HONG KONG – Hong Kong is proposing to liberalise rules for mutual funds to lure more international asset managers to set up shop in the city.
Authorities plan to allow alternative risk models and permit private market asset funds to reach retail investors, among other proposed changes, according to a consultation paper released after the market closed on Oct 22.
The move comes as Hong Kong, which vies with Singapore to be Asia’s top wealth hub, is seeing a boom in listings and trading volume amid reignited interest in China investments in 2025.
Seeking to cement itself as one of the world’s largest wealth centres, the city has eased rules to attract high-net-worth individuals over the past few years. It saw assets under management in 2024 rise 13 per cent to reach more than HK$35 trillion (S$5.85 trillion).
Hong Kong domiciled funds managed about HK$2.1 trillion at end June.
For bond funds that heavily use swaps and other derivatives, the city proposed to move to a value-at-risk approach common in Europe and the United States. The new model would run parallel to the current risk model, which caps derivatives exposure at 50 per cent of the fund’s net asset value.
The regulator proposed to expand retail access to private market funds, which invest in illiquid assets and redeem less frequently. Following a similar relaxation for listed closed end alternative asset funds in February, Securities and Futures Commission-authorised unlisted funds will be allowed to invest beyond the current 15 per cent ceiling on illiquid assets.
Other proposals cover liquidity management and requiring money market funds to provide a constant net asset value, among others.
The market has until Jan 21, 2026 to submit comments on the new framework. BLOOMBERG