Hong Kong’s Fund Management Business Grows Steadily In 2016

The Securities and Futures Commission (SFC) today released its annual Fund Management Activities Survey (FMAS) which shows that the combined fund management business (Note 1) in Hong Kong increased by 5.2% year-on-year to $18,293 billion (Note 2) as of 31 December 2016.

Overseas investors remained a major source of funding for the fund management business, accounting for 66.3%. The survey findings also indicate that private wealth management business grew by 9% to $5,203 billion during the year.

“We are committed to supporting the overall goal of developing Hong Kong as a full-service asset management centre and preferred funds domicile,” said Mr Ashley Alder, the SFC’s Chief Executive Officer.

Below is a breakdown of the performance of different market players during 2016:

• Licensed corporations registered a year-on-year increase of 3.5% in their aggregate asset management and fund advisory business to $12,553 billion, representing the largest proportion of the combined fund management business.
• Registered institutions recorded a 9% increase in their aggregate asset management and private banking business to $5,015 billion.
• Insurance companies reported a 9.8% increase in their assets under management to $514 billion.

Some other findings of the survey:

• Asset management business increased by 4.6% to $12,824 billion.
• Over 50% of the asset management business has been managed in Hong Kong over the past five years.
• More than 54% of the assets managed in Hong Kong were invested in equities.

The FMAS report also notes that the SFC actively develops new regulatory initiatives to ensure Hong Kong remains a major international asset management centre. Following the Mainland-Hong Kong Mutual Recognition of Funds scheme concluded in July 2015, similar arrangements were entered into with Switzerland in December 2016 and France in July 2017 respectively. Locally, approval was granted for leveraged and inverse products and a number of public consultations have been launched on proposals to enhance the regulation of the industry.

The FMAS is an annual survey to help the SFC assess the state of the industry for policy and operational planning. This year, a total of 575 firms responded to the survey on a voluntary basis. They included 511 licensed asset management and fund advisory corporations, 44 registered financial institutions and 20 insurance companies (Note 3).

Notes:

1. Combined fund management business includes SFC-authorised REITs as well as other sub-sectors of asset management, fund advisory and private banking, which are broadly categorised as “fund management business (excluding REITs)” in the report. Please see the appendices for some key findings.
2. Unless stated otherwise, the values given are in Hong Kong dollars.
3. Respondents fall into three categories:
   (i)     asset management and fund advisory companies licensed under section 116 or 117 of the Securities and Futures Ordinance (SFO);
   (ii)    registered institutions under section 119 of the SFO, which are authorised financial institutions as defined in section 2(1) of the Banking Ordinance; and
   (iii)  insurance companies registered under the Insurance Companies Ordinance providing long term business.