Hong Kong’s asset and wealth management industry surpassed $3 trillion, reaching HK$24.27 trillion ($3.12 trillion) in total assets at the end of 2017, according to an annual survey from the Hong Kong Securities & Futures Commission (SFC).
The SFC said a global economic upswing helped the asset management and fund advisory business conducted by licensed corporations and registered institutions grow 23% to HK$17.51 trillion in 2017. As of the end of 2017, the total assets under management by the private banking and private wealth management business totaled HK$7.81 trillion, 52% of which was invested in mainland China and Hong Kong.
The survey found that foreign investors continued to be the main source of assets, as their share increased to HK$15.93 trillion in 2017 from just under HK$12 trillion in the previous year, representing 66% of the asset and wealth management business. Institutional and corporate professional investors accounted for 61% of the asset management and fund advisory business in Hong Kong in 2017, while non-professional investors, including retail investors, made up 28%.
Public funds, including SFC-authorized funds and funds authorized in other jurisdictions, accounted for 38% of the asset management and fund advisory business, followed by managed accounts (27%) and private funds (16%). Hedge funds (6%), and private equity and venture capital (4%) were included in private funds.
The number of Hong Kong-domiciled SFC-authorized funds rose 7% to 755, while their combined net asset value increased 30% to HK$1.24 trillion in 2017. And the number of corporations licensed for asset management in Hong Kong increased 14% to 1,477 at the end of 2017. Meanwhile, the number of licensed corporations and registered institutions established by mainland China-related groups in Hong Kong increased 12% to 334.
The SFC’s research also found that mainland China and Hong Kong remained the preferred markets for fund managers, with investments in the two markets growing 26% to HK$4.195 trillion from HK$3.337 trillion in 2016, and representing nearly half (49%) of all assets managed locally in 2017.
Equities were the most popular asset class among Hong Kong managers, accounting for 57% of the assets managed in Hong Kong, according to the SFC. Investment allocated to cash and money markets soared 84% to $809 billion from $439 billion, but only represented 9% of the assets managed.
The island’s REIT market continued to expand in 2017, as the market capitalization of all SFC-authorized REITs surged 31% to HK$277 billion. The dividend yield of the Hang Seng REIT Index was 5.6% for 2017, which was nearly twice the 2.9% of the Hang Seng Index.
A total of 572 firms responded to the SFC’s questionnaires, and reported that they conducted asset management, fund advisory, or private banking and private wealth management business during the survey period. These included 508 licensed corporations, 44 registered institutions, and 20 insurance companies.