HONG KONG (HedgeWorld.com)–Rising domestic demand and increasing inflows of international funds allocated to Asia-focused strategies contributed to Hong Kong’s continuing growth in the fund management business in 2005.
The combined fund management business amounted to HK$4.526 trillion (US$580.26 billion), representing a sizable year-on-year growth of 25%. Overall, 66% of assets under management were sourced from overseas, with the remaining 34% attributed to Hong Kong investors.
In its annual Fund Management Activities Survey for the year, which ended Dec. 31, 2005, the Securities and Futures Commission noted: “The continuous growth of AUM sourced from overseas reflected significant interest from overseas investors to make investment allocations to the Asia-Pacific region in view of the great potential and strong growth in the PRC and regional markets.”
A significant portion of the total non-REITs HK$3.242 trillion AUM (also excluding pure advisory assets and other private banking activities) by SFC-licensed corporations and registered institutions, HK$1.725 trillion (U.S.$221.15 billion) or 53%, was managed in Hong Kong, representing 18% year-on-year growth in value terms.
Of the HK$721 billion worth of assets invested in Hong Kong, 65% were in equities and 25% in bonds, similar to past years. The remaining 10% was invested in cash, deposits, or money market instruments; derivatives or structured products; or other investments.
One of the first jurisdictions in the world to allow retail hedge funds since 2002, the net asset size of the 13 authorized retail hedge funds was HK$8.1 billion (US$1.04 billion) as of Dec. 31, 2005.
The domestic REIT market took shape in the fourth quarter 2005 with the November listing of Link, the first REIT in Hong Kong, followed by another two launches before the end of the year, Prosperity and GZI. The Link REIT is the largest initial public offering of REITs so far in the world. GZI REIT, comprising Guangzhou-based retail and offices, is the first REIT with 100% of its portfolio in mainland properties.
At the end of December 2005, there were 1,964 authorized unit trusts and mutual funds (ex REITs) in Hong Kong, with a net asset value of around HK$5.21 trillion (US$667.95), up 21% from 2004.
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