Hong Kong 2023 Budget on Asset & Wealth Management Centre, Family Office, Bonds & Securities Market, Renminbi and Fintech
25th February 2023 | Hong Kong
Hong Kong has announced the 2023 Budget with new initiatives for the Asset & Wealth Management Centre, Family Office, Bonds & Securities Market, Renminbi and Fintech industry. On Family Office in the Hong Kong 2023 Budget Announcement: HKD 100 million ($7.8 million) funding allocated to InvestHK dedicated to family office promotional campaign. In 2023 January, Hong Kong government introduced a bill on tax exemptions for eligible single family offices with minimum $30 million assets (HKD 240 million), retrospective from 1st April 2022 and passing tests on family office control, holding period & immovable property. In 2022 October, new Hong Kong Chief Executive John Lee Ka-chiu announced a series of new policies to strengthen Hong Kong as a leading financial hub in his 2022 policy address (19th Oct 2022, Wednesday). For family offices, Hong Kong will give tax-concession to eligible family offices, and target to attract at least 200 of the world’s top family offices to set up or expand their operations by 2025. Hong Kong manages $216 billion (HKD 1.7 trillion) of assets from family offices & private trusts (2022). Hong Kong also announced plans to launch a Hong Kong residence program via a new Capital Investment Entrance Scheme with a Hong Kong residency requiring investments in local asset market excluding properties. The old scheme launched in 2003 required $1.2 million (HKD 10 million) investment in Hong Kong including properties, but was suspended in 2014 due to rising property prices. Hong Kong Financial Secretary, the Hon Paul MP Chan on Hong Kong Capital Investment Entrant Scheme: “With a view to further enriching the talent pool and attracting more new capital to Hong Kong, we will introduce a new Capital Investment Entrant Scheme. Applicants shall make investment at a certain amount in the local asset market, excluding property. Upon approval, they may reside and pursue development in Hong Kong. Details of the Scheme will be announced later.” See below on Hong Kong 2023 Budget on Hong Kong as an International Financial Centre, Asset & Wealth Management Centre, Family Office, Bonds & Securities Market, Renminbi, Fintech. View Hong Kong 2023 Budget Speech here
“ Hong Kong 2023 Budget on Asset & Wealth Management Centre, Family Office, Bonds & Securities Market, Renminbi and Fintech “
2023 Hong Kong Budget: International Financial Centre
Hong Kong Financial Secretary, the Hon Paul MP Chan Speech on 2023 Budget
Capital Investment Entrant Scheme
68. With a view to further enriching the talent pool and attracting more new capital to Hong Kong, we will introduce a new Capital Investment Entrant Scheme. Applicants shall make investment at a certain amount in the local asset market, excluding property. Upon approval, they may reside and pursue development in Hong Kong. Details of the Scheme will be announced later.
International Financial Centre
81. By leveraging its advantages to serve the country’s needs, Hong Kong has developed into a globally recognised international financial centre. As our country is going full steam ahead to a higher- level opening up and advancing towards higher quality development, channelling funds for effective allocation through the capital market is essential for the development of our country’s real economy, which will in turn provide enormous opportunities for Hong Kong.
82. Despite the impact of geopolitical risks, our country’s steady economic growth, coupled with its adherence to the development principle of reciprocity and mutual benefits, has prompted a large number of enterprises and investors to zero in on the investment benefits to be brought by our country’s long-term development. This has made Hong Kong’s advantages to become more prominent.
83. As a leading offshore RMB hub, Hong Kong will continue to take the lead in RMB fund management and investment in the international market, and contribute to the internationalisation of RMB.
84. As Hong Kong heads towards high-quality development as an international financial centre, it has to attach importance to issues about both development and security. We have been identifying potential risks early and managing them properly, and firmly upholding the bottom-line of ensuring “financial security”, on which our steady economic, financial and social development depends.
