Family office growth fuels HK’s private wealth management sector optimism

The sector's Assets Under Management (AUM) almost tripled in 2023 compared to 2022.

Hong Kong's private wealth management industry experienced a significant rebound in 2023, according to the latest report from KPMG, co-authored with The Private Wealth Management Association (PWMA).

The report revealed a return to growth in Assets Under Management (AUM), with inflows nearly tripling from the previous year. It also highlighted the growing influence of Artificial Intelligence (AI) on the sector and provides insights into the market's positive outlook despite global uncertainties.

Despite ongoing global uncertainties, including geopolitical tensions, interest rate fluctuations, and digital disruptions, most firms in the sector remain optimistic about the market’s future.

The report said that many industry leaders are confident about the next five years, particularly due to the substantial wealth opportunities in Mainland China. Firms surveyed expect AUM from the region to continue its upward trajectory over this period.

Whilst Mainland China continues to be a key source of wealth, it noted that firms are also targeting emerging markets in Southeast Asia and the Middle East.

Hong Kong’s position as a premier hub for family offices is a significant factor driving optimism, with a large majority of respondents noting the sector's potential for future growth. Additionally, many firms are focusing on engaging the next generation of wealth.

The report also commended the Hong Kong government's initiatives to support the industry. Key measures outlined in the 2024 Policy Address, such as expanded tax concessions and new distribution channels, have been welcomed by wealth management professionals.

The government's ongoing efforts to enhance Hong Kong’s status as an international financial center and attract talent are also seen as pivotal in driving future growth.

The report also highlighted Hong Kong’s unique advantages over other global wealth management hubs, including its robust infrastructure, simple tax system, strong regulatory framework, and open financial markets.

Hong Kong’s close ties to Mainland China, both geographically and culturally, offer distinct advantages, with local professionals well-equipped to serve both Mainland Chinese clients and international investors seeking opportunities in the region.