As published on regulationasia.com, Friday January 17, 2020.
The HKMA has been working to enhance Hong Kong’s competitiveness as a family office hub by developing talent, enhancing investment opportunities, and outreach.
The HKMA (Hong Kong Monetary Authority) is looking to position Hong Kong as a family office hub, according to senior executive director Edmond Lau, speaking at the Asian Financial Forum on Tuesday (14 January).
“With the rapid growth of the number of high-net-worth individuals in Asia Pacific – now surpassing Europe and North America – family office business has substantially expanded in recent years in this region, and has become an important growth driver to Hong Kong’s private wealth management business,” he said.
According to Lau, Hong Kong is already Asia’s largest cross-border private wealth management centre, and a leading asset management hub with total AUM exceeding USD 3 trillion across 1,800 asset management firms. In addition, the city is Asia’s top hedge fund centre, managing close to half of the region’s total AUM, and the second largest private equity hub in the region after China.
Hong Kong’s connectivity role is further enhanced by the ongoing integration of the Greater Bay Area, he added, highlighting last November’s announcement that China plans to explore the establishment of a cross-boundary wealth management connect scheme.
“The two-way wealth management connect scheme will create new business opportunities for the financial industry, and provide more options of wealth management products to residents of the two sides,” he said.
According to Lau, the HKMA has been working closely with the industry to further enhance Hong Kong’s competitiveness as a family office hub, through a three-pronged approach: talent development, platform building and outreach.
To develop talent in the private wealth management industry, the HKMA has already rolled out various initiatives including an enhanced competency framework for private wealth management practitioners to help them enhance their training and professional development.
In addition, the HKMA’s Pilot Apprenticeship Programme has since 2017 paid for summer apprenticeships for over 130 university students to acquire “front-to-back” experience for a potential career in private wealth management.
Last year, the HKMA had also set up the Hong Kong Academy of Finance to develop financial leadership and promote research collaboration.
On platform building, the HKMA has been working to widen the investible universe for private wealth management firms in Hong Kong, including by strengthening the city’s position as offshore RMB hub and the dominant gateway for two-way investment flows with mainland China.
It has also promoted green finance, ESG investment opportunities, infrastructure financing, fintech and impact investing – areas Lau says have garnered the attention of family offices in recent years.
Meanwhile, the SFC (Securities and Futures Commission) has issued new guidance this month providing clarifications on the licensing obligations of family offices. Lau highlighted that a single family office which appoints a trustee to hold and manage assets of a family trust does not need to apply for a licence.
He also noted the increased interest among family offices in private equity investments, highlighting tax exemptions granted to private equity and hedge funds that make Hong Kong’s fund platform more attractive.
The HKMA is also assisting working with the government on a bill to establish a new limited partnership vehicle for private equity funds to domicile in Hong Kong. Besides this, further tax incentives are also being explored, Lau said.
On outreach, Lau said the HKMA has been working with the Private Wealth Management Association (PWMA), other key industry stakeholders and government agencies to step up efforts to showcase Hong Kong’s key advantages as a family office hub.
In parallel, the HKMA is working in collaboration with InvestHK and other government agencies to provide one-stop services to family offices. InvestHK’s family office contact point offers free advice and other services to help family offices open bank accounts, locate office premises, apply for visas, and arrange schooling, Lau said.
“We welcome family offices from all over the world to explore your opportunities here.”