Widen Mutual Access between the Mainland and Hong Kong
85. Relevant institutions in the two places have been collaborating closely to expand the mutual market access schemes, with a view to implementing the related measures promptly. In the future, we will continue to explore with the Mainland various proposals on expansion of mutual market access and enhancement arrangements, such as enhancing the Cross-boundary Wealth Management Connect Scheme in the GBA, the Bond Connect, as well as further expanding the scope of eligible securities under the Stock Connect. We will also contemplate the idea of providing more risk management products for investors outside of the Mainland, including to issue Mainland government bond futures in Hong Kong, thereby injecting new impetus into Hong Kong’s capital market in a sustainable manner.
Offshore Renminbi Business Centre
86. As our country is the world’s biggest trading nation, the usage volume of cross-boundary and offshore RMB will continue to increase. As stated in the report to the 20th National Congress of the Communist Party of China, our country will promote the internationalisation of RMB in an orderly way.
87. Hong Kong has always been the world’s largest offshore RMB hub with deposits of nearly RMB 1 trillion in total as at the end of 2022. Approximately 75 per cent of offshore RMB settlements across the globe are conducted in Hong Kong. Experience from the Shanghai- Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect as well as the Bond Connect fully shows that where risks are controllable, Hong Kong can assist the Mainland in opening up the financial market in an orderly manner and attracting offshore capital for investment in offshore RMB assets. Under the mutual access channels, RMB counter is being explored under the Stock Connect, while HKD and RMB settlement is also offered in the international carbon market launched by the HKEX.
88. In January this year, the Legislative Council (LegCo) passed a bill to exempt the stamp duty payable for certain transactions by dual-counter market makers (DCMMs). To boost the issuance and trading of RMB securities in Hong Kong, the HKEX will introduce a DCMM regime in the first half of this year to promote the liquidity of RMB-denominated stocks and price efficiency as well as to tie in with the setting up of RMB trading counters by issuers.
Securities Market
89. After consulting the market, the HKEX will introduce a listing regime for advanced technology companies in the first quarter of this year to expand the listing channel for issuers. The HKEX will also put forward specific reform recommendations on GEM within this year after carefully considering the views of various market players on the financing needs of SMEs and start-ups, and consult stakeholders.
90. Besides, the HKEX will explore ways to further enhance the listing rules with the Securities and Futures Commission (SFC) in order to strike a balance between market development and regulatory needs, including relevant arrangement concerning share buy-backs by issuers. If the above recommendation is supported by the market, we will make necessary amendments to the Companies Ordinance.
91. The HKEX will also study a series of proposals on the optimisation of the trading mechanism, which include exploring arrangements for maintaining operation of the market under inclement weathers and reviewing the Self-Trade Prevention function as well as the relevant restrictions, so as to facilitate transactions of investors and dovetail with the market trend.
Bond Market
92. As the leading bond hub in Asia, Hong Kong has been the largest centre for arranging international bond issuance in the region for six consecutive years. The Government will continue to upgrade our infrastructure and implement support measures as well as work with regulators to promote the strengths of our capital market to issuers and investors in the Mainland and abroad.
93. Hong Kong is also an offshore RMB bond issuance centre. Last year, the People’s Government of Hainan Province and the Shenzhen Municipal People’s Government each issued offshore RMB bonds worth RMB 5 billion in Hong Kong respectively. In January this year, we issued offshore RMB bonds again under the Government Green Bond Programme (GGBP) and, in response to investors’ demand, doubled the RMB tranches in size to RMB 10 billion. The issuance was well received by Mainland and overseas financial institutions. We will continue to encourage more Mainland local governments at different levels as well as Mainland and overseas public and private institutions to issue offshore RMB bonds in Hong Kong.
94. In addition, we just issued the inaugural one-year tokenised green bonds last week, making use of tokenisation technology in the process of bond issuance, including coupon payment, secondary trading and maturity redemption, etc. Institutional investors were the targets of this pilot issuance which explores the compatibility of Hong Kong’s existing legal framework and financial infrastructure with tokenised issuance. We will consolidate the experience gained, review the development potential and prospects of tokenised bond issuance in Hong Kong, and consider policy initiatives to promote the wider use of tokenisation technology in our capital market.
