Posted inFund Flows

Hong Kong mutual funds attract strong flows

Both the AUM and net inflows in the territory recorded a double-digit increase, according to the Securities and Futures Commission (SFC).
Drone view of Victoria Harbour, Hong Kong

Hong Kong’s asset and wealth management business had a booming year in 2020, with the territory’s AUM posting a 21% year-on-year increase to HK$34.93trn ($4.48trn), according to the SFC’s quarterly report.

The AUM held by licensed corporations and registered institutions increased 20% to HK$24.04trn, while the AUM of the private banking and private wealth management business grew 25% to HK$11.312trn.

The net inflow for the year was HK$2.04trn, accounting for a 33% year-on-year increase.

For the six months to 30 September, Hong Kong-domiciled SFC-authorised funds reported overall net inflows of HK$7.13trn. The AUM of Hong Kong-domiciled funds remained steady at around HK$191bn during the period.

Between July and September this year, the regulator authorised 31 unit trusts and mutual funds, including 20 Hong Kong-domiciled funds.

The other authorisations included four mandatory provident fund pooled investment funds and 73 unlisted structured investment products for public offering in Hong Kong.

Hong Kong added 12 new open-ended fund companies during the quarter, taking the total number of registrations to 27 for 2021.

Mutual Recognition of Funds (MRF)

During the third quarter in 2021, southbound mainland funds recorded a net subscription of about Rmb172.31m ($27.1m), up from Rmb111.42m in the previous quarter.

Meanwhile, Hong Kong funds recorded a net redemption of about Rmb539.11m between 30 June and 30 September, reversing a net subscription of Rmb1.32bn in the three months before.

Jointly launched by the China Securities Regulatory Commission (CSRC) and the SFC in July 2015, eligible mainland and Hong Kong funds can be distributed in each other’s markets under the MRF.

As of the end of September, the SFC authorised a total of 48 funds to be sold in Hong Kong, while the CSRC approved 38 Hong Kong funds.

On virtual assets regulation, the SFC issued a warning earlier this year on Binance, a popular virtual asset trading platform, that it is not licensed or registered to trade stock tokens in Hong Kong.

During the third quarter, the SFC conducted a consultation on amendments to the Fund Manager Code of Conduct to require fund managers managing collective investment schemes to take climate-related risks into consideration in their investment and risk management processes.

Moreover, the green and sustainable finance cross-agency steering group, which is co-chaired by the SFC and the Hong Kong Monetary Authority, announced to advance their collaboration to help transition the financial ecosystem towards carbon neutrality.

Part of the Mark Allen Group.