Published On: Sun, Jul 24th, 2011

HK Fund Management Business Continues to Grow in 2010

The annual Fund Management Activities Survey (FMAS) released today by the Securities and Futures Commission (SFC) shows that the combined fund management business (Note 1) in Hong Kong reached $10,091 billion (Note 2) in 2010, up 18.6% from 2009. The increase outperformed the previous year-on-year record of $9,631 billion achieved in 2007, and suggests a return of investor confidence in global financial markets and continuing inflows of investment capital into the Asia Pacific region.

The latest survey indicates that Hong Kong continued to be a preferred location for international investments. Overseas investors contributed $6,592 billion (or 66.0%) to fund management business, excluding real estate investment trusts (REITs). The population of intermediaries engaging in asset management business also expanded in 2010. During 2010, both the number of licensed corporations and of individuals licensed for asset management (i.e. Type 9 regulated activity) grew about 10% from 2009 to 798 and 5,483 respectively.

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

* Licensed asset management and fund advisory houses continued to contribute the largest proportion of the combined asset management business. Their aggregate asset management and fund advisory businesses amounted to $7,305 billion in 2010, recording a year-on-year increase of 13.3% from 2009.
* Registered institutions recorded a 33.8% increase in their aggregate asset management and other private banking businesses to $2,423 billion in 2010.
* Insurance companies reported a 48.6% increase in their assets under management to $260 billion in 2010.

Some highlights of the survey include:
* Non-REIT asset management business increased by 17.5% to $6,841 billion. Of this amount, $4,161 billion worth of assets were managed in Hong Kong and 79.7% of these assets were invested in Asia.
* Other private banking business grew 32.1% to $2,230 billion in 2010.
* Fund advisory business decreased by 0.4% to $917 billion in 2010.
* The market capitalisation of SFC-authorized REITs recorded a growth of approximately 39% to $103 billion in 2010.

The report also highlights the three key aspects that the SFC has been focusing on to strengthen the status of Hong Kong as a leading asset management centre as follows:

* Strengthening the regulatory framework for public offers of investment products;
* Contributing to the process of renminbi internationalisation and fostering closer ties with the Mainland market; and
* Developing exchange-traded-fund (ETF) market and implementing new measures to enhance transparency of synthetic ETFs.

“Hong Kong will strive to fortify its position as an international asset management centre and an offshore renminbi centre,” said Mrs Alexa Lam, the SFC’s Acting Chief Executive Officer. “The SFC will continue to work with all to capitalise on our robust regulatory framework and local asset management expertise to attract international investors to select Hong Kong as an investment platform.”

“Hong Kong will play an increasingly important role as the renminbi continues to internationalise. It is important that we promote the development of offshore renminbi business and offshore renminbi-denominated investment products in Hong Kong,” Mrs Lam added.

The FMAS has been conducted annually since 1999 to help the SFC assess the industry’s state of affairs for policy setting and operations planning. This year, a total of 398 entities responded to the survey on a voluntary basis. They included 342 licensed asset management and fund advisory houses, 40 registered financial institutions and 16 insurance companies (Note 3).

Notes:

1. The term refers to the overall value of assets reported in the sub-sectors of asset management, fund advisory, private banking (broadly categorised as non-REIT fund management business) as well as SFC-authorized REITs.
2. Unless stated otherwise, the values given are in Hong Kong dollars.
3. Respondents fall into these categories: 1) asset management and fund advisory companies licensed under section 116 or 117 of the Securities and Futures Ordinance (SFO); 2) registered institutions under section 119 of the SFO, which are authorized financial institutions as defined in section 2(1) of the Banking Ordinance (Chapter 155); and 3) insurance companies registered under the Insurance Companies Ordinance (Chapter 41) providing long-term business.
4. Please see appendices for some key findings of the report.

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