Despite the social unrest last year and geopolitical tensions between the US and China, Hong Kong’s private banking and wealth management industry remained resilient, with assets increasing 19% to HK$9.05trn ($1.16trn) last year, according to the Securities and Futures Commission’s latest asset and wealth management activities survey.
Net new money coming in the industry was also up nearly 80% to HK$681bn in 2019 compared with the HK$379 inflows in 2018.
Around 43 banks and 35 licensed corporations reported that they had conducted private banking or private wealth management business, the SFC noted.
Diversified investor base
The report also shows that the private banking and wealth management industry’s investor base is diversified, with 50% of its AUM sourced from non-Hong Kong investors, most of which were from Asia-Pacific.
Private banking and private wealth management business – investor base
In terms of client segments, 30% of the total AUM came from individual professional investors, while 66% came from institutional and corporate investors.
The report noted that while family offices and private trusts account for only 15% of the investor base, they had the largest growth rate in 2019, with their assets rising by nearly 90% to HK$1.4trn in 2019 from HK$741bn in 2018.
Private banking and private wealth management business AUM investor type (in HK$ bn)
AUM coming from individuals grew at a steady pace of 11%, reaching HK$2.67trn in 2019.
Asset and product type
Meanwhile, listed equities continued to account for the largest portion of invested assets of the private banking and wealth management business, accounting for 42% of the total AUM as of the end of December.
Private banking and private wealth management business by product type
The remaining assets were diversified into other products, such as private funds (including hedge funds, private equity and venture capital), bonds, cash and deposits.
In terms of investment destination, 51% of the private banking and private wealth management industry was invested in Asia-Pacific, with 44% invested in Hong Kong and mainland China.
Private banking and private wealth management business by investment destination
Investors in the industry also allocated more into China-focused investments. The report shows that investments going into mainland China grew 70% to HK$969bn in 2019. Investments going into Europen asset classes also grew substantially by 26% to HK$1.19trn.
In total, the AUM of Hong Kong’s asset and wealth management industry, which includes fund advisory, private banking and wealth management and assets held under trusts, totaled HK$28.77trn in 2019, which was 20% higher than in 2018. Net fund inflows of the overall industry were HK$1.67trn last year, which compares with HK$783bn in the previous year.
