SFST's speech at AIMA APAC Annual Forum 2025 (English only)
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Jack (Chief Executive Officer of the AIMA, Mr Jack Inglis), Michael (Managing Director and Co-head of APAC, AIMA Mr Michael Bugel), Kher Sheng (Managing Director and Co-head of APAC, AIMA Mr Lee Kher-sheng), distinguished guests, ladies and gentlemen,
It is a great honour to address you today at the AIMA APAC Annual Forum 2025, here in the vibrant heart of Hong Kong. I am delighted to join over 600 senior leaders from the alternative investment sector — pioneers who shape the future of global finance. AIMA, as the preeminent voice for our industry across more than 60 locations, plays an indispensable role in advocating for innovation, sound governance and sustainable growth. This forum is a testament to our shared commitment to navigating the complexities of today's markets, and I thank you for the opportunity to contribute to these vital discussions.
Let us begin by reflecting on the dynamic landscape of the global alternative investment sector. This year has underscored a profound resilience and appetite for alternatives amid persistent market uncertainties. Institutional allocators, in particular, demonstrate unwavering confidence: AIMA's research indicates 46 per cent plan to increase their hedge fund allocations over the coming year, drawn to strategies that deliver uncorrelated returns, capital efficiency, and also tailored customisation. Record inflows continue to surge into non-traditional equity, private credit, and digital assets, validating alternatives as a cornerstone of diversified portfolios. Private credit and private equity, in particular, remain firmly at the very core of institutional strategies, bolstered by robust deal activity and also steady capital deployment — especially in high-growth regions like the Asia-Pacific and the Middle East, where structural reforms are unlocking long-term capital flows.
Also, technology and innovation are no longer peripheral but central to our evolution. AIMA's latest findings reveal that 58 per cent of managers now anticipate ramping up generative AI integration in their investment processes — a sharp rise from 2023 — while investors more commonly incorporate AI-specific due diligence into their assessments. Cybersecurity and digital assets have similarly transitioned to mainstream imperatives, enabling enhanced risk management and new investment opportunities.
Regulatory and governance imperatives further define this era, with global policy forums — many convened by AIMA — emphasising adaptive frameworks and industry-led standards, particularly for private market strategies. Geopolitical tensions, once viewed solely as hazards and risks, are increasingly reframed as alpha opportunities, necessitating dynamic hedging and robust risk budgeting as prerequisites for outperformance. These trends, as AIMA aptly captures, affirm the sector's vitality: robust institutional demand and record fundraising cement alternatives' pivotal role, while emerging opportunities in AI, private credit, and policy evolution call for agility and ceaseless innovation.
Hong Kong stands at the very epicentre of this global momentum, uniquely positioned under the "One Country, Two Systems" principle to bridge international capital with Asia's inexhaustible opportunities. Our city is not merely a participant in these trends but an accelerator, leveraging our highly open, internationalised market as seen in today’s audience; our robust rule of law; and our regulatory alignment with leading global jurisdictions. With assets under management surpassing HK$35 trillion — 11 times our GDP — and net fund inflows reaching HK$705 billion last year alone, followed by HK$340 billion in the first eight months of this year, Hong Kong reaffirms its stature as Asia's foremost hub for alternative investments. Home to over 650 private equity firms managing nearly US$228 billion and more than 2,700 single family offices, we are Asia's largest cross-boundary wealth management centre, with projections positioning us to claim global primacy in the coming years.
In alignment with the trends AIMA has identified, the Hong Kong Government is advancing a comprehensive policy agenda to nurture this ecosystem. Central to our efforts is the enhancement of our preferential tax regimes for funds, single family offices, and carried interest — measures designed to attract and retain the institutional capital that fuels private equity and credit strategies. Under our existing framework, publicly offered funds are already exempt from profits tax, while a targeted ordinance has provided tax relief for carried interest distributed by eligible private equity funds since May 2021.
Building on this foundation, we are finalising proposals this year to broaden these concessions further. These include expanding the scope of qualifying transactions to encompass emissions derivatives, carbon credits, insurance-linked securities, loans, private credit investments, and digital assets; refining the carried interest regime by removing the regulator's certification requirement and the hurdle rate reference; and extending exemptions to pension and endowment funds. We target submission of the legislative bill to the Legislative Council in the first half of next year, with implementation from the year of assessment 2025/26. These reforms directly respond to the sector's call for capital efficiency and customisation, enabling managers to deploy resources more effectively while mitigating fiscal barriers to innovation in Asia-Pacific's growth corridors.
Equally pivotal is our drive to facilitate the listing of alternative asset funds, fostering deeper liquidity and investor access in line with the rising demand for resilient strategies. In February this year, our regulator issued a circular clarifying regulatory requirements for closed-ended funds investing primarily in private and less liquid assets — such as private equity, private credit, and infrastructure, to list here in Hong Kong. This guidance emphasises management competence, diversified portfolios, robust distribution policies, rigorous valuation standards and comprehensive disclosures, while allowing flexibility to suit diverse strategies. Preferentially, we encourage sizeable funds with regular income streams, and the regulator may impose additional conditions, modify requirements or allow flexibility in compliance with certain requirements, having regard to the fund's nature and investment strategy. Complementing this, the Mandatory Provident Fund Schemes Authority clarified in May this year that MPF funds may invest in approved listed private equity funds, capped at 10 per cent of net asset value to balance diversification benefits with risk safeguards. This opens new channels for institutional inflows, supporting the record fundraising and private market vitality that AIMA just highlighted.
To amplify our appeal to single family offices and global wealth owners — the nimble stewards of bespoke, long-term capital — we launched the New Capital Investment Entrant Scheme in March last year, enriching our pool of wealth owners and injecting fresh allocators into the alternatives space. Our third Wealth for Good in Hong Kong Summit in March this year also convened global family offices, fostering collaboration and knowledge exchange. These initiatives, coupled with tax concessions for single family offices and a dedicated FamilyOfficeHK team in our Invest Hong Kong which is the investment promotion agency in the Government, position Hong Kong as a sanctuary for the transparency and governance that allocators now demand. Moreover, our ongoing diversification of fund structures — through the Open-ended Fund Company and Limited Partnership Fund regimes, alongside re-domiciliation mechanisms — facilitates seamless migration and innovation, aligning with the sector's embrace of technology and regional divergence.
Ladies and gentlemen, these policies are not isolated measures but a cohesive strategy to propel Hong Kong's alternatives sector forward, in harmony with global currents. By deepening mutual market access with the Mainland — through enhancements to Stock Connect, Bond Connect, and the Mutual Recognition of Funds arrangement — we are channelling Asia's structural tailwinds into tangible opportunities for hedge funds, private equity, and beyond. As we explore innovative offerings like offshore Mainland government bond futures and inclusion of RMB counters in Southbound Stock Connect, we reinforce Hong Kong's role as the indispensable gateway for risk-managed growth.
In closing, the trends before us demand partnership, and Hong Kong is resolute in our collaboration with AIMA and our shared community. Together, we will harness institutional appetite, pioneer technological frontiers and fortify governance to unlock the full promise of alternatives. I very much look forward to the dialogues ahead and to Hong Kong's continued leadership in this sector. Thank you.
Ends/Tuesday, October 28, 2025
Issued at HKT 10:42
Issued at HKT 10:42
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