Sami Abouzahr, Hong Kong head of investments and wealth solutions at global financial institution HSBC, says the expansion is a breakthrough for financial institutions seeking to market to more than 450,000 high-net-worth families in the region of 86mn people. “GBA clients, meanwhile, will gain access to more products and asset classes to help diversify their assets and improve their risk-adjusted returns,” he says.
It comes alongside other measures to support what already is a vibrant sector. One new incentive is the exemption of tax on profits generated from eligible investments by single family offices. “Such measures make the regulatory regime more flexible, provide focused talent development initiatives, and enhance coordination between the different services that family offices need,” Abouzahr says.
According to a Securities and Futures Commission annual survey released in August 2023, private banking and private wealth management business assets under management in Hong Kong amounted to HK$8.97tn (US$1.15tn) in 2022. Overall, the asset and wealth management business in Hong Kong reached HK$30.54tn (US$3.91tn) in 2022, recording long-term healthy growth of 143 per cent over the past decade.
Aligning rules with international norms
Another recent development is the streamlined suitability assessment for sophisticated professional investors (“SPIs”) – those with a portfolio of at least HK$40mn (US$5.1mn) or net assets (excluding primary residence) of at least HK$80mn (US$10.2mn) – for whom banks and brokers are no longer required at a transaction level to match the SPI’s risk tolerance level, investment objectives and investment horizon, assess their knowledge and experience or provide some product explanation. That brings Hong Kong in line with other global wealth management centres.
Abouzahr says Hong Kong has “unique strengths as a wealth management centre”, including its access to mainland China and the world, regulatory framework, business environment, experienced talent and sophisticated financial ecosystem. “Hong Kong has always been an international city, firmly established in the region but connected globally,” he says.
The city’s financial technology is also advanced, he adds. “We have always embraced new technology to improve our offering and processes for the benefit of our clients. We're working on tokenised solutions using blockchain, and artificial intelligence to get the right information faster to staff and clients.”
At the same time, wealth management relies on deep personal connections. “Relationships and personalised advice are still important to clients when they make decisions,” says Abouzahr. “But a lot of things that used to require a physical meeting can be done digitally, so relationship managers and clients can focus on the right conversations.”
Ivan Wong, regional head of North Asia and Hong Kong chief executive at Union Bancaire Privée (UBP), one of the largest Swiss private banks, points out that the human-to-human connection is essential. “Core private banking is still face-to-face,” he says. “We can all have mobile online transactions, but private banking is so much more than buying or selling orders.”
Overall, Wong is optimistic on the potential for the wealth management sector in the region. “I’m bullish on longer term development in Asia, and, in particular, Hong Kong, as a hub. I think with ‘one country, two systems’, Hong Kong’s ‘super-connector’ status and various initiatives by the central and Hong Kong SAR governments working together on stocks, bonds and swaps give us a unique position.”
Hong Kong sets pace for new developments
He notes that Hong Kong – with its combination of Chinese cultural approaches and international outlook – is often used as a testing ground for new developments, such as renminbi internationalisation. “Because of this advantage, Hong Kong is the major centre for the renminbi traded offshore,” he says.
Wong says that when he visits UBP offices in Geneva or London, the Hong Kong office is regarded as the “eyes and ears on the ground as to understand what is going on in China”, as the bank’s experts can give an “objective and unbiased view on China’s economic, social and political fronts”.
Attracting and retaining talent in Hong Kong remains a challenge. Wong, who sits on the Financial Services Development Council’s human capital committee, says Hong Kong is not only taking steps to attract talent into Hong Kong but also working to retain employees who planned to move. “We take active steps to develop and equip local graduates,” he says, adding that he has observed a number of initiatives being taken by local education institutions, with one of them being The University of Hong Kong’s development of a dedicated management studies programme.
Wealth management is also likely to receive a boost from proposals announced in March 2023 to welcome global family offices to deploy and manage wealth in Hong Kong. They include providing tax concessions, developing Hong Kong as a philanthropy centre, introducing a Capital Investment Entrant Scheme and establishing the Hong Kong Academy for Wealth Legacy under the Financial Services Development Council.
Abouzahr says Hong Kong’s unique position enables the bank to “combine expert advice with the broadest set of digital wealth capabilities in the market”. Continued cooperation between Hong Kong’s financial sector and regulators and government agencies can only broaden and deepen the wealth management sector.
