The accountancy and professional services firm has broadly praised official moves in Hong Kong to chart ways of boosting the jurisdiction's funds industry.

Hong Kong-based asset managers are likely sell their wares more directly to investors and must raise their game in making know-your-client and onboarding processes much simpler, argues PricewaterhouseCoopers, which has commented on regulatory reports on the region’s fund industry.

The Financial Services Development Council has issued a range of recommendations for Hong Kong’s investments sector, drawing broad praise from PwC. PwC believes that, together, these three papers' recommendations can substantially strengthen the territory’s role as a leading international asset and fund management centre, as well as a fund domicile hub.

One report, titled Strengthening Hong Kong as a Retail Fund Distribution Centre, reflects similar views to those of asset managers and policymakers with whom PwC has engaged in separate discussions over the last two years, the consultancy firm said. 

“It underlines Hong Kong’s potential to become the leading regional centre for fund distribution,” PwC said.

The recommended policy ideas from the FSDC come at a time when Hong Kong is battling not just rival financial hubs such as Singapore, but also positioning itself to deal with competition from mainland China as the latter's financial centres develop in the years ahead.

In PwC’s Asset Management 2020 report, the firm predicts asset managers will move “centre stage”, as they increase their direct engagement with investors. PwC recommends that “know your customer” and investor onboarding processes must be simplified to make it easier for clients to use fund products. “A central repository of data, for example, which distributors and fund providers could access to satisfy KYC requirements would be a significant step in this regard,” PwC said. It also argues that firms should produce distribution channels helping players who do not wish to develop their own platforms. “The impact this could have in aiding distribution to local investors would be of enormous benefit to the industry in Hong Kong,” PwC said.

FSDC
The report from the FSDC was accompanied by a paper looking at tax issues for open-ended fund companies and profits tax exemption for offshore private equity funds. The third report covers limited partnerships for PE funds.   

"PwC welcomes these reports, which offer a clear road map for the development of Hong Kong’s financial services industry,” Marie-Anne Kong, asset management industry leader for PwC Hong Kong, said in a statement. “We are optimistic Hong Kong can become the regional fund distribution centre in the medium term and a global fund distribution centre in the longer term." 

The accountancy and professional services firm said it has “seen a growing number of fund houses establishing a presence in Hong Kong”.

“Many [fund firms] report difficulties in finding appropriate distribution partners. Likewise, local fund managers struggle to find international partners due to a lack of brand recognition overseas. Hong Kong can capitalise on opportunities in China and Asia through Stock Connect, the Mutual Recognition of Funds programme (MRF) and regional fund passporting schemes. But access to local distribution channels and investors is a roadblock that must be cleared,” the firm continued.