The Hong Kong capital markets made encouraging, broad-based progress in the second quarter of 2024 as reflected by an array of data on asset management, listing, licensing and virtual assets, according to the Quarterly Report of the Securities and Futures Commission (SFC) published today.

Among the notable developments for the quarter covering April-June, Hong Kong-domiciled funds showed continued momentum with assets under management (AUM) up 7% quarter-on-quarter (QoQ) as of end-June and net fund inflows up 80% QoQ for the quarter (Note 1).

Another bright spot was the growth of licence applications received by the SFC, which rose 3% QoQ and 8% year-on-year. New listing applications the SFC cleared also increased 6% QoQ (Note 2).

On the virtual assets (VA) front, Asia’s first batch of six VA spot ETFs listed in Hong Kong have traded smoothly with a total market capitalisation of $2.4 billion (US$310 million) as of mid-August. In addition, the SFC received 17 applications for virtual asset trading platform (VATP) licences in the quarter.

“The latest quarterly data and continuing trends reaffirm the SFC’s strategic approach, and we will build upon our accomplishments with steadfast commitment to market connectivity, innovation, sustainability and, above all, integrity,” said Ms Julia Leung, the SFC’s Chief Executive Officer. “Going forward, the SFC will continue with its assiduous efforts to ensure Hong Kong’s capital markets remain competitive and resilient against global headwinds, evolving trends and unforeseen challenges ahead.”

The last quarter also saw deepening connectivity with the Mainland and regional capital markets for Hong Kong through the five measures to expand Mainland-Hong Kong market cooperation announced in April, as well as the first official visit to the Middle East by the SFC’s leadership. Of the five measures, the enhancements to ETF Connect have taken effect. Under ETF Connect, 85 Mainland and six Hong Kong ETFs were added to the scheme. Preparations are underway for the other measures (Note 3).

To ensure Hong Kong markets remain competitive internationally, the SFC participated in formulating a proposal to maintain normal market trading and other operations under severe weather, which Hong Kong Exchanges and Clearing Limited (HKEX) will put into effect in late September. It has also been working closely with HKEX to strengthen the listing market through the introduction of treasury shares regime and review of the corporate governance framework.

On investor protection and combatting misconduct, the SFC secured the conviction of three individuals involved in a highly sophisticated market manipulation scheme following a landmark High Court jury trial. Also, the regulator disciplined five individuals in the quarter, suspending their licences or prohibiting them from entering the industry for seven months to four years. To keep the public scam-savvy and caution investors against suspicious activities, the SFC added nine entities as well as four investment products onto its alert lists last quarter. It also launched a TV commercial and radio advertising campaign to raise anti-investment scam awareness and joined other local financial regulators in April to support the Anti-Scam Consumer Protection Charter 2.0 to assist the public in guarding against investment scams and digital frauds (Note 4).

The quarterly report is available on the SFC website.

1. 1.For asset management, the AUM and net fund inflows of Hong Kong-domiciled funds increased QoQ to $1,492.4 billion (US$191.1 billion) and $59.1 billion (US$7.6 billion) respectively.2.
2. 2.During the quarter, the SFC received 1,931 licence applications, and the number of new licensees and registrants totalled 2,593. Moreover, it cleared 53 new listing applications.
3. 3.Other measures include mutual recognition of funds enhancements, incorporating real estate investment trusts into Stock Connect, the inclusion of renminbi-denominated stocks into southbound Stock Connect, and the listing of leading Mainland companies in Hong Kong.
4. 4.Over 100 SFC-licensed corporations, covering more than 80% of all active clients, have signed up the charter.