second largest in the world behind Switzerland.

Furthermore, it has the highest number of ultra-high-net-worth individuals (UHNWIs) of any Asian city. 

Hong Kong’s asset and wealth management business was worth HK$31.2 trillion at the end of 2023. Mr Ng said it now stands as the second largest cross-border wealth management centre globally, and is poised to become the largest booking centre for wealth management business by 2027.

Noting that investors across the globe are seeking better returns by allocating capital to alternative asset classes such as private equity, hedge funds and more, he added that alternative investments in Hong Kong are experiencing extraordinary growth.

Outside of the Mainland, Hong Kong has the largest number of hedge funds and the biggest private equity market in Asia.

Hong Kong also serves as the largest offshore renminbi centre, and its RMB liquidity pool, exceeding RMB600 billion, is the world’s largest outside of the Mainland.

Enabling growth

The Hong Kong Special Administrative Region Government is committed to attracting global investment through various initiatives, including tax concessions for private equity funds and relaxed listing rules for pre-revenue biotech and specialist technology companies.

Hamilton Lane, a distinguished leader in alternative asset management, has announced the establishment of its first Hong Kong Limited Partnership Fund, further solidifying its presence in Asia. The company manages approximately US$130 billion in discretionary assets and US$810 billion in non-discretionary assets.

Having opened its inaugural Asian office in Hong Kong in 2009, Hamilton Lane is poised to celebrate its 15th anniversary in the region this month.

Shannon Chow, Managing Director and Head of Greater China Client Solutions at Hamilton Lane, remarked: “Our Hong Kong office has operations in asset management and client solutions. If you ask me whether Hong Kong is our inaugural office in Asia, the answer is yes. We are very pleased to have this office in the heart of Hong Kong to expand our business further in Asia.”

Ms Chow also expressed her admiration for the InvestHK team, acknowledging its dedication and strenuous efforts in promoting the family office sector, and praised the Hong Kong SAR Government’s successful initiatives aimed at enhancing the city’s talent pool.

According to Ms Chow, one of Hong Kong’s key advantages is its low tax rates, which underpin the development of alternative investment companies and other industries.

She stated: “Hong Kong is renowned for having some of the lowest tax rates in the global market, which significantly helps in the development of these sectors.”

Furthermore, she noted, “Hong Kong possesses a robust and skilled talent pool, which is vital for our operations.”

The Hong Kong SAR Government, Ms Chow highlighted, has launched various initiatives to attract talent, fostering an environment that draws professionals from around the world.

“These programmes allow overseas individuals and those from Mainland China to work in Hong Kong, making Hong Kong their home.”

In addition to Mainland talent moving to Hong Kong, many businesses from the Mainland are also choosing to expand their operations in the city. A notable example is Guolian Securities International, which is headquartered in Jiangsu Province. The company established a presence in Hong Kong in 2019, and engages in both wealth management and investment banking.

Franklin Yang, CEO of Guolian Securities International, highlighted the numerous advantages Hong Kong offers, stating: “There are many benefits to operating in Hong Kong, both from a policy-making perspective and in terms of the advantages it provides within Greater China.”

He also stressed that the city's commendable education system contributes to a pool of graduates proficient in both English and Mandarin, making it easier to attract top talent for larger-scale deals.

Mr Yang emphasised Hong Kong’s unique position in the financial industry, remarking: “Guolian takes full advantage of Hong Kong’s status as a financial capital. We attract many reputable companies from Mainland China, who either list on the Hong Kong Stock Exchange or engage in merger and acquisition activities here.”

He added, with optimism: “I believe Guolian can bring more capital into these markets.”

As Hamilton Lane continues to expand its operations and Guolian Securities International consolidates its offerings, Hong Kong remains a pivotal hub for financial services in the region, attracting businesses and talent alike.

Targeting wealthy individuals

To draw UHNWIs to the city, the Hong Kong SAR Government has introduced measures to enhance offerings for global wealth owners and promote the development of family offices.

“Hong Kong's family office sector is flourishing, with more than 2,700 single-family offices,” Mr Ng explained.

Over the past year, facilitating measures have been implemented to support the business development of family offices.

“As of end-May this year, we have assisted 89 family offices to set up or expand their operations in Hong Kong and more than 130 family offices indicated that they had decided or were preparing to set up or expand their operations in Hong Kong.”

The New Capital Investment Entrant Scheme (CIES) is another vital initiative that is contributing to Hong Kong’s status as a leading financial hub. Under the scheme, high-net-worth individuals (HNWIs) can settle in the city if they invest a minimum of HK$30 million here, with a portion being directed towards companies and projects with a Hong Kong nexus.

“When HNWIs choose to invest through the New CIES, they create a demand for financial services, further strengthening the city’s reputation as a premier destination for wealth management and investment.”

Highlighting the scheme’s appeal, Mr Ng said that since its launch in March, the scheme had received over 5,000 enquiries and more than 500 applications.

The insurance sector is another important pillar of Hong Kong’s financial industry, with the city housing around 160 authorised insurers, including six of the world’s top 10, as of July. Hong Kong has also achieved exceptional insurance density, ranking first in Asia and second globally for insurance premiums per capita as of the end of last year.

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