Key Takeaways:
Hong Kong's asset management industry posted double-digit growth across funds, equities and digital assets in the past financial year, reinforcing the city's status as Asia's premier capital markets hub.
Assets under management of Hong Kong-domiciled funds jumped 19.4 percent to HK$2.3 trillion ($293 billion) in the financial year ending March 2026, driven by strong net inflows, the Securities and Futures Commission said in its annual report Wednesday. The combined market capitalization of SFC-authorized exchange-traded funds and leveraged and inverse products rose 25.2 percent to HK$651.2 billion, with average daily turnover surging 50.6 percent to HK$38.1 billion.
"The initiatives launched over the past year to improve sponsors' quality, narrow bid-ask spreads and lower collateral costs are already delivering impact," SFC Chief Executive Officer Julia Leung Fung-yee said. More reforms, including changes to board lot sizes and the launch of the uncertificated securities market, are in the pipeline, she added.
Single-stock L&I products saw particularly explosive growth, with market value soaring 60 times during the year. The broader equity market also posted record activity: average daily turnover of Hong Kong stocks rose 54 percent to a record HK$258 billion, while funds raised through initial public offerings more than tripled to HK$379 billion. Cross-border trading through Stock Connect remained a key driver, with southbound daily turnover jumping 84 percent to HK$124.1 billion, accounting for a record 24 percent of Hong Kong's total market turnover.
The digital asset ecosystem expanded rapidly alongside traditional markets. Assets under management of SFC-authorized tokenized retail products gained nearly six times year-on-year to about HK$11 billion as of March. Market capitalization of virtual asset spot ETFs increased 90 percent since their 2024 debut, while turnover across Hong Kong's 12 licensed virtual asset trading platforms more than doubled. The SFC is working with the government to complete legislation for four new regulatory regimes covering virtual asset dealing, custody, advisory and management.
Connectivity as a growth engine
"Deeper connectivity is fundamental to the stable development of both mainland and Hong Kong markets," Leung said, pointing to measures such as including renminbi counters in southbound trading and incorporating real estate investment trusts into the mutual market access program — known as REIT Connect. Swap Connect, the cross-border interest rate swap scheme, registered record monthly turnover of RMB821 billion ($113 billion) in March 2026, with over RMB11.6 trillion in transactions executed since launch.
The SFC also secured a landmark investor redress outcome in April, reaching an agreement with the auditor of a now-defunct company to set aside HK$1 billion to compensate independent minority shareholders — the first such auditor compensation for false and misleading financial statements.
Amid a complex global backdrop, "the top priority for Hong Kong's markets is to remain orderly, trusted and open for business," SFC Chairman Kelvin Wong Tin-yau said. The regulator will focus on deepening market resilience, driving high-quality development, steering responsible innovation and reinforcing Hong Kong's role as a gateway connecting China and global markets, he added.
Separately, the government is studying amendments to the preferential tax regime for funds, family-owned investment holding vehicles and carried interest. Proposed changes would expand eligible investments to cover loans, digital assets, precious metals and certain commodities. Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the enhancements would create new business opportunities for Hong Kong's asset and wealth management industry, particularly in attracting private credit investment activities.
The Hong Kong banking sector, which held HK$26 trillion in total assets in 2025, is pivoting toward structural growth in fixed income, gold value chains and transition finance to sustain momentum as net interest margins face pressure, according to KPMG.
This article is for informational purposes only and does not constitute investment advice.
