Hong Kong FSC Report Shows Continued Growth In Fund Industry

by Mary Swire, Tax-News.com, Hong Kong

02 August 2005

The Hong Kong Securities and Futures Commission has released the findings of its latest Fund Management Activities Survey (FMAS), which indicated that the territory's fund industry continued to expand through 2004.

The FMAS has been conducted by the SFC on an annual basis since 1999 to collect information and data on the general state of affairs of the fund management industry in Hong Kong. The survey covers the fund management activities of two types of firms in Hong Kong, namely: corporations which are licensed by the SFC and engage in asset management and fund advisory businesses; and banks which engage in asset management and other private banking activities.

According to the main findings of the 2004 survey:

• There was 23% year-on-year growth in the value funds in Hong Kong, which amounted to HK$3,618 billion (US$465 billion) at the end of 2004.
• A total of 17,039 people were employed in the fund management business, up 12% from 15,195 in 2003.
• 63% of combined fund management business were sourced from overseas.
• 80% of the fund management business was enjoyed by SFC licensed corporations.
• 53% of the assets under management were managed onshore.

Separately, the SFC has reviewed the growth of the retail fund business in Hong Kong since the establishment of the SFC in 1989. It found that the number of retail funds offered to the public has grown from 783 at the end of 1989 to 1,933 at the end of 2004. In value terms, the size of retail funds has grown 15 times, from HK$283 billion to HK$4,300 billion over the same period.

There has also been substantial increase in the nature and types of funds available to the retail investing public. Retail funds in 1989 essentially consisted of four fund types, namely equity funds, bond funds, money market funds and bond/equity or diversified funds. Today, retail investors may also invest in exchange-traded funds, index funds, guaranteed funds and hedge funds. The SFC has been working alongside the industry to enable these new fund types to come to the market.

“The remarkable growth of Hong Kong’s fund management business underscores the breadth and depth of the Hong Kong market and its ability to bring together a critical mass of fund management talents to serve the needs of the international and domestic investors," commented Alexa Lam, the SFC’s Executive Director of Intermediaries and Investment Products.

Mrs Lam added that:

“The SFC will continue to position Hong Kong as an international financial centre, a regional hub for Asia and the capital market for the Mainland. To this end, the SFC has been working in partnership with the industry, consistently pursuing a balanced approach."

"While we maintain market integrity and investor protection, we also ensure that there is sufficient room and facilitation for market development and product innovation. The data before us today tell us that this has been the correct approach.”

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