Family Office sector in Hong Kong continues to expand

Wealth management sector set to further benefit with the soon to be implemented Wealth Management Connect Scheme

The Family Office Association Hong Kong (FOAHK) recently announced that since its founding in November 2020, its membership has grown to over 30 single family offices and multi-family offices, with over $50 billion in AUM.

This milestone reflects a continuing growth in the Family Office sector in Hong Kong which, unlike in Europe and the USA, is still a relative new concept in Asia. But, with $185billion in wealth management revenue expected to be generated from the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) by 2025, Hong Kong is positioning itself as a Family Office hub and looking to grow AUM.

The wealth management sector is expected to benefit from the forthcoming implementation of the Wealth Management Connect Scheme, where the Chinese, Hong Kong and Macau financial regulators have agreed to a number of supervisory, enforcement and liaison arrangements in the GBA.

The scheme will allow Macau and Hong Kong residents to purchase mainland investment products that are sold by banks in the GBA. It will also allow certain categories of residents of nine Guangdong cities to buy investment products sold by banks in Hong Kong and Macau. While there is a cap of 150 billion yuan in each direction, the scheme is still expected to drive 300 billion yuan (US$46.5 billion) in investment product sales.

It is expected to open up new opportunities for mass affluent and High Net Worth investors in the region.

Furthermore, wealth managers will also need to start preparing themselves for a new class of investor. As wealthy families start to hand their wealth to new generations, younger investors will want to broaden their investments, looking to ESG, tech and other asset classes, in addition to real estate, equities and other asset classes favoured by the older generation.

Hong Kong is already a leading global financial centre and a leading destination for IPOs in the region. The city is a key gateway to Mainland China with many international making it there home precisely because of the access it affords to the region. As a result, a rich and deep ecosystem of Trust providers, Family Offices, lawyers and other experts has emerged, making it well-positioned to take advantage of the growth in the GBA.