How Hong Kong can double asset holdings: target world’s ‘patient’ capital, FSDC advises

Assets under management in Hong Kong would double with the addition of just a small portion of the money global insurance and pension funds have to invest, according to a member of the Financial Development Services Council (FSDC).

Hong Kong should do more to attract this so-called patient capital – assets that insurance companies and pension funds invest for the long term, said the government think tank that promotes the city as an international financial centre, in a report on Wednesday.

Globally, pension funds had total assets of US$68 trillion at the end of last year, while global insurers had investment assets of US$42 trillion at the end of 2024, according to data from the FSDC.

“If only a small portion, or about 5 per cent, of the global insurance and pension fund capital would invest in Hong Kong, the total assets under management in the city would double,” said Jonathan Wu, human capital committee member of the FSDC, who is also a founding partner of Wings Capital Ventures, in a media briefing.

Assets and wealth managed in the city increased by 20 per cent last year to a record HK$42.2 trillion (US$5.4 trillion), according to data from the Securities and Futures Commission.

Rocky Tung Yat-ngok, executive director of the FSDC, said the council recommended that Hong Kong needed more bonds and other long-term projects to meet the investment needs of insurance companies and pension funds, which invest over 20- to 30-year horizons.

“The city also needs to work with regulators in mainland China to expand the many cross-border connect schemes to allow mainland insurers and pension funds to invest in stocks and bonds in the city,” Tung said in the same media briefing.

Beijing recently allowed mainland insurance companies to invest in Hong Kong-listed exchange-traded funds via the connect schemes, but mainland pension funds are not yet allowed to invest here.

Mainland insurers held 41.3 trillion yuan (US$6.1 trillion) in assets at the end of last year, but only 5.4 per cent was invested overseas, well below the 15 per cent regulatory ceiling, the FSDC data showed.

Mainland pension assets reached 15.66 trillion yuan in 2024 and were projected to expand to 28 trillion yuan by 2030. Allowing mainland pension funds to invest across the border would drive unprecedented growth for Hong Kong, the council report said.

“Mainland insurers and pension funds could diversify their investments and achieve a good return if they were allowed to invest in Hong Kong via the many connect schemes,” said Ding Chen, vice-chairman of the FSDC, who is also a director of bourse operator Hong Kong Exchanges and Clearing.