Hong Kong financial body proposes steps to attract long-term 'patient capital'
Hong Kong's Financial Services Development Council has proposed three policy recommendations to attract patient capital from international institutions, mainland China and local sources, aiming to strengthen the city's role as a leading Asian wealth management hub.
The Financial Services Development Council (FSDC) of Hong Kong has released a research report proposing three core policy recommendations to attract, channel and cultivate long-term 'patient capital' from international institutions, mainland China and local sources. The proposals aim to consolidate Hong Kong's position as Asia's leading international asset and wealth management hub.
The recommendations include broadening product types, developing the bond market and diversifying equity investment products, while strengthening risk management frameworks. The FSDC also called for deepening cross-border connectivity mechanisms and exploring new links in pension and insurance sectors, as well as improving the market ecosystem to address future development by leveraging Hong Kong's long-term capital, reducing cross-border tax barriers, offering fiscal incentives, upgrading market infrastructure and strengthening corporate governance standards.
The report noted that pension funds and insurance capital are key components of patient capital. With global retirement savings and insurance pools continuing to expand, and demand growing among mainland Chinese pension and insurance funds for overseas asset allocation, Hong Kong is uniquely positioned to serve as a bridge connecting international and regional long-term capital.
According to the report, mainland China's insurance industry held assets worth 41.3 trillion yuan (about US$5.7 trillion) at the end of last year, but overseas asset allocation accounted for only 5.4 per cent, far below the 15 per cent regulatory ceiling. Meanwhile, mainland China's three-pillar pension system reached 15.66 trillion yuan in 2024 and is expected to grow to between 22 trillion and 28 trillion yuan by 2030. The report said that as the population ages, the need for cross-border asset diversification and liability matching will bring unprecedented growth opportunities for Hong Kong's patient capital development.
FSDC Chairman Peter Hung said Hong Kong, as a leading international financial centre in Asia, plays a key role in connecting global patient capital with regional economic opportunities. Patient capital can provide stable funding sources, help withstand market cycles, drive financial innovation and support long-term and sustainable economic development. By broadening product types, deepening cross-border market connectivity and improving the competitiveness of the operating environment, Hong Kong will continue to strengthen its status as a global patient capital hub.