Hong Kong leader sets target for family offices, lends support for IPO reform, green finance to fend off challenge from Singapore

Lee unveiled measures to strengthen the city’s role as an international finance centre by attracting more family offices, new listings and green financing
Family offices are a ‘key growth segment’ of the asset and wealth management industry, Lee says in policy address

HKEX

Enoch Yiu

Published: 5:54pm, 19 Oct, 2022

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Hong Kong unveiled a slew of measures to strengthen the city’s role as an international financial centre and fend off challenges from Singapore, dangling carrots to attract more global family offices, stock listings and green finance projects.

Chief Executive John Lee Ka-chiu aimed to get at least 200 of the world’s top family offices to set up or expand their operations in the city by 2025, he said in his policy address on Wednesday. The city’s leader also signalled his government will move a piece of legislation with tax concessions to support his initiatives.

“Family offices are a key growth segment of the asset and wealth management industry,” Lee said. “The target is attracting no less than 200 family offices to establish or expand their operations in Hong Kong by end-2025.”

The decision came with one eye on its closest regional rival in Southeast Asia, which has usurped Hong Kong as the highest ranking centres after New York and London in the most recent industry survey, while the Chinese city struggled to overcome investor discontent over its stringent Covid-19 curbs. The city will gather top global financial executives in a summit next month to regain its lustre.

Family offices are private entities formed to manage the fortunes of wealthy individuals and forge early succession planning. InvestHK, an investment promotion agency, has helped 14 such offices establish their business in Hong Kong over the past year, with another 50 in the pipeline.

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Lee said Hong Kong is already home to HK$1.7 trillion (US$216.6 billion) of assets managed by family offices and their related trusts.

Laurence Li Lu-jen, chairman of the Financial Services Development Council (FSDC), said the proposed tax exemption will further enhance Hong Kong’s appeal in the arena.

“We have the most liquid and sophisticated international financial market in the region,” Li said. “Hong Kong also has many attractions to offer to ultra-high net worth individuals in terms of lifestyle.”

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Lee also paid attention to the insurance sector, saying the city was keen to proceed with the long-awaited project of forming after-sales services centres, such as in Nansha and Qianhai, to support residents in the Greater Bay Area (GBA) who have bought insurance policies in Hong Kong.

Local insurers will be able to provide mainland residents with services, such as policy renewal, claims, and enquiry at such centres, said Carrie Tong, chief strategy officer at Manulife’s Hong Kong and Macau operations. More mainlanders can be expected to buy insurance products, opening new opportunities for the industry, she added.

The Insurance Authority said the measures will help strengthen Hong Kong’s role as a global risk management centre and regional insurance and reinsurance hub.

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Besides the target on the wealth management industry, Chief Executive Lee also pledged to expand many of the existing cross-border trading platforms with mainland China, and promote greater usage of the yuan in the city.

“We will speed up the implementation of a series of mutual market access arrangements supported by the China Securities Regulatory Commission,” he said.

These arrangements include a law amendment by the end of this year to waive stamp duty for market makers to support yuan-denominated shares trading in Hong Kong through the Stock Connect scheme from next year. More than 15 companies have supported the plan, including Tencent Holdings and Ping An Insurance (Group).

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Lee also gave his nod to Hong Kong Exchanges and Clearing (HKEX)’s latest listing reform proposals, which would enable big but yet-to-be profitable technology companies to list their shares on the local bourse. The city can also enhance its role as a fundraising avenue for companies and governments to support anti-pollution and climate change-related projects, Lee added.

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The HKEX on Wednesday issued a consultation paper to solicit views for two months to introduce the changes from next year to allow companies in artificial intelligence, semiconductors and other hi-tech sectors to raise money from the public to fund their research.

“HKEX welcomes the policy address today by Lee that affirms his administration’s commitment to supporting Hong Kong’s position as a leading international financial centre and a global listing venue of choice,” CEO Nicolas Aguzin said in a statement.

The government support for the expansion of the Connect schemes, as well as other listing and green finance reform, “will continue to underpin the attractiveness of Hong Kong’s capital markets,” he added.

Lee said the Hong Kong Monetary Authority will introduce an electronic platform called Commercial Data Interchange by the end of this year. This will allow small enterprises to exchange data with their banks to grease loan processing efforts.

The government will also continue to study the digital currency project known as e-HKD, and test the use of e-CNY or digital yuan in Hong Kong, Lee added.