HK fund assets climb 39% to record high

Funds industry assets under management in Hong Kong hit a record high of HK$12.6 trillion ($1.6 trillion) at the end of last year, a near-40% year-on-year increase, exceeding the previous record set at the end of 2010.

The Securities and Futures Commission’s (SFC) annual fund management survey, released yesterday, notes that in 2012 overseas investors contributed HK$8 trillion (or 64.6%) to the city's funds business, excluding real estate investment trusts (Reits).

The survey breaks down figures by type of activity, noting that licensed asset management and fund advisory corporations contributed the largest proportion of assets, with total AUM amounting to HK$9.2 trillion at the end of 2012, up 47.9% from the end of 2011.

AUM of registered institutions and private banks recorded an 18.8% YoY rise to HK$2.9 trillion at the end of last year, while insurance companies reported a 24.7% increase to HK$358 billion.

Asset management firms recorded a year-on-year increase of 43.1% in AUM to HK$8.2 trillion last year, while fund advisory business assets grew by 67.4% to HK$1.5 trillion.

The number of licensed corporations and individuals licensed for asset management in Hong Kong grew by 5.9% and 8% respectively, to 892 and 6,677.

The SFC says the favourable outlook in the Asia-Pacific region, particularly on China, attracted more capital flows into the region. It also points to the growing popularity of the renminbi as an internationally accepted currency, noting that Hong Kong continued to play an active role in broadening the scope of available RMB products.

For example, since the RMB-qualified foreign institutional investor (RQFII) programme launched in December 2011 with Rmb20 billion, mainland authorities extended the size by Rmb50 billion in April 2012 and by a further Rmb200 billion in November.

As of May 31, the SFC had authorised 21 unlisted RQFII funds with a quota size of Rmb23.6 billion. It notes that Hong Kong as an asset management hub is an ideal location for bridging the gap between the offshore renminbi market and the mainland Chinese market.

Meanwhile, Hong Kong’s ETF market continued to grow last year, both in terms of market capitalisation and trading volume. As of March 2013, there was a total of 100 ETFs, up from 77 at the end of 2011. The total market value of Hong Kong-listed ETFs reached $103.7 billion as of March, a 6.5% rise from year-before levels of $97.4 billion.