Despite predictions of outflows, the Hong Kong industry pulled in net inflows of HK$681 billion in 2019 (about 9 per cent of December 2018 AuM), overcoming a challenging period.

According to a survey of Hong Kong’s private wealth management sector, industry figures predict that assets under management will rise at a compound annual growth rate of  between 5 and 10 per cent over the next five years.

The industry reckons that mainland China, family offices and the younger generation of HNW individuals are three important drivers of business growth, the report from the Private Wealth Management and KPMG China said. 

Despite predictions of outflows, the Hong Kong industry pulled in net inflows of HK$681 billion ($87.83 billion) in 2019 (about 9 per cent of December 2018 AuM), overcoming a challenging period. This, combined with a 10 per cent return on assets, led to AuM growth of 19 per cent reaching HK$9.1 trillion last year, up from HK$7.6 trillion in 2018.

The Hong Kong Private Wealth Management Report is mainly based on an online survey of PWMA member institutions and a client survey, as well as interviews with industry executives in Hong Kong. Both surveys were conducted from June to July 2020.

According to the survey, 71 per cent of respondents indicated that Mainland China is the largest growth opportunity (2019: 67 per cent, up by 4 per cent), with the Greater Bay Area (GBA) being a key driving force. On average, 40 per cent of AuM is sourced from Mainland China, with the figure expected to increase to 54 per cent by 2025, indicating its growing significance to Hong Kong’s PWM industry.

Continuing liberalisation of Mainland China’s financial services sector is expected to allow Hong Kong to increase its development as an international wealth and asset management hub in the GBA, and to encourage financial institutions in Hong Kong to increase their presence in the Mainland China market.

Attracting family offices (11 per cent) and targeting the younger generation (6 per cent) continue to be other key drivers, according to survey respondents. Of the member firms surveyed, 73 per cent think that family offices are an increasingly important source of business.

COVID-19 is transforming work practices and is likely to fundamentally change the operating models of many firms. According to the client survey by the groups, 98 per cent of surveyed clients said that the industry met or even beat their expectations during the pandemic.