According to Forbes World’s Billionaires list 2020, six out of the world’s top 10 richest cities are in Asia, and Hong Kong is ranked No. 2. As many of the city’s billionaires accumulated the majority of their wealth in a single lifetime, one of their priorities is to preserve it for future generations. Setting up a family office comes into the picture for wealth succession planning.
Over the past year, Hong Kong has continued to develop its edge in wealth management. In September, Hong Kong’s Securities and Futures Commission issued the first licensing guidelines for the family offices industry. Two months earlier, the government passed a law allowing fund managers to set up limited partnership funds in the city, a business format favored by family offices.
The DNA of Family Offices: Resilience and Versatility
“The development of family offices is very much in line with Hong Kong’s DNA as a comprehensive international financial center. One thing to highlight is the importance of family offices being endurable because families are built to last. On that front, Hong Kong has exhibited similar qualities as being highly resilient and versatile,” says Christopher Hui, Secretary for Financial Services and the Treasury.
As a sophisticated financial hub, Hong Kong has a robust legal system, a low and simple tax structure, and it is one of the world’s freest economies. Its strategic location in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) connects the city seamlessly with this robust growth engine and the rest of the world.
Nearly 80 of the world’s 100 largest banks and 70 of the top 100 global money managers have a presence in Hong Kong. It is a global offshore renminbi business hub and a major platform for international investors to allocate renminbi assets. The city is also the largest international asset management hub in Asia and it is the second-largest private equity center after mainland China. There are more than 500 private equity and venture capital firms based in Hong Kong, including 15 of the top 20 global PE managers. It is among the world’s largest equity fundraising centers and Asia’s third-largest bond center, excluding Japan. It offers an ideal platform for investment exit.
As a unique and dominant gateway between mainland China and the rest of the world, the city accounts for the largest inbound and outbound direct investment of mainland China. The Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect and Mutual Recognition of Funds all facilitate cross-border investment flow.
As one of the world’s largest green bond markets with US$10 billion arranged and issued in 2019, Hong Kong is cementing its position as a green finance hub in Asia-Pacific.
InvestHK’s Global Family Office Team
To encourage family offices from around the world to set up a presence in Hong Kong, InvestHK has set up a dedicated team. The Global Family Office Team is a strategic initiative supported by the Financial Services and Treasury Bureau and works in conjunction with regulators and industry stakeholders.
The family office specialists, who are located in Hong Kong and in key cities around the world, working alongside InvestHK’s network of 32 global offices, will offer bespoke support and tailor-made solutions. These include identifying opportunities, providing support during set-up and helping newly established family offices to become part of Hong Kong’s vibrant financial ecosystem.
In the past year, InvestHK supported wealth-services managers such as Pacific Hawk, Raffles Family Office, Hywin Wealth and AvantFaire Investment Management to set up or expand in the city.