HK’s wealth management business growth may attract China’s onshore investors

Onshore investors from China currently accounts for 10% of the asset and wealth management business in 2020.

The strong asset and wealth management business in Hong Kong will likely attract more of China’s onshore investors when the wealth management connect is launched in the Greater Bay Area.

The Securities and Futures Commission earlier reported that the asset and wealth management business in Hong Kong climbed 21% year-on-year to $34.93t in assets under management (AUM). This is approximately US$4.5t in 2020.

“The strength of the industry and a large number of funds authorized by the SFC may help to attract China’s onshore investors, who only contributed to 10% of HK’s asset and wealth management business in 2020, once the wealth management connect is launched,” the OCBC Treasury Research said in a report.

Of the $34.93t, some 64% were from non-Hong Kong investors. Moreover, the net fund inflows in 2020 also amounted to $2.04t, higher than $1.67t in 2019.

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The wealth management connect scheme is an arrangement that allows residents to carry out cross-boundary investment in wealth management products offered by banks in the Greater Bay Area.

Moreover, the OCBC also noted that the recent Asset and Wealth Management Activities Survey result showed that the industry remained “resilient” even amidst political tensions and the economic crisis.

“Despite the political risks and the COVID-19 pandemic over the past two years, Hong Kong’s asset and wealth management industry has been resilient amid robust fundamentals and supports from global flush liquidity,” the report read.

It added that the strong growth in the private banking and private wealth management business, continuous net fund inflows and increased employment reinforced its view that political tensions did not lead to net outflows of capital and talents.

The AUM of private banking and private wealth management business grew 25% to $11.31t in 2020.