Hong Kong: Wealth Management
Banks, Stocks and Real Estate
Hong Kong has one of the largest representations of international banks in the world: 71 of the world's 100 largest banks have a presence there. Hong Kong is the world's 9th largest international banking centre in terms of the volume of external transactions, and the second largest in Asia after Japan. The banking sector plays a vital role in establishing Hong Kong as a major loan syndication centre in the region.
The banking sector, being the major participant of the Hong Kong foreign exchange market, contributes to Hong Hong's status as the world's 7th largest foreign exchange centre.
At the end of June 2010, there were 146 licensed banks, 24 restricted licence banks and 27 deposit-taking companies in business. These 200 authorised institutions operate a comprehensive network of 1,600 local branches. In addition, there are 70 local representative offices of overseas banks in Hong Kong.
Total employment in the sector is nearly 80,000. Banking assets amount to more than US$1 trillion.
For more information on banking in Hong Kong, see here.
Hong Kong has the world's 10th largest securities market and the second largest in Asia after Tokyo. As of March 2000 the Hong Kong Stock Exchange and the Futures Exchange were merged into Hong Kong Exchanges and Clearing (HKEx). The launch of the Growth Enterprise Market (GEM) in November 1999 for smaller and high growth companies has broadened Hong Kong's stock market, although the timing of GEM's launch was unfortunate, and the 'dotcom' shakeout in 2000 weakened its initial impact.
The influx of issuers from Mainland China into Hong Kong, boosted by economic reforms, has accelerated the growth of the Hong Kong market.
Being the most liquid overseas market for mainland enterprises, Hong Kong's capital market is playing a key role in funding China's state-owned enterprises reform, as well as its massive infrastructure development programme.
2010 has been a good year for HKEx. In October, HKEx announced a 222% rise in the amount raised by initial public offerings during the first 10 months of the year when compared with the same period in 2009, from HK$107.5bn to HK$346bn. The year's total to the end of October has already surpassed the past record of IPO equity capital raised, which was the HK$333.9bn raised in 2006. The IPO of AIA Group Ltd, Hong Kong’s largest ever, raised HK$159bn (AIA was listed on the Main Board on 29 October).
For more information on Hong Kong's securities markets, see here.
After a slump in property values and costs in 2001-2003, in 2006 Hong Kong leaped up the property costs league table and entered the top three most expensive office locations in the world, according to a survey by DTZ, the global property adviser.
DTZ’s ninth annual Global Office Occupancy Costs survey is a guide to accommodation costs in major prime office locations covering 117 business districts in 46 countries worldwide. It found that the West End of London maintained its position as the world's most expensive office location with occupancy costs of US$18,740 per workstation per year. Washington DC climbed two spaces to become the second most expensive location with occupancy costs of US$15,370.
However, according to DTZ, the most notable finding was the rate at which office occupancy costs have increased in Hong Kong, posting a 61% increase over the last decade to US$15,000 per workstation per year. This resulted in the city climbing 13 places to become the world’s third most expensive location.
Following a significant inflow of hot money, leading to substantial increases in asset prices in Hong Kong, the Financial Secretary, Mr John C Tsang, announced new anti-property speculation measures in November 2010.
He said that, with Hong Kong’s local property prices some 15% above the level of only eight months ago, and a “staggering” 47% above their low levels of 2008, the government had to take action, especially as the United States’ recent US$600bn addition to its quantitative easing programme was likely to lead to a further inflow of capital into Asia.
New measures include a Special Stamp Duty on residential property and stricter lending criteria for Hong Kong banks.