Introduction

In a groundbreaking development for the financial sector, Hong Kong has reported a staggering 81% increase in the number of registered open-ended fund companies (OFCs), climbing to 502 as of February, according to the latest announcement from the Securities and Futures Commission (SFC). This surge highlights a renewed interest and confidence in Hong Kong's asset management landscape.

Growth Drivers

The SFC attributes this exponential growth to 'overwhelming industry support' for the grant program aimed at offsetting eligible costs for the incorporation, re-domiciliation, and listing of real estate investment trusts (REITs) with Hong Kong-based service providers. To date, this program has already benefited 430 OFCs and one REIT, signifying a significant shift in investment strategies within the region.

Program Extension

In light of the robust demand from the financial sector, the Hong Kong Special Administrative Region government has decided to extend the grant program for an additional three years, continuing until 2027. Starting April 11, the grant program will cover 70% of expenses paid to local service providers for newly incorporated or re-domiciled OFCs and newly listed SFC-authorized REITs on the Hong Kong Stock Exchange (HKSE).

Financial Incentives

The program also sets specific caps: HK$300,000 (approximately $38,577) for public OFCs, HK$150,000 for private OFCs, and HK$5 million for REITs, ensuring that one OFC can be claimed per investment manager, according to SFC regulations. This strategic move is designed to bolster Hong Kong’s status as a premier asset management hub.

Importance of the Grant Program

Christina Choi, the SFC’s executive director of investment products, emphasized the importance of the grant program, stating it 'will continue to play an essential role in sustaining momentum and generating interest in establishing new OFCs and REITs in Hong Kong.' This momentum underscores Hong Kong’s ambition to remain a leader in the asset management domain.

New ETF Launch

Additionally, in a related development, CMS Asset Management (HK) Co recently announced the launch of its CMS Hang Seng Tech Index ETF on the HKSE. This new ETF, which is set to debut at an initial price of HK$10 per share and will trade in board lots of 10, is designed to provide investors exposure to China’s rapidly evolving technology sector. With a management fee of just 0.7%, this financial product presents an appealing low-cost investment option for individuals looking to tap into growth in frontier technology.

Future Prospects

Liu Bo, vice-president of China Merchants Securities International Co., articulated the ETF's potential by stating, 'The launch aims to help investors seize investment opportunities in China’s tech sector and share in the growth dividends of these innovative enterprises.' Furthermore, CMS Asset Management is eyeing future expansion, with plans to potentially introduce additional ETFs focused on artificial intelligence (AI) and robotics by year’s end, alongside exploring ETFs connected to Japanese and Southeast Asian equity markets.

Conclusion

With these developments, Hong Kong is not just witnessing increased activity in the financial sector; it is also positioning itself as a key player on the global investment stage, promising a vibrant future for asset management in the region.