Asset & Wealth Management Centre
95. The asset and wealth management industry is an essential part of Hong Kong’s financial industry as well as an important component contributing to our status as an international financial centre under the 14th Five-Year Plan. In 2021, the assets under management in Hong Kong amounted to over $35 trillion, with a total of 54 000 practitioners in the sector. We will actively take forward a series of measures to further strengthen Hong Kong’s status as the asset and wealth management hub in Asia.
Family Office
96. Regarding family office business, we introduced legislative amendments into LegCo last December to provide profits tax exemption for qualifying transactions of family-owned investment holding vehicles managed by single family offices in Hong Kong. Upon LegCo’s passage of the proposal, the tax concession arrangements will be applicable to any years of assessment on or after 1 April 2022.
97. Furthermore, we will allocate $100 million to InvestHK over the next three years for attracting more family offices to Hong Kong. The Financial Services and the Treasury Bureau has set up a steering group to oversee key projects including the “Wealth for Good in Hong Kong” Summit in end-March, as well as providing dedicated training for relevant wealth management talents.
98. Over the years, we have been striving to enhance the ecosystem of our asset management industry. We have also provided targeted, tangible support to local asset managers. For example, in recent years, the Exchange Fund has established alternative asset portfolios with dedicated allocation to smaller local managers. As a next step, such portfolios will cover also private equity funds managed by smaller local managers and those seeking to expand their Hong Kong operations in order to support their continued growth here. In addition, the Exchange Fund will identify and increase allocation to funds that focus on sustainable investment to help consolidate Hong Kong’s position as the region’s leading sustainable finance platform.
99. Meanwhile, we will work with regulators to refine the regulatory measures and tax arrangements for the asset and wealth management sector. On wealth management, regulators will on a risk- based principle and subject to appropriate protection for investors, streamline the suitability assessment and disclosure process for sophisticated or ultra-high net worth individual clients. Moreover, the Government will review the existing tax concession measures applicable to funds and carried interest.
Financial Technology Development
100. We will continue to take forward the application testing and preparatory work for various financial technology (Fintech) infrastructure projects, including “e-HKD” and “e-CNY” as cross- boundary payment facilities. In addition, the HKMA is currently working with the Bank of Thailand to explore the use of Hong Kong’s Faster Payment System and Thailand’s PromptPay by visitors from the two places for local payment, providing them with another safe, fast and effective payment option.
101. The Commercial Data Interchange (CDI) was launched in October 2022, with over 1 000 loans totalling more than $1.9 billion having been granted to SMEs by participating banks as at end of 2022. It is expected that the CDI will be linked to the Consented Data Exchange Gateway developed by the Office of the Government Chief Information Officer at the end of this year, thus allowing financial institutions to obtain relevant data after receipt of their clients’ authorisation, thereby enhancing the efficiency of providing financial services.
Non-traditional risk transfer instruments
102. Hong Kong is a global risk management centre, and some Mainland enterprises have established captive insurers to leverage on the professional managers and services in Hong Kong for enhancing their integrated corporate risk management capabilities. In recent years, we implemented a dedicated regulatory regime for insurance-linked securities (ILS) and launched the Pilot ILS Grant Scheme, facilitating the issuance of several catastrophe bonds in Hong Kong and promoting diversified development of the insurance market. I propose a two-year extension of the Pilot ILS Grant Scheme to continue attracting more issuing institutions and nurturing talent, with a view to supporting industry development and assisting our country in expansion of channels for risk diversification and management.
Financial Inclusiveness
103. The Government will continue to adopt a multi-pronged approach in developing the retail bond market. I plan to issue no less than $50 billion of Silver Bond and $15 billion of retail green bonds in the next financial year, so as to facilitate market development and at the same time offer members of the public investment options with steady returns.
104. At present, there are over four million MPF scheme members. Society at large has clear aspirations for MPF funds that offer stable returns at low fees. I have instructed the HKMA and the Mandatory Provident Fund Schemes Authority to conduct a study on this. To start off, I plan to earmark a certain proportion of the future issuances of Government green bonds and infrastructure bonds for priority investment by MPF funds, thereby providing MPF scheme members an additional investment option.
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