21/10/22

HONG KONG: Jurisdiction vows to support family offices.

As published on fundselectorasia.com, Friday 21 October, 2022.

In his maiden policy address announced on Wednesday, Hong Kong Chief Executive John Lee said that the government was planning to introduce a bill by the end of this year to offer tax concessions to family offices.

Local media reported, citing unnamed sources, that the tax concessions included profit tax relief for family offices that are operating in Hong Kong but the exact percentage has yet to be determined.

Li also set out the target to attract no less than 200 family offices to establish or expand their operations in Hong Kong by the end of 2025.

In 2021, Hong Kong’s asset and wealth management industry managed over HK$1.7trn (US$217bn) of assets including those for private trust clients, the government noted.

Another area of focus in Lee’s policy address was the green and sustainable finance industry in Hong Kong.

“We will promote the development of Hong Kong as a premier financing platform for governments and green enterprises in the mainland and around the world,” said Lee.

“We are also developing Hong Kong into an international carbon market and will support the Hong Kong stock exchange to continue pursuing co-operation with, among others, financial institutions in Guangzhou in carbon market development.”

Lee did not provide any further details on the establishment of a carbon market.

Singapore has already set up its carbon market exchange, Climate Impact X, which was jointly established by DBS Bank, Singapore Exchange, Standard Chartered and Temasek.

Lee announced plans to create a Hong Kong version of Singapore’s state-owned investment company Temasek Holdings from funds managed by the Hong Kong Monetary Authority (HKMA).

“I have asked the Financial Secretary to set up a new Hong Kong Investment Corporation Limited (HKIC) to further optimise the use of fiscal reserves for promoting the development of industries and the economy,” said Lee.

According to the companies registry, the HKIC was established on 11 October.

The directors of the corporation are Francis Chu, who is also the deputy chief executive officer (exchange fund investment office) at HKMA, and Samson Wong, chief investment officer (private markets) at HKMA.

The new investment company will also manage the Hong Kong Growth Portfolio, the GBA Investment Fund and the Strategic Tech Fund that have been established under the city’s sovereign wealth fund, the Future Fund, in recent years.

The government also plans to set aside HK$30bn to set up the Co-Investment Fund to invest in strategic industries.

After the initial announcement of Swap Connect in July, which connects the interest rate swap markets in Hong Kong and mainland China, Lee also announced in his policy address that authorities in Hong Kong and China are completing preparations for the launch of the northbound leg of the scheme. However, he did not disclose the expected launch date. He also said the governments are exploring plans to enhance the southbound trading of Bond Connect after it was launched last year by facilitating the issuance and trading of more “dim sum” bonds, renminbi-denominated bonds issued in Hong Kong.