The Trust Market in Hong Kong 2024: Growth and Opportunities

Hong Kong’s trust and family office market continues to show robust growth, reflecting its strong position as a wealth management hub in Asia. This growth is driven by the increasing number of high-net-worth individuals and the rapid development of family office businesses in the region.

Current Status and Growth

The Securities and Futures Commission’s (SFC) Asset and Wealth Management Activities Survey 2023 shows Hong Kong’s trust market continuing to grow. Trust-held assets reached HKD 5,188 billion (USD 665 billion) as of December 2023, up 4% from 2022. This growth trend has been consistent since 2019 when trust-held assets at HKD 3,844 billion (USD 492 billion).

Licensed corporations or registered institutions manage 88% of the trust assets, reflecting Hong Kong’s strong position as a wealth management hub in Asia, highlighting the continued importance of trusts for wealth preservation and succession planning among high-net-worth individuals and families.

For individuals like you, who are considering setting up a trust, Hong Kong’s thriving market presents a range of opportunities. The city’s well-established financial infrastructure, coupled with its professional wealth management services, ensures that your assets will be managed with the highest standards of expertise and regulatory oversight.

Recent high-profile examples underscore the growth and importance of the Hong Kong trust market:

1. In 2019, tycoon Li Ka-shing pledged one-third of his wealth, estimated at over HKD 100 billion (12.8 billion USD), to his charitable trust, the Li Ka Shing Foundation. This Hong Kong-based Foundation is now among Asia’s largest private charitable foundations, supporting various philanthropic causes.
2. In 2020, the late Macau casino magnate Stanley Ho’s family established a Hong Kong family trust to manage their HKD 50 billion+ (6.4 billion USD) wealth, aiming to support future generations and charitable causes.
3. In 2022, the family of the late Stanley Ho, the Macau casino tycoon, announced the setup of a family trust in Hong Kong to manage and distribute the family’s wealth, estimated at over HKD 50 billion. The trust is designed to provide for the needs of future generations and to support charitable causes.
4. In 2023, a group of successful tech entrepreneurs from mainland China made headlines when they established a collective trust in Hong Kong. The trust, with initial assets of over HKD 10 billion, aims to invest in and support the next generation of tech startups in Asia.

Hong Kong’s Competitive Edge and Why Choose Hong Kong for Your Trust?

Hong Kong offers several unique advantages that make it an attractive destination for establishing a trust:

1. Geographical Advantage: Hong Kong’s strategic location as a gateway to mainland China provides unparalleled access to one of the world’s largest and fastest-growing economies. This proximity is particularly attractive for high-net-worth individuals with business interests or investments in China.
2. Free Capital Flow: Hong Kong’s financial system allows for unrestricted capital movement, a crucial aspect for international wealth management and investment strategies. This freedom enables you to optimize your trust’s investment portfolio and adapt to changing market conditions.
3. International Legal Framework: Hong Kong’s legal system, based on English common law, offers a familiar and trusted environment for international clients like you. The city’s well-established trust laws provide a solid foundation for protecting your assets and ensuring the smooth operation of your trust.
4. Business-Friendly Environment: Hong Kong’s pro-business policies, low tax rates, and efficient regulatory framework make it an ideal location for establishing and operating family offices.
5. Low Tax Regime: Hong Kong’s tax system is known for its simplicity, low rates, and various exemptions. The city does not impose estate duty, capital gains tax, or withholding tax on dividends and interest. This favorable tax environment allows your trust to maximize its returns and minimize its tax liabilities, ensuring that more of your wealth is preserved for future generations.
6. No Hong Kong Registration Requirement: Unlike some other jurisdictions, Hong Kong does not require trusts to be registered with local authorities. This provides an additional layer of privacy and confidentiality for you and your beneficiaries. The absence of a public trust registry helps to maintain the anonymity of your trust arrangement, protecting your family’s privacy and security.
7. Settlor Can Retain Control of Investment Power: Hong Kong trust law allows you, as the settlor, to retain a significant degree of control over the trust’s investment decisions. This feature is particularly appealing if you have specific investment preferences or expertise that you wish to incorporate into the trust’s investment strategy. By maintaining control over the investment power, you can ensure that the trust’s assets are managed in accordance with your vision and goals, while still enjoying the benefits of professional trust administration.

According to the BCG Global Wealth Report 2023, Hong Kong is the largest cross-border wealth management centre in Asia, with a cross-border private wealth management scale of USD 2.2 trillion in 2022, ranking second globally after Switzerland. It is projected that Hong Kong’s wealth management scale will continue to grow at a compound annual growth rate of 7.6% over the next five years, potentially surpassing Switzerland by 2027 to become the world’s top cross-border wealth management centre.

Government Support and Policy Initiatives

The Hong Kong government recognizes the importance of the trust and family office sector and has implemented various measures to support its growth. These initiatives can directly benefit you when setting up a trust in Hong Kong:

1. Tax Incentives: In 2022, Hong Kong introduced a new tax concession for family-owned investment holding vehicles managed by single family offices. This initiative aims to attract more ultra-high-net-worth individuals to establish family offices in Hong Kong.

2. Talent Attraction: The government has launched programs to attract and retain financial talent, including those specializing in wealth management and family office services.

3. Enhanced Regulatory Framework: The Securities and Futures Commission (SFC) has been working on refining regulations to provide greater clarity and flexibility for family offices, while maintaining robust investor protection.

Growth Prospects

The Family Office sector’s growth prospects are promising due to increasing wealth creation in Asia and the growing need for intergenerational wealth transfer and diversification of investment strategies.

Comparison with Singapore

While Hong Kong shows impressive growth, it’s worth comparing these figures with Singapore, Hong Kong’s main rival as an Asian financial hub. Singapore has been aggressively positioning itself as a trust and family office center in recent years. As of 2021, Singapore reported about 400 family offices, nearly double the number from the previous year. However, direct comparisons are challenging due to differences in reporting methodologies and definitions.

Singapore has introduced several incentives to attract family offices, including the Variable Capital Company (VCC) structure and tax exemptions for qualifying funds. These initiatives have made Singapore increasingly attractive for wealth management and trust services.

Despite Singapore’s efforts, Hong Kong maintains its competitive edge with its strong financial infrastructure, proximity to mainland China, and recent initiatives to enhance its trust laws. The growth in Hong Kong’s trust-held assets suggests that it remains a preferred destination for many in Asia and globally.

We have highlighted some trust and family office law comparisons between Singapore and Hong Kong in the table below:

Conclusion

Hong Kong’s family office and trust sector has shown remarkable resilience and growth, as evidenced by the 76% increase in assets under management over the past six years. The city’s unique advantages, combined with supportive government policies, position it well for continued expansion in this sector.

UniTrust Global is well-positioned to help you capitalize on this positive market trend. Our expert team offers customized trust structures designed to meet your specific requirements. We pride ourselves on delivering cutting-edge wealth management solutions, carefully tailored to address the distinct needs of sophisticated families and individuals.

Looking Ahead

Looking ahead, Hong Kong’s family office sector is expected to play an increasingly important role in the city’s financial landscape, driving innovation in wealth management services and contributing to Hong Kong’s status as a leading international financial center.

Hong Kong’s thriving trust market, coupled with its unique advantages and supportive government initiatives, makes it an attractive destination for setting up a trust. As a high-net-worth individual, you can leverage Hong Kong’s expertise, legal framework, and business-friendly environment to safeguard your assets and achieve your wealth management goals.

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