No fears of ‘exodus’ as Hong Kong handles HK$31 trillion in assets in 2023: Paul Chan

Total assets handled in the asset and wealth management sector stood above HK$31 trillion last year, or a modest growth of 2.1 per cent, according to Chan.

Investors outside the city remained a major source of funding for the business, accounting for about two-thirds of the assets under management, “more or less the same as in the past”, he added.

Hong Kong was also the second-largest private equity centre in Asia after the mainland, in terms of capital under management by private equity funds and excluding real estate funds.

Private equity handled amounted to over HK$1.7 trillion, or about US$217 billion, in 2023, according to Chan. This was higher than the US$212 billion in 2022 and US$182 billion in 2021, as recorded by the SFC.

Net capital inflows in 2023 were also up more than 3.4 times from 2022, reaching nearly HK$390 billion. Meanwhile, Hong Kong-domiciled funds also saw net fund inflows of HK$87 billion in 2023, up 90 per cent year on year.

Chan said the figures showed “worries about capital exodus were unnecessary” and that “despite the changing international geopolitical situation, investors still have confidence in the prospects of the mainland and Hong Kong markets”.

He added: “It is important for us to do our job well and continue to explain how the country is steadily improving, the central government’s strong support for Hong Kong, and the unique advantages of the ‘one country, two systems’ principle.”

Chan emphasised that the city’s efficient financial market and status as a global city meant it remained attractive to ultra wealthy individuals.

“There are 2,700 family offices operating in Hong Kong, more than half of which are established by ultra high net worth individuals with assets exceeding US$50 million.”

He added that the number of open-ended fund companies (OFC) registered last year also more than doubled, thanks to the government’s push for diversification of fund structures in the past few years.

OFCs are open-ended collective investment schemes structured with limited liability and variable share capital. They serve as investment fund vehicles and are incorporated in Hong Kong under the Securities and Futures Ordinance.

In his post, Chan said he believed more OFCs would be established locally under a subsidy scheme announced in the city’s budget in February.