Hong Kong's fund management business last year recorded total assets of $2.947 trillion, substantially higher than the $1.635 trillion reported the previous year, according to the Fund Management Activities Survey 2003 released by the Securities & Futures Commission today.

The strong gains were due to several factors. Registered institutions were included in the survey for the first time. They contributed $630 billion worth of assets to the survey (comprising $142 billion in asset management and $488 billion in other private banking activities). And licensed corporations recorded a 42% rise in their asset management and advisory businesses to $2.317 trillion (comprising $2.108 trillion in asset management and $209 billion in advisory business). This was on the back of strong performances in the financial markets, inflows of investment funds and gain in investment mandates.

Commission Executive Director of Intermediaries & Investment Products Alexa Lam said: "The fund management business has generally benefited from market appreciation and renewed interest in investing in financial products."

Hong Kong is a magnet for overseas funds and possesses the expertise for managing investments in the Asian region. Of the $2.947 trillion worth of assets in the fund management business, 63% ($1.860 trillion) were sourced from overseas investors.

According to statistics collected from licensed corporations in the last four years, overseas investors have consistently accounted for 60-70% of their asset management and advisory businesses.

Steady growth in asset management

In the asset management business, assets managed in Hong Kong have steadily grown from 42% in 2000 to 53% in 2003. In value terms, $1.194 trillion worth of the assets was managed onshore.

Of the assets managed in Hong Kong, 73% or $878 billion was invested in Asia, including $481 billion in Hong Kong and the Mainland.

Mrs Lam said the substantial investments in the Asian markets reflected not only their attractiveness in 2003, but also the expertise the fund management industry in Hong Kong has developed over the years in investing in Asia. Such skills have been and will continue to be vital to Hong Kong's ability to attract overseas funds for management.

Thirty-seven licensed corporations and 10 registered institutions responded that Hong Kong was their regional headquarters.

The respondents reported that 15,195 staff were engaged in fund management activities. Among them, 81% were responsible for sales and marketing.

Copies of the report are available at the commission's office and on its website.