Major private banks managed 14 per cent more assets in the first half and hired over 400 bankers in the last two years, HKMA's Eddie Yue says The strong growth of Hong Kong's private banking and wealth management sectors will drive increased hiring and leasing of office space in the coming years, according to the chief executive of Hong Kong Monetary Authority (HKMA).
Major private banks' assets under management (AUM) in the city rose 14 per cent in the first half of the year compared with the end of December, while they hired more than 400 wealth management experts in the last two years, an increase of 12 per cent, said Eddie Yue Wai-man, without naming them.
HSBC and Standard Chartered reported strong growth in their wealth management business in the first half in their interim results last week.
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Transactions by the city's 46 private banks hit HK$4.47 trillion (US$569.4 billion) last year, up 50 per cent from HK$2.97 trillion in 2022, he said, adding that some of them expanded their office space by as much as 50 per cent in recent years.
"Recently, a number of international banks and asset management firms have announced plans to further enlarge their operations in the city, with headcount growth projected to range from 10 per cent to 100 per cent in the next few years," Yue said in an article posted on the HKMA's website.
"These developments show the strong confidence international financial institutions place in Hong Kong's asset and wealth management market and highlight the strategic importance they attach to its long-term growth potential."
Apart from HSBC and Standard Chartered, UBS, Julius Baer and DBS Hong Kong have also unveiled plans to expand their wealth business to capture the growing wealth business in the city.
Total AUM by the city's 46 private banks rose 15 per cent last year to HK$10.4 trillion, according to data from the Securities and Futures Commission (SFC) last month. Including funds managed by investment firms, brokers and insurers, AUM in the city rose 13 per cent last year to HK$35.14 trillion, just shy of the record HK$35.55 trillion in 2021, according to the SFC.
Yue said HK$384 billion flowed into Hong Kong last year, as high-net-worth individuals used the city to manage their wealth, aided by the stock market rally, the enhanced Wealth Management Scheme, the Capital Investment Entrant Scheme (CIES) and measures to attract family offices.
The CIES, commonly known as the investment-migration scheme, had drawn about HK$16.5 billion from 543 applicants over the past 14 months up to April, with two-thirds of the capital directed into mutual funds and the stock market, according to government data.
In February 2024, authorities tripled the annual individual investment quota to 3 million yuan (US$416,640), added more fund choices to the menu and relaxed sales restrictions.
The move, dubbed Wealth Connect 2.0, has led to the doubling of investors using the scheme to more than 160,000 as of June, with mainland investors tripling their investment in Hong Kong fund products via the scheme to 16 billion yuan, Yue said.
"As southbound scheme investors become more familiar with Hong Kong products and put more emphasis on diversification, their focus has shifted from deposits to a broader allocation towards funds and bond products," he said.
Yue said Hong Kong lenders had benefited from the fast-growing wealth in Asia. The number of high-net-worth individuals with more than US$10 million rose 5 per cent last year to 850,000, including some 470,000 from the mainland.
"The continued growth of wealth in China and the wider Asia region is expected to provide ongoing momentum for Hong Kong's wealth management industry," he said. "Importantly, as a superconnector linking mainland China with the international markets, Hong Kong plays a vital role in facilitating cross-boundary asset allocation and capital flows."
Yue said he was optimistic about the outlook of Hong Kong's asset and wealth management sector due to the increase in the number of wealthy individuals on the mainland and the growth of the numerous cross-border connect schemes to trade stocks, funds and bonds.
He added that geopolitical uncertainties were prompting international investors to adopt more proactive diversification strategies to better manage risks, with Chinese yuan-related assets gaining an increasing share of their asset allocation.
From April to July, Asia collectively received US$91.5 billion in net inflows from investment funds, with US$44.3 billion directed towards Hong Kong and mainland markets, Yue said, citing data from the global fund tracking company EPFR.
The Hang Seng Index has rallied more than 20 per cent so far this year to rank among the world's best-performing stock benchmarks, while the city reclaimed the top ranking in initial public offerings.
Yue said the city's wealth business was also boosted by digital-asset trading. Local lenders traded HK$26.1 billion worth of digital or tokenised assets in the first half, up 233 per cent from a year earlier.
"Hong Kong is forecast to become the world's largest wealth management centre in the coming years," Yue said, adding that the HKMA would work with the government and the industry towards that goal.
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