Hong Kong fund assets grew by almost half in 2009

Jul 28, 2010

But despite climbing to HK$8.5 trillion ($1.1 trillion), the figure is still short of its 2007 peak, according to Hong Kong's Securities & Futures Commission.

Funds under management in Hong Kong saw a sharp rebound last year, but remain around HK$1 trillion below the record levels of 2007, according to the Securities & Futures Commission's (SFC) annual Fund Management Activities Survey, released this week.

Following a drop of 39.3% to HK$5.85 trillion in 2008 from $9.63 trillion in 2007, total fund-management assets in Hong Kong leapt by 45.4% in 2009 to HK$8.51 trillion. And mainland China-related fund activity is growing particularly strongly.

Mainland-related firms saw their total asset-management and fund-advisory business grow by 70.1% to HK$154.7 billion. The number of mainland-related companies managing SFC-authorised funds rose from two in 2008 to eight by the end of June 2010, and the number of funds they manage grew by almost half to 65 last year from 46 in 2008.

Moreover, following a drop in 2008 in mainland-owned assets managed in Hong Kong, last year the figure increased by 17.2% to HK$75 billion. That represents around 15% of the total qualified domestic institutional investor (QDII) quota.

And China-related fund-management activity is likely to keep gathering momentum, in light of developments over the past several months.

For one thing, last week's move to ease controls on the opening of renminbi accounts in Hong Kong and to facilitate inter-account renminbi transfers will pave the way for the launch of Rmb-denominated fund products, says the SFC. China's State Administration of Foreign Exchange's resumption of granting QDII quota in October is also helping boost mainland-related business.

Meanwhile, like the rest of the Asia-Pacific region, Hong Kong's exchange-traded fund (ETF) market continued its growth trajectory, with total market capitalisation rising by 30.9% year-on-year to $67.8 billion.

The number of ETFs nearly doubled to 43 last year from 24 in December 2008, with another 19 being listed up to June 30, bringing the current total to 62. One-third of the total (21) track the China A-share indices.

Hong Kong is the second largest ETF market in Asia by turnover and market cap. Average daily turnover for the first half of this year was $252 million, representing an increase of 12.5% year-on-year. Average daily ETF turnover now accounts for 3.2% of the total average daily turnover of the Hong Kong stock market, up from 2.5% in 2008.