What’s shaping Hong Kong’s asset management sector

The report highlights evolving investment trends such as ESG, alternative assets, and virtual assets.

Hong Kong’s asset management sector faces a challenging yet promising path leading up to 2030, according to the Vision 2030 report by KPMG China and the Hong Kong Investment Funds Association (HKIFA).

The report, based on insights from HKIFA members and key stakeholders across banking, asset management, insurance, and talent recruitment sectors, underscores both challenges and emerging opportunities in the industry.

Despite global economic uncertainties and persistent geopolitical tensions, Hong Kong is positioned as a pivotal player poised to capitalize on emerging trends.

“As we move along the path to 2030, it seems likely that the environment for asset managers will continue to be volatile - in the short term at least,” the report stated. “The prospects for global economic growth remain muted whilst geopolitical tensions are unlikely to subside in the near future.”

Key findings suggested that whilst global economic growth remains subdued, significant opportunities lie in Asia, particularly the Chinese Mainland. The city’s strategic connectivity and established financial hub status position it uniquely to harness  these opportunities, bolstered by recent governmental support initiatives like the Wealth Management Connect.

“Hong Kong's connectivity with the Mainland and longstanding role as an international financial hub mean that it is uniquely positioned to seize these opportunities,” the report said.

Moreover, the report also showed that technology is transforming asset management operations, attracting new players from fintech startups to traditional firms, and prompting firms to broaden their asset ranges. This is deemed crucial as asset managers adapt to shifts like blockchain and digital services, alongside growing interests in ESG, alternative assets, and ETFs.

Despite Hong Kong's advantageous position, challenges such as geopolitical tensions and regional competition, notably from Singapore, loom large. 

CEO’s said that the city must enhance its competitive edge through favorable tax policies and robust talent retention strategies to maintain its status as a leading asset management hub.

The report recommends several actions, including raising awareness amongst retail investors about investment options, expanding educational campaigns on retirement planning, equipping sales staff with updated product knowledge, and advocating for expanded quotas and streamlined application processes for cross-border schemes.

Additionally, it calls for exploring relaxed marketing restrictions, integrating Hong Kong's pension expertise into Mainland initiatives, and reviewing and easing restrictions on foreign firms in the China market to encourage greater participation.