Hong Kong fund assets pass 2007 peak

Jul 20, 2011

Assets under management in Hong Kong's private-banking non-funds business and retail products saw particularly strong growth in 2010, according to the annual SFC survey.

Funds industry assets under management in Hong Kong hit HK$10.09 trillion ($1.3 trillion) at the end of last year, up 18.6% from the end of 2009 and exceeding the previous record of HK$9.63 trillion set in 2007.

The Securities and Futures Commission's annual Fund Management Activities Survey, released yesterday, also broke the figures down by type of activity. SFC-authorised retail funds posted a big gain, leaping 40.3% to HK$1.56 trillion from HK$1.11 trillion. Other (that is, non-asset-management) private-banking business grew 32.1% to $2.23 billion. Private-client funds AUM dropped 16.9% to $292.3 billion.

The number of mainland China-related licensed firms managing SFC-authorised funds increased from seven in 2009 to 10 by the end of June 2011. And the number of SFC-authorised funds they manage rose from 65 in 2009 to 81 last year.

The SFC expects the number of mainland-related firms to continue to rise, given the momentum towards renminbi internationalisation and Hong Kong's role in it, along with the growing amount of quota being awarded by China’s State Administration of Foreign Exchange to mainland fund-management companies.

The continued issuance of RMB bonds will also help, notes the regulator: Rmb106 billion of them were issued between July 2007 and the end of May 2011.

Exchange-traded funds have also contributed to AUM growth. There were 69 ETFs listed in Hong Kong as of December 2010, up from 43 at the start of the year, of which 24 track China A-share performance. Total ETF market capitalisation hit $88.6 billion (HK$690.4 billion) as of March 31, up 38% year-on-year from $64.3 billion.

The SFC survey threw up some other interesting statistics on closer inspection. Take the assets managed in Hong Kong by geographical distribution of investments, which clearly reflected a shift last year towards perceived safe havens.

The biggest percentage gain went to Japan, which received HK$257.9 billion in Hong Kong-managed assets, up 111.7% from HK$121.8 billion in 2009. The second biggest recipient was North America, which took in HK$472.7 billion in 2010, up 46.5% from HK$322.7 billion the previous year.

Turning to the number of staff in funds management, the overall industry headcount rose 5.8% to 29,303 from 27,695 in 2010.

The biggest percentage rises by business function came in corporate planning and business management (33.6%), research/analysis (32%) and dealing/trading (22.9%). Sales and marketing, always the function with by far the biggest headcount, saw a 3.4% increase in staff numbers to 22,368.