KPMG and the Hong Kong Investment Fund Association: More than half of fund companies expect assets to grow by 11-30% over the next five years

Source: KPMG 2020-06-16

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KPMG and the Hong Kong Investment Funds Association (HKIFA) released a joint report. The report shows that more than half of the fund companies interviewed believe that the prospects for the fund management industry in Hong Kong are optimistic in the next five years. Despite potential challenges, 53% of the companies surveyed expect their management The scale of total assets will increase by 11% to 30%.

The report is titled "Vision 2025: The Future of the Hong Kong Fund Management Industry." KPMG conducted a questionnaire survey with HKIFA member companies and conducted in-depth interviews with senior management in the industry to discuss the industry's long-term prospects. The survey shows that the opening of the asset management industry in mainland China, the continued development of the Greater Bay Area, the changes brought about by technology, and environmental, social, and governance (ESG) investment are all major growth drivers.

The companies interviewed pointed out the top five trends that will have the greatest impact on the Hong Kong fund management industry by 2025, in order of changes in regulations, cost pressures, the emergence of the Greater Bay Area as a financial center, an aging population, and enhanced connectivity.

Andrew Weir, Global Head of KPMG Asset Management and Vice Chairman of KPMG China, said: "Hong Kong has always been regarded as a major asset management center. Close cooperation and active communication among industry stakeholders will take the industry to the next level. The key. Seizing major opportunities such as China’s development, technology and ESG will drive growth in the next few years and consolidate Hong Kong’s position as a major asset management center in the global and Asia-Pacific regions.” Li Jinrong, Chairman of the Hong Kong Investment Fund Association, said: “In order to meet the aging of Hong Kong’s population Under the retirement needs, the fund industry’s first task is to help investors understand how they need to invest in future income, but the reality is that investors are often reluctant to take risks but want to obtain better returns. Therefore, we need Increase investment education, help investors understand the trade-off between risk and return, make investors pay more attention to their pension plans, help them better understand their choices after retirement, and how to plan early in response to future expenditure needs ."

Looking forward to the next five years, the companies interviewed believe that "capital market development", "RMB internationalization" and "sustained development of the Greater Bay Area" will have the greatest impact on the Hong Kong asset management industry. Many interviewed companies are optimistic and point out that the asset management scale (AUM) originating in China has increased significantly since 2015, and this trend will only further accelerate. One third of the companies surveyed expect AUM from China to grow by more than 30% by 2025.

KPMG China’s Asia Pacific and China Asset Management Partner Liao Runbang said: "The fund management industry needs to develop attractive and long-term income-generating products for retired customers. Hong Kong faces considerable challenges in pensions and needs to address post-retirement The income and pension issues depend on the industry, regulators, government, employers and employees to work together."

Most of the companies interviewed agreed that Hong Kong, as an important asset management center, can use its advantages to seize major business opportunities in the Greater Bay Area, which accounts for 12% of China’s GDP. Although most of the interviewed companies (79%) have not yet formulated a development plan for the Greater Bay Area, this situation will change as 37% of the interviewed companies indicate that they will develop a strategy for the Greater Bay Area in the next 12 months. In addition, 21% of the companies surveyed said that they have formulated relevant development strategies.

The companies interviewed believe that technology will be used more in terms of increasing efficiency and making it easier for customers to invest in 2025. Nearly 80% of the companies surveyed expect to increase investment in technology in the next 12 months, with 37% expected to increase investment by 10% or more. 20.8% will invest in customer-related technologies, including digital customer interface, website optimization, and applications; the most interviewed companies (22.3%) intend to invest in data, hoping to use data more effectively to assist management to make near real-time And more ideal management decisions.

Xu Minghui, KPMG China Securities and Asset Management Owner Management Partner, said: "Fund companies that are considering establishing a direct customer channel need to fully understand how to make good use of customer data. Fund companies that can highlight their advantages will be those that can establish Companies that provide high-quality products and integrity, provide a better customer experience, and provide simple investor education."

In recent years, more and more customers have asked companies to incorporate ESG into investment decisions and launch sustainability-related products. 89% of the companies surveyed “agreed” or “strongly agreed” that providing such products is increasingly important to customers. However, the interviewed companies have different estimates of the share of ESG products in their asset management scales by 2025: 84% expected to exceed 5%, but more than a quarter (26%) of the interviewed companies expected Will exceed 25%.

Paying more attention to ESG investment will prompt fund companies to find suitable talents to lead and implement their ESG plans. However, the companies interviewed all believed that the market lacked ESG expertise; and pointed out that among all kinds of talents, Hong Kong lacked the most talents in this area.

KPMG and the Hong Kong Investment Fund Association: More than half of fund companies expect assets to grow by 11-30% over the next five years

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