One of the world’s top professional services houses gives the Asian city high marks for its status as a financial and wealth management hub. It certainly suggests that Hong Kong has emerged from recent challenges stronger than might have been expected.

Hong Kong’s wealth and asset management sectors rose 13 per cent in 2024 reaching HK$35.1 trillion (about $4.5 trillion), showing that tariff and geopolitical frictions aren’t holding the Asian city back, KPMG said in a new report.

Tax reforms, a resilient initial public offering pipeline, and clear regulatory framework for virtual assets are among reasons why the city is prospering, KPMG’s Hong Kong Asset Management and Private Equity Outlook 2024 said. It was released late last week.

The KPMG report chimed with official Hong Kong data published on 16 July. The Securities and Futures Commission in Hong Kong said asset and wealth management sectors' AuM rose 13 per cent last year from a year before, while net fund inflows surged 81 per cent. Total AuM rose to HK$35.1 trillion ($4.53 trillion), powered by net fund inflows of HK$705 billion. In particular, the AuM of private banking and private wealth management business grew 15 per cent year-on-year to HK$10.4 trillion).

Reforms
An important reform is the refinement of Hong Kong’s Unified Funds Exemption (UFE) regime. Recent updates have broadened the scope of eligible assets, notably including alternative investments such as private credit. The regime now offers enhanced clarity on the tax neutrality of both fund entities and their associated Special Purpose Vehicles (SPVs), addressing prior concerns about unintended tax liabilities, the report said.  

“Hong Kong's commitment to refining its UFE regime, fostering a vibrant IPO market, and establishing clear regulations for virtual assets sends a strong signal to global asset managers,” Vivian Chui, head of securities and asset management, Hong Kong SAR at KPMG China, said.

While Hong Kong was hit by domestic political issues in 2020 and the onset of the pandemic-induced lockdowns of the same year, it has recovered some of its former lustre, taking steps to encourage family offices to locate there, for example. The cross-boundary Wealth Connect system – starting in 2021 – channels two-way investment and financial flows between mainland China, Hong Kong, Macau and the Greater Bay Area. (See more stories on Hong Kong's family offices activities, here and here.)

Hong Kong financial secretary Paul Chan has outlined plans for the city to overtake Switzerland as the world’s biggest asset and wealth management centre by 2027. Separately, Boston Consulting Group has said it expects Switzerland, Hong Kong, and Singapore to capture nearly two-thirds of all new cross-border wealth through 2029. 

Virtual assets
The KPMG report said virtual asset regulation – covering areas such as digital tokens enabled by blockchain tech – has also become a “defining feature of Hong Kong’s evolving financial ecosystem.”

The city has an expanding number of licensed virtual asset trading platforms and a “clear regulatory framework under development.”

KPMG added that domestic renminbi funds remain actively deployed, particularly in government-prioritised sectors such as renewable energy and advanced technology. 

Hong Kong can be a “super connector” linking global capital with Chinese opportunities, the report added.