This week, Hong Kong will usher in the "Financial Events Week", which includes the "Yu Ze Hong Kong" Summit Forum organised by the Hong Kong Special Administrative Region Government.
Financial Secretary Paul Chan Mo-po revealed on the 24th that this year's forum will focus on how to promote family offices to settle in Hong Kong and continue to flourish in a challenging external environment. As of February this year, InvestHK's dedicated team had assisted 58 family offices to set up or expand their businesses in Hong Kong, while more than 100 others said they had decided or were preparing to set up or expand their businesses in Hong Kong.
On the same day, Choi Ye introduced the week's financial events in his latest blog, and stressed that the "Safeguarding National Security Ordinance" has officially come into effect, and Hong Kong will concentrate on fighting for the economy in the future.
Mr Chan said that while the HKSAR Government is making every effort to explore new sources of funding, it is also actively attracting more key enterprises to develop in Hong Kong. The picture shows the launching ceremony of the Financial Events Week. Picture of the Fortune Blog
There are 900 family offices in Hong Kong with a wealth of more than US$100 million
Following the Asian Financial Forum in January and the Hong Kong Green Week in February, this week's Financial Events Week will be held in Hong Kong. According to Mr Chan, the "Yuze Xiangjiang" summit forum with the theme of "steering in the wind" organized by the SAR Government will return with honors. The highlight of the week will bring together some 400 influential family offices, asset owners, wealth heirs and professional managers from around the world, with an estimated 400 representatives from Hong Kong and the Mainland, Asia, Europe, the United States and the Middle East participating in in-depth discussions on topics including philanthropy, wealth inheritance and green development.
Mr Choi delivered a speech at the launching ceremony of the Financial Events Week. Picture of the Fortune Blog
According to a market study conducted by a consultant commissioned by InvestHK, there were about 2,700 single-family offices operating in Hong Kong as of the end of last year, of which nearly 900 had a wealth level of more than US$100 million, and this figure does not include multi-family offices. The figures reflect the attractiveness of Hong Kong, as an international financial centre, for wealth management businesses, including family offices.
One-fifth of the key enterprises in Hong Kong are located in Europe and the United States
"While we are making every effort to explore new sources of funding, we are also actively attracting more key enterprises to develop in Hong Kong, so that funds can find more good investment projects, and at the same time, we will also guide funds to better promote local I&T development and build a more vibrant industrial ecosystem. The Hong Kong government signed an agreement with the second batch of key enterprises to settle or expand their business in Hong Kong last week, and together with the first batch of enterprises introduced last year, a total of nearly 50 enterprises will invest more than 40 billion yuan in Hong Kong and create more than 13,000 jobs, most of which are scientific research and management positions.
Last week, the Hong Kong government signed an agreement with the second batch of key enterprises to set up or expand their business in Hong Kong. Picture of the Fortune Blog
He said that nearly half of these companies are engaged in life and health technology. Hong Kong has strong basic research capabilities in this area, with world-leading medical schools and authoritative experts, and is vigorously encouraging more local and overseas pharmaceutical and medical device companies to conduct clinical trials in Hong Kong. It can be said that the path to promote Hong Kong's development into a healthcare innovation and technology hub is becoming clearer and more mature.
Cai Ye pointed out that if you analyze from a geographical perspective, about one-fifth of the first two batches of key enterprises are from Europe and the United States. He said that in the future, we will continue to actively "go global" and take the initiative to contact more cutting-edge technology enterprises in different regions, and it is expected that the number of introduced enterprises will continue to increase. In fact, the arrival of key enterprises in Hong Kong will also drive enterprises in the upstream, midstream and downstream of their industrial chains to settle in Hong Kong.
