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On 25 August 2020, Hong Kong’s Securities and Futures Commission (SFC) published its findings on the annual Asset and Wealth Management Activities Survey for the year ended 31 December 2019 (Survey). The Survey reveals positive industry data from over 800 firms, which demonstrates the asset management industry in Hong Kong continues to thrive amid market uncertainties. The SFC remains, in the words of Ashley Alder, the CEO of the SFC, “committed to further developing Hong Kong as a premier global asset and wealth management centre”.
This article provides some key takeaways from the Survey in terms of the market landscape in 2019, the SFC’s recent regulatory developments and upcoming initiatives.
What does the data say?
The Hong Kong asset and wealth management business posted strong growth in 2019, as evidenced from the following figures:
Below is a macroscopic view of the AUM attributable to the three major components of the asset and wealth management industry in Hong Kong and how they fared in 2019:
|AUM as at 31 December 2019 (HKD)||Year-on-year change|
|Asset management and fund advisory business||$20,040 billion||+22%|
|Private banking and private wealth management business
(including asset management services by licensed corporations and registered institutions)
|Assets held under trusts||$3,844 billion||+11%|
The number of market participants also increased in 2019 as shown in the table below.
|Number as at 31 December 2019||Year-on-year change|
|Staff in the asset and wealth management business||45,132
(numbers for trustees were not included in the 2018 Survey)
|Type 9 (asset management) licensed corporations||1,808||+10%|
|Individuals licensed for asset management||12,686||+9%|
|Mainland-related licensed corporations and registered institutions||387||+7%|
On the product front, as at 31 December 2019, the number of Hong Kong-domiciled funds authorized by the SFC stood at 763, a slight drop of 2% compared to 2018.
The SFC also highlighted a number of “firsts” in the Hong Kong market in 2019 and 2020, particularly in the exchange traded funds (ETF) and leveraged and inverse (L&I) products space, such as:
Taking a look into the source of funding and where such assets were managed and invested in 2019:
The Survey showcases recent regulatory developments and provides insights into the SFC’s upcoming initiatives, such as:
The Survey also provides a glimpse into how the Hong Kong market has fared in 2020 so far. Unsurprisingly, with the COVID-19 pandemic weighing on the global financial markets, the Hang Seng Index dropped by 16% at the end of March 2020 compared to the previous quarter. Q1 2020 also saw net fund outflows of HK$16 billion from Hong Kong. Whilst it remains to be seen how the global financial markets will recuperate, Hong Kong saw a rebound in Q2 2020 with net fund inflows of HK$27 billion and the activities of the stock and futures markets remain robust.
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