China-focused family offices say Hong Kong still the place to be: survey
Hong Kong has defied recent negative publicity to rank as the leading international finance hub in Asia for at least 65% of respondents to a recent survey commissioned by the Financial Services Development Council (FSDC).
71% of respondents — comprising asset and wealth managers and some family offices — still see Hong Kong as their chief gateway to mainland China.
29% of the participants — predominantly those in the insurance sector — said that they did not view Hong Kong in this way as they already had a direct local presence in mainland China or had engaged in joint ventures on the mainland.
Most of the survey's participating institutions said they intended to maintain or increase their presence in Hong Kong in the mid-term, but overwhelmingly reported that the ability to develop Hong Kong’s future talent pool in finance, both local and expatriate, should be strengthened.
GATEWAY TO CHINA
A Hong Kong-based veteran family office investor told AsianInvestor that the findings that the city remains the financial hub in Asia — ranking ahead of Singapore, the Chinese Mainland and Tokyo — came as no surprise.
“Hong Kong is a global connector, particularly prior to the pandemic, to all the major cities around the world and geographically, it's right in the heart of Asia. If you're doing business in Asia, I think the location is a definite advantage,” he said.
“It’s proximity to Mainland China, means it’s still a gateway for the West into China.”
While geopolitical tensions with the US, and the threat of regulatory crackdowns have caused hesitancy for institutional investors in recent months — the family office veteran believes the macro themes still make China an attractive market, which in turn helps solidify Hong Kong’s IFC status.
“The country itself has 1.4 billion people and the economy is still growing. There’s still a lot of investment opportunities just based on these domestic macro themes —there's still a lot of attraction there,” he said
“After the events of last year, in terms of the regulatory crackdowns on tech and the overheated property sector, there is a lot of fear in the market, but it’s still one of the fastest growing countries and will be for years to come, so the macros aren’t going to change and we will continue to look for the right opportunities.”
GOVERNMENT SUPPORT
A chairman of a prominent Hong Kong family office, who also wished to remain anonymous, told AsianInvestor that beyond its obvious strengths — such as being the gateway of China, a robust legal system and stable economy — strong industry initiatives and dedicated support by the government have been critical to maintaining Hong Kong’s status as a family office hub.
“I think one of the key things that has happened over the past few years is definitely government support, such as the launch of Limited Partners Fund Bill in 2020, and also the tax concessions for carried interest as part of the government's effort to attract more private equity and funds to domicile and operate on Hong Kong,” said the chairman.
As private equity is one of the key segments pursued by family offices, the chairman asserted that Hong Kong is the prime location to generate alpha.
“For two consecutive years, chief executive Carrie Lam has mentioned family offices in her police address, highlighting the governments interest in promoting Hong Kong as the hub for Asia,” he said.
“At the most recent Asia Financial Forum, Lam reiterated the deployment of government support and mentioned the possibility of further tax concessions as well.”