Hong Kong fund managers see AUM hit record high

10 July 2014   Category: News, Asia, Global, Hong Kong   By Asia Asset Management

The total AUM of Hong Kong’s fund management industry grew 27.2% year-on-year to a record high of HK$16 trillion (US$2.06 trillion) as of the end of 2013, according to the Securities and Futures Commission (SFC).

The regulatory watchdog’s annual Fund Management Activities Survey (FMAS) interviewed a total of 555 institutions, including 488 licensed asset management and fund advisory corporations, 47 registered financial institutions and 20 insurance companies.

The survey indicated that Hong Kong continued to be a preferred platform for international investors to access Asia. Contributions from overseas investors reached a historic high of HK$11.38 trillion, or 72% of the total fund management business in 2013.

"The record high AUM of our combined fund management business at the end of 2013 ranks us among the top asset management hubs in Asia ex Japan.  Significant inflows of overseas capital underscore the value and attractiveness of our open markets and our role as an international asset management centre," said Alexa Lam, the SFC’s deputy chief executive officer and executive director of investment products, international and China at the SFC.

"Hong Kong's fund industry is trending up the value chain with more market professionals engaging in the high value end of the business. Hong Kong’s strength in product innovation and in particular our lead in RMB product development are a key driver behind the growth of its fund management business," Ms. Lam added.

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

  • Licensed asset management and fund advisory corporations continued to contribute the largest proportion of the combined asset management business. Their aggregate asset management and fund advisory businesses amounted to HK$11.78 trillion at the end of 2013, up 28.4% from end-2012.
  • Registered institutions recorded a 27.8% increase in their aggregate asset management and other private banking businesses to HK$3.68 trillion at end-2013.
  • Insurance companies reported a 1.7% increase in their AUM to HK$364 billion at end-2013.

Some highlights of the survey include:

  • Non-REIT asset management business increased by 38.5% to HK$11.42 trillion in 2013. Of this amount, HK$5.83 trillion worth of assets (or 51.0%) was managed in Hong Kong and 74.6% of these assets managed in Hong Kong were invested in Asia.
  • Other private banking business increased by 2.7% to HK$2.75 trillion in 2013.
  • Fund advisory business grew by 11.6% to HK$1.67 trillion in 2013.
  • The market capitalisation of SFC-authorised REITs increased by approximately 1.7% to HK$177 billion in 2013. 

The FMAS report noted that Hong Kong is committed to maintaining its lead as the centre for creation and development of RMB assets, products and services. At the same time, as the number of Mainland-related financial institutions establishing operations in Hong Kong continues to increase, they have brought new opportunities to the territory’s market.

Furthermore, the report noted that the SFC continues its efforts to facilitate market development and safeguard investor interests through launching various facilitative measures and regulatory initiatives. The SFC is also committed to investor education and the ongoing monitoring of investment products.

"The SFC will continue to follow through with the Mainland regulatory authorities on arrangements in relation to the mutual recognition of funds between Hong Kong and the Mainland. This initiative will help promote Hong Kong domiciled funds. Increased AUM will further develop the ancillary professional service sectors engaged in the product development, investment management and distribution of sales of funds. We need to take positive steps to ensure that we have a robust and attractive platform with sufficient expertise to capture the ever-growing opportunities in the region, with China as one of the key driving forces of economic growth," Ms. Lam said.