Hong Kong sees surge in investment fund net inflows: SFC Quarterly Report

The Securities and Futures Commission (SFC) today published its latest Quarterly Report to provide operational and financial highlights for the quarter ending 31 December 2023.

The asset management space fared strongly during the quarter. Net fund inflows into Hong Kong domiciled funds surged 179% quarter-on-quarter to HK$33.5 billion. For full-year 2023, these inflows jumped 92.9% year-on-year (YoY) to HK$87.1 billion. As at 31 December, the assets under management of the 914 Hong Kong-domiciled funds increased 4.9% YoY. In addition, the SFC authorised Asia’s first and the world’s largest exchange-traded fund investing in Saudi Arabian listed stocks, which listed in November.

Mainland-Hong Kong Stock Connect kept up its momentum. Average daily northbound trading rose 8% YoY in 2023 whilst average daily southbound trading remained steady. Their shares in both Mainland and Hong Kong stock market turnovers increased. Moreover, both northbound and southbound trading recorded net buys last year, amounting to RMB43.7 billion and RMB292.9 billion.

To facilitate the development of the listing market, the SFC approved rule amendments for GEM listing reforms by the Stock Exchange of Hong Kong Limited, which introduced a new route for GEM listing and a streamlined mechanism for Main Board transfer. During the quarter, the SFC processed 135 listing applications, totalling 270 for full-year 2023, with average processing time reduced by 11% YoY to 108 business days.

The number of SFC licensees and registrants remained stable at 48,091 (Note 1) as of 31 December. Licence applications received rose 16% YoY for the whole year (Note 2) and picked up 8% YoY for the quarter. Of the 56 licensed corporation applications approved by the SFC in the quarter (Note 3), Type 9 (asset management) and Type 4 (advising on securities) regulated activities accounted for 88% and 66%. Six virtual asset trading platforms (VATPs) submitted their corporate licence applications during the quarter (Note 4). 

To raise the public’s awareness of investment scams and risks, the SFC warned the public against VA-related frauds and suspicious investment products through press briefings, press releases, social media posts and alert lists (Note 5). It also launched a comprehensive publicity campaign, including a television drama, debuting a YouTube channel, radio broadcasts, bus advertisements and online banners.

In an effort to combat fraudulent activities, the SFC also established a joint working group with the Hong Kong Police Force to enhance collaboration on monitoring and investigating VA-related illegal activities. The SFC and the Police have been sharing information twice a week since December to promptly address potential fraud.

The quarterly report is available on the SFC website.

Notes:

1. Comprising 3,257 licensed corporations, 112 registered institutions and 44,722 individuals.
2. Around 7,200 licence applications were received, including around 7,000 individuals and 185 corporations.
3. Each licensed corporation may have multiple SFC regulated activity licences.
4. A total of 24 applications under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance were received when the deadline for licence applications under the transitional arrangements of the VATP licensing regime closed on 29 February 2024. 
5. As of 29 February 2024, 14 suspicious VATPs and 38 suspicious investment products were posted on the alert lists.