A Greater Gateway: Hong Kong’s Future as a Fund Management Center

Hong Kong is in prime position as capital flows across China's borders increase.

The city has long been the most important offshore Renminbi hub. Now, landmark schemes like Stock Connect and the Mutual Recognition of Funds program mean its importance in fund management is being magnified. Against this background, BNY Mellon is examining some of the fundamental issues shaping Hong Kong's future as a fund management center in its latest whitepaper series.

According to the first paper in the series, A Greater Gateway: Hong Kong's Future as a Fund Management Centre, the outlook in Hong Kong for exchange-traded products, and fund management in general, is increasingly bright. Key highlights include:

• Globally, ETF assets have exploded in recent years, growing at over 24% annually for the past decade to reach US$3.3trn
• Hong Kong already leads in Asia (excluding Japan) in terms of market size, with 124 ETFs totaling some US$37.8bn in assets.
• The likely inclusion in 2017 of ETF products in the Stock Connect schemes stands to be transformational for Hong Kong's ETF market, making it more diverse and international.
• While mainland demand for exposure to international assets is likely to lead to greater diversification, the stage is also set for the launch of a wider range of product structures such as actively managed, smart beta as well as inverse and leveraged ETFs.

Read the full paper to explore these points in depth.