Hong Kong's growing asset and wealth management AUM and tax reforms poised to attract global asset managers in 2025, says KPMG

Unified Funds Exemption (UFE) refinements, strong IPO market, and virtual asset regulatory clarity enhance industry competitiveness

Unified Funds Exemption (UFE) refinements, strong IPO market, and virtual asset...

18 July 2025, Hong Kong (SAR), China (“Hong Kong”) – Despite global economic uncertainty and geopolitical tensions, Hong Kong is reinforcing its role as Asia’s asset management hub through targeted tax reforms, a robust IPO market, and progressive virtual asset regulations, according to this year’s Hong Kong Asset Management and Private Equity Outlook by KPMG. Total assets under management (AUM) for Hong Kong’s asset and wealth management industry rose 13% to HKD 35.1 trillion in 2024¹, while the city’s focus on resolving ambiguities in tax regimes, fostering innovation, and aligning with the Chinese Mainland’s priorities positions it to attract global capital in the long term amid market volatility.

Recent refinements to Hong Kong’s Unified Funds Exemption (UFE) regime focus on broadening the exemption’s scope to include alternative assets such as private credit. These enhancements are likely to bolster the city’s competitiveness by clarifying that both fund entities and their Special Purpose Vehicles (SPVs) remain tax-neutral, thereby preventing unanticipated tax leakage.

Meanwhile, Hong Kong’s recent efforts to regulate and support the virtual asset sector have firmly placed the city on the map, with 2025 poised to be a significant year for market growth. With the city’s virtual asset trading platforms (VATPs) growing in number and regulators’ continued effort to provide clarity on virtual asset trading, Hong Kong is marking important progress in its journey to regulate and legitimise the industry.

Vivian Chui, Head of Securities and Asset Management, Hong Kong SAR, KPMG China, says,

Hong Kong's commitment to refining its UFE regime, fostering a vibrant IPO market, and establishing clear regulations for virtual assets sends a strong signal to global asset managers. These efforts demonstrate how effective regulatory support and targeted programmes can be in shaping a dynamic and competitive asset management hub, positioning Hong Kong to capitalise on opportunities in the evolving financial landscape.

Although foreign investor sentiment in China is facing challenges due to the current geopolitical tensions, domestic RMB funds remain active in policy-backed sectors such as renewables and advanced technology. Here, Hong Kong can play its role as a super connector as continuous enhancement and relaxation of cross-boundary initiatives, including expanded Wealth Management Connect (WMC) and Mutual Recognition of Funds (MRF) schemes, are deepening access to the Chinese Mainland’s investor base. The country's pension reform is also attracting increasing interest from asset managers viewing this development as a gateway to access a substantial pool of future pension assets, enabling them to broaden their investor base and generate new revenue streams.

Rising operational costs and demand for diversified strategies are driving industry consolidation, with firms pursuing scale through mergers and partnerships, especially among asset managers focused on the Chinese Mainland. By seeking cost efficiency, smaller firms aim to compete with larger players and invest more in technologies such as AI to enhance client service, optimise portfolio management, and stand out in the market.

Darren Bowdern, Head of Asset Management Tax in ASPAC, Head of Alternative Investments in Hong Kong SAR, KPMG China says:

Amid a volatile global environment, Hong Kong’s efforts to enhance investment options and market accessibility continue to provide unparalleled opportunities for investors. The push for cross-boundary recognition of qualifications would be a significant step toward enabling Hong Kong advisors to offer a broader range of products in the Chinese Mainland. As the Chinese Mainland market opens up and more Chinese investors seek global opportunities, it is clear that Hong Kong-based asset managers are ideally positioned to serve this emerging market.

¹ Securities and Futures Commission, Asset and Wealth Management Activities Survey 2024.

https://www.sfc.hk/-/media/EN/files/COM/Reports-and-surveys/EN_AWMAS-2024.pdf?rev=b5a3bd4768b34f3185b421ca91f70750&hash=532732D531ED17BDC46927632F1F09A8

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