After the national security regulations came into effect, everyone worked hard to fight for the economy
Apart from key enterprises, InvestHK assisted about 380 domestic and overseas enterprises to set up and expand their business in Hong Kong last year, an increase of nearly 30% compared to 2022. In the first two months of this year alone, the department has assisted 100 domestic and overseas enterprises to develop in Hong Kong, an increase of 74% over the same period last year. He added that the authorities are actively exploring more overseas connections and urging more enterprises to set up in Hong Kong. He said that the HKSAR Government is considering setting up new economic and trade offices in Riyadh, Saudi Arabia and Kuala Lumpur, Malaysia, while InvestHK plans to open advisory offices in Cairo, Egypt and Izmir, Turkey this year to strengthen investment attraction in the Middle East, Central Asia and other regions along the Belt and Road.
Cai Ye delivered a speech at the "Key Enterprise Partner Signing Ceremony" held by the Office of Introducing Key Enterprises last week. Picture of the Fortune Blog
A stable and secure environment is conducive to investment, and development and security must be balanced. Mr Chan emphasised that the financial and business sectors recognise that a stable and secure social environment is essential for investment and operation in Hong Kong. The "Safeguarding National Security Ordinance" came into effect on the 23rd of this month, fulfilling Hong Kong's constitutional responsibility to legislate for Article 23 of the Basic Law, and further strengthening the barrier to safeguarding national security.
Financing of family-office art in Hong Kong is on the rise
In Hong Kong, the stock market has been sluggish in recent years, and art investment has gradually become the new darling of family offices. In an interview with Hong Kong Commercial Daily, Deacons Corporate Finance Partner Eva Wong said that family offices and high-net-worth individuals are more interested in art with appreciation potential, and financial institutions have recently begun to be willing to accept clients as collateral for art.
Huang Qijia (right) and Huang Xiaomin both said that the potential for art financing is increasing. Photo by reporter Cui Junliang
Art financing is not alternative financing
Deacons assists family offices or their counterparties in conducting due diligence and preparing legal documents related to sale, lease and financing for family offices' investments in the art sector.
"A work of art not only has the potential to appreciate and appreciate value, but also shows people's tastes and preferences. Huang Qijia emphasized that art is "not as unusual as everyone thinks", and the current downturn in the stock market and property market has made art begin to attract the attention of investors, and the demand for art financing has increased.
"Our bank's work on art investment-related documents has been on the rise recently. She revealed that art investors in Asia, including family offices, have tried to explore the use of art financing and then use the proceeds to invest in art or other projects.
Wong added that art financing is not new in Europe and the United States, but it is more conservative in Asia, mainly because of concerns that the value of art is not as "transparent" as other assets like stocks, and that financial institutions are worried that art has "no market" and that if the art loan defaults, it will be difficult to find a next buyer when enforcing the mortgage. As a result, Asian financial institutions and family offices have been "hesitant" to use art as collateral for financing in the past.
Last year, the Hong Kong government proposed in the Policy Statement on the Development of Family Office Business in Hong Kong to develop Hong Kong into a philanthropic hub and allocate philanthropic funds for family offices and philanthropists around the world. Deacons Financial Services Partner Huang Xiaomin admits that family offices may be tempted by tax incentives to invest in charitable projects and are concerned about what kind of tax incentives they receive, and the Hong Kong government is also considering simplifying the procedures for charities to apply for tax exemption.
Tax incentives are attractive to family offices
Huang Xiaomin believes that in order to raise the awareness of charities among family offices, the Hong Kong government could consider setting up a specific group to help charities and family offices reach directly into the community and enhance public awareness of Hong Kong's charities. When expanding the list of charities in Hong Kong, it is convenient for family offices to invest in charities, thereby reducing the operating costs of such institutions.
The U.S. is expected to enter a cycle of interest rate cuts this year. In this regard, Huang Xiaomin expects that family offices are expected to shift from focusing on fixed deposits during the earlier interest rate hike to holding fixed income assets or non-US dollar foreign currency assets.
When it comes to choosing between Hong Kong and Singapore, she believes that family offices will ultimately decide where to settle down based on three aspects: ease of investment, legal and institutional security, and living environment. As multi-family offices (MFOs) involve more resources than single-family offices (SFOs), it is believed that family offices in Hong Kong will continue to be dominated by single-family offices in the future.
【Business Daily Review】
Financial tycoons are coming to Hong Kong
Singing decay is difficult to stop the way to wealth
Hong Kong Commercial Daily commentator Su Xin
Hong Kong will usher in the "Financial Events Week" this week, with a series of financial events such as the World One Forum, the Global Investment Summit and the Yuze Xiangjiang Forum to be staged one after another, attracting many international financial giants to Hong Kong to participate in the event. About 400 delegates from Asia, Europe, the United States and the Middle East will participate in the second "Yu Ze Hong Kong" Summit, organised by the Hong Kong Government, which will focus on promoting the establishment and sustainable development of family offices in Hong Kong. Hong Kong's financial events and heavyweight guests have once again demonstrated Hong Kong's vibrancy and strong attractiveness as an international financial centre. In particular, the authorities should make full use of Hong Kong's advantages, continue to strengthen its "soft and hard power", keep financial services closely abreast of the development of the times and market demand, and continue to grow bigger and stronger to achieve "re-value-added", so as to gather more prosperous financial resources for Hong Kong.
This is not the first time that Hong Kong has held a major financial event, and each time it is held, it has been favored by many international investors, and they have since accelerated their settlement and layout in Hong Kong. Many of the financial leaders and business executives attending the event have visited Hong Kong many times in the past and are "old friends". As the saying goes, "eat over and look for taste", the financial and business bigwigs are willing to spend time and again to come to Hong Kong again and again, precisely because Hong Kong has an excellent business environment, has significant advantages in economic freedom, common law, low tax rate, talent pool, professional service support, etc., and is also a "super connector" connecting Chinese mainland and the world. Choosing Hong Kong can bring huge business opportunities and benefits to international investors, who of course want to continue to use Hong Kong as an international financial centre to better add value to their own wealth.
The numbers speak for themselves. Hong Kong is one of the preferred locations for regional headquarters and offices of multinational corporations. According to the data, as of June 1, 2023, the number of Hong Kong-based companies with parent companies outside Hong Kong was 9,039, an increase of 61 over last year, and the number of employed people was about 468,000. In addition, as of February this year, InvestHK has assisted 58 family offices to set up or expand their operations in Hong Kong, and more than 100 have indicated that they have decided or are preparing to come to Hong Kong. As at the end of last year, there were about 2,700 single-family offices operating in Hong Kong, of which nearly 900 had a wealth level of more than US$100 million, reflecting the strength and strong attractiveness of Hong Kong's international wealth management centre.
In terms of attracting wealth and enterprises, this good achievement can be achieved by the joint efforts of the government and relevant circles. Combining the "promising government" and the "efficient market", the authorities have actively created a good environment, introduced various measures to "grab enterprises" and "talents", continued to strengthen traditional ties with Europe and the United States, and took the initiative to go out to open up new markets such as ASEAN and the Middle East to attract new funds. More importantly, Hong Kong has the unique advantage of being "backed by the motherland and connected to the world", has close ties with the mainland capital market, actively integrates into the country's financial reform and opening up pattern and maintains its international characteristics, and plays its role as a bridge between the mainland and the world. As Daniel Pinto, president and chief operating officer of JPMorgan Chase & Co., Ltd., recently described that the bank's confidence in Hong Kong has never been as strong as it is today, and it will continue to invest in Hong Kong, stressing that the Chinese mainland market has unlimited potential and Hong Kong will live up to the growth potential brought by relying on Chinese mainland.
It should be pointed out that those with ulterior motives have all along used the "Safeguarding National Security Ordinance" to slander and smear Hong Kong's status as a financial centre, and it is of course necessary for the Government to set up a "contingency rebuttal team" to refute it as soon as possible, so as to set the record straight and dispel misunderstandings. The most important thing is that after the enactment of Article 23 in Hong Kong, the business environment is better, and we must focus more on fighting for the economy, seeking development, benefiting the people's livelihood, showing real results, slapping the faces of those who sing the decline, and constantly enhancing the confidence of international investors with actual results.