Hong Kong Trust Industry Poised for Growth Amid Regulatory Enhancements

Hong Kong’s trust industry is on an upward trajectory, driven by improved access to Mainland Chinese clients, the booming private wealth sector in Asia, and strengthened industry credibility, according to a recent report by KPMG and the Hong Kong Trustees’ Association (HKTA). However, industry professionals face challenges from rising compliance costs and talent acquisition.

The HKTA and KPMG conducted in-depth interviews with government officials, regulators, and nearly 30 trust executives, alongside a digital survey of HKTA member institutions. This comprehensive research highlights the vital role of the trust sector in safeguarding assets across pension schemes, corporate trusts, charitable foundations, and private trusts.

From 2021 to 2023, Hong Kong's trust market experienced a robust 10% growth, with assets under management reaching HK$5,188 billion (approximately US$667 billion) by the end of 2023, up from HK$4,719 billion (around US$606 billion) in 2021.

When assessing future growth drivers, 24% of respondents pointed to connectivity initiatives with the Chinese Mainland and Greater Bay Area, such as Wealth Management Connect. Additionally, 18% cited the Capital Investment Entrant Scheme (CIES), which aims to attract capital and family offices, while another 18% highlighted initiatives focused on family offices and philanthropy.

Recent regulatory advancements are enhancing investor confidence and protection, with 64% of survey respondents acknowledging that the regulatory landscape is becoming more conducive to business, compared to just 51% in 2021. Key changes include the introduction of RA13 for depositaries of SFC-authorized Collective Investment Schