After a steep two-year climb in the face of economic headwinds and geopolitical challenges, Hong Kong’s position as a premier asset and wealth management hub has been reaffirmed. In the latest Global Financial Centres Index study, compiled by the China Development Institute in Shenzhen and British thinktank Z/Yen Group, Hong Kong moved one notch above Singapore to secure third place behind New York and London.
Furthermore, in the next few years, the Special Administrative Region (SAR) is poised to overtake Switzerland as the world’s top crossborder wealth management hub, according to the Boston Consulting Group. Hong Kong’s asset management industry has experienced significant growth, with assets under management surpassing HK$31 trillion (US$3.98 trillion) at the end of 2023 and net fund inflows reaching HK$390bn (US$50bn).
Expansion efforts
Recognition of Hong Kong’s resurgence is particularly gratifying for members of Hong Kong’s banking and finance community, rebutting claims that the SAR’s status as Asia’s leading international financial hub was declining amid a slip in rankings and reputation. Speaking at a recent flagship banking conference, senior government officials highlighted how Hong Kong’s return to the top of Asia’s financial hub table can be closely linked to government initiatives to expand economic capacity, enhance competitiveness and cultivate new growth areas.
A slew of tax and residency incentives are designed to attract more money management firms
The officials cited a slew of tax and residency incentives designed to attract more money management firms, including family offices, to Hong Kong. For example, recent legislation means that family offices managing over HK$240m (US$30.9m) are exempted from profit taxes on their qualified financial investments in Hong Kong, provided that the family holds at least 95% of the beneficial interest of the single-family office, or 75% if tax-exempt charities hold the remaining 25%. The government has also introduced immigration schemes and expedited visa processing for financial services professionals, including those working in family offices. Other initiatives include favourable investment migration schemes, art storage and platforms for crossborder payments via digital currencies.
The SAR is currently home to more than 2,700 single-family offices
According to Deloitte’s Market Study on the Family Office Landscape in Hong Kong, the SAR is currently home to more than 2,700 single-family offices, with more than half of them founded by individuals whose wealth exceeds US$50m. At the end of 2023, according to government figures, family offices and private trusts made up roughly HK$2 trillion (US$257bn) in assets under management. Over the past five years investors outside mainland China and Hong Kong have consistently accounted for 54%-56% of total assets under management, while 60% of the assets managed in Hong Kong are allocated to overseas markets, according to the Hong Kong Securities and Futures Commission’s Asset and Wealth Management Activities survey.
Provider ecosystem
Meanwhile, in anticipation that the multiplier effect of bringing funds into Hong Kong will benefit the overall economy, a Hong Kong Academy for Wealth Legacy has been established to provide training for wealth management talent and to create an ecosystem of family office service providers. However, while enthusiastic about the direction of travel, professionals familiar with the services that family offices require – such as legal, accountancy, insurance and, increasingly, skillsets around technology – point out that recruiting talent is often easier said than done, especially with family offices competing for the same talent.
As one seasoned family office wealth adviser put it, while Hong Kong has qualified professionals with the experience to serve single- and multi-family offices, there are simply not enough of them.
