Directions
This briefing summarises the key themes and important facts from the speech by Hong Kong’s Financial Secretary, Paul Chan, at the “Wealth Management Expo 2025”. The speech highlights Hong Kong’s robust financial performance, its strategic importance as an international financial centre, and its future development priorities amidst a changing global landscape.
I. Overview of Hong Kong’s Strong Financial Performance and Resilience
The Financial Secretary opened by presenting a positive outlook on Hong Kong’s financial performance, asserting that the city’s financial centre has been “performing brilliantly and is steadily advancing.” He attributed this resilience to Hong Kong’s “status as a free port, stable financial system, free flow of capital, and predictable government policies,” which provide “security and confidence for international investors,” making Hong Kong a “safe haven for capital.”
Key statistics reinforcing this optimistic view include:
- Stock Market Performance:Hang Seng Index rose by 18% last year and over 15% year-to-date.
- Average daily stock turnover in the first five months of the year reached HKD 242 billion, a 1.2-fold increase year-on-year.
- New share fundraising in Hong Kong year-to-date is “temporarily ranked first globally,” nearing HKD 90 billion.
- Banking Sector Growth:Bank deposits increased by over HKD 1 trillion last year (7% growth).
- An additional 4% increase year-to-date, with total deposits exceeding HKD 18 trillion.
- Wealth Management Inflows:As of end-March this year, 976 registered funds in Hong Kong.
- Recorded “over USD 44 billion in net capital inflows year-on-year, a growth of 285%.”
These figures collectively suggest that while geopolitical shifts present challenges, they also create opportunities for Hong Kong.
II. Strategic Pillars for Hong Kong’s Financial Development
The Financial Secretary outlined four key observations and strategic directions for Hong Kong’s financial future:
1. Asset Management and Wealth Management Hub:
Hong Kong is confident in becoming the “world’s number one cross-border asset management centre within two to three years.” This confidence stems from several factors:
- Booming Family Offices: The number of family offices is rapidly increasing, projected to grow from 2,700 to 3,000 soon.
- Significant Assets Under Management: Hong Kong’s treasury management industry manages “over USD 4 trillion” in funds (2024 survey).
- Increasing Capital Inflows:Greater Bay Area (GBA) Wealth Management Connect: This scheme has been “widely popular,” attracting significant capital from the GBA, with expectations of further expansion in product scope and investment quotas.
- New Regional Expansion: Efforts are underway to extend cross-border wealth management to new regions, such as Shanghai.
- Diversified Inflows: Hong Kong is attracting “fresh capital” from the Middle East and Southeast Asia.
- Product Innovation: Promoting innovation in investment products, particularly Exchange Traded Products (ETPs). Over 210 ETPs are listed on HKEX, covering diverse assets including digital assets, and accounting for over 15% of market turnover.
- Vibrant Private Equity and Venture Capital Scene: Managing assets close to USD 230 billion, second only to mainland China in Asia. Measures are in place to guide these funds towards supporting Hong Kong’s innovation and technology (I&T) and future industries.
2. Offshore RMB Business Hub:
Hong Kong is pivotal in the internationalisation of the Renminbi (RMB), handling “about 80% of global offshore RMB transactions.” This role is increasingly important given global discussions on diversifying international currency and payment systems.
- Multi-polar International Monetary System: The future international monetary system is expected to be more multi-polar, with the RMB and new payment systems like CIPS gaining importance.
- Strategic Role: Consolidating Hong Kong’s position as the global offshore RMB business hub is crucial for aligning with national development strategies and is a “unique advantage” for Hong Kong’s financial development.
- Enhancement Initiatives:Optimising offshore RMB financial infrastructure.
- Improving RMB liquidity (e.g., plans to add RMB counters to Southbound Stock Connect for 24 existing RMB-denominated stocks).
- Enriching RMB investment products and risk management tools.
3. Supporting Mainland Enterprises’ Global Expansion (“Going Out”):
Hong Kong’s “vibrant and full-chain fundraising market and high-quality financial services” are essential for mainland enterprises expanding internationally.
- Fundraising Platform: The recent listing of CATL in Hong Kong, the “largest IPO globally this year,” demonstrated Hong Kong’s role in “raising capital to support international expansion,” with about 90% of the funds used for a factory in Hungary.
- Business Hub: Hong Kong welcomes mainland enterprises to raise capital, and establish international business headquarters, supply chain management centres, and treasury centres in the city.
4. Financial Innovation and Digital Assets:
Hong Kong is committed to continuous innovation to maintain its competitive edge, particularly in digital assets.
- Embracing Digital Assets: Hong Kong “embraces the development of digital assets” and has accelerated the improvement of related legal and regulatory frameworks.
- Virtual Asset Trading Platform Licensing: 10 licenses have been issued, with another eight applications under review.
- Stablecoin Regulation: Legislation on stablecoins has been completed and will take effect on 1st August, making Hong Kong “one of the first jurisdictions globally to establish a statutory regulatory framework for stablecoins.”
III. Conclusion: A New Stage of Financial Development
The Financial Secretary concluded by reiterating that “Hong Kong’s financial development is entering a new stage.” He emphasised Hong Kong’s identity as a “free and open, interconnected, and opportunity-filled international metropolis.” By identifying major trends, adapting flexibly, continuously reforming, and daring to innovate, Hong Kong is poised to “find new markets, new opportunities, and new capital” to achieve even more prosperous development.