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Chinese wealth manager sets up in Hong Kong

A Beijing-based firm has joined other Chinese wealth managers which have expanded offshore.

Tang Wealth International received relevant licences last month to operate in Hong Kong, according to records from the Securities and Futures Commission (SFC). The licences include asset management (Type 9), dealing in securities (Type 1) and advising on securities (Type 4).

The firm’s parent is Beijing-based Tang Wealth, which was established in 2011 and manages around RMB 470bn ($66bn) in assets, according to the firm’s website. The firm provides wealth management consulting services to 33,000 families in China, with 80 business units across the country. The firm’s shareholders are Zhongzhi Fortune Holdings and Datang International Power Generation, which is affiliated state-owned China Datang Group.

FSA sought more information from the firm, but it was not able to provide more details in time for publication.

Tang Wealth International’s responsible officers are Ren Jie and Freddy Chong, according to SFC records. Ren is the firm’s co-president of the Beijing-based entity, according to local media, while Chong was most recently from DWS, SFC records show.

Besides Tang Wealth, nine other asset management and wealth firms receive Type 9 licences from the SFC last month, including Ever Rich Asset Management, Valuable Asset Management and Mainland Asset Management.

China is a key growth driver in private wealth

Tang Wealth’s move comes at a time when industry participants in Hong Kong have become less optimistic over the SAR’s private banking and wealth management industry, according to a survey conducted by KPMG and Hong Kong’s Private Wealth Management Association. On average, firms operating in Hong Kong have forecasted 5%-10% annualised assets under management (AUM) growth over the next five years, down from 10%-20% in last year’s survey, amid deteriorating geopolitical and economic trends as well as volatile markets.

However, participants believe that China is one of the key growth drivers for Hong Kong’s private wealth industry. Around two-thirds of wealth managers believe that AUM sourced from mainland China will grow to make up nearly half of the private wealth management market in Hong Kong in the next five years. As of the end of 2018, 14% of Hong Kong’s HKD 7.62trn ($970bn) private wealth market were sourced from the mainland.

“The ongoing development of the Greater Bay Area, a key strategic component of China’s national development blueprint, presents a number of opportunities for growth, and is considered the main avenue for further penetrating the mainland Chinese market,” the report said.

Like Tang Wealth, other Chinese firms have started to set-up shop in Hong Kong.

In July, Tongfang Wealth Management was granted three SFC licences in Hong Kong. Its parent, Beijing-based Tsinghua Tongfang, owns multiple “industrial clusters” which manufacture consumer electronics, such as LCD televisions and internet-related products and also engages in the incubation of technology firms in China.

In April, Guangzhou-based Hefeng Family Office obtained Type 9 and Type 4 licences.

Shanghai-based wealth manager Hywin, a product selector and distributor with branch offices in China, also partnered with the Singapore arm of Liechtenstein-based VP Bank to set up a Hong Kong-based collaboration platform. Both firms will be targeting both offshore and onshore ultra-high net worth Chinese investors.

Part of the Mark Allen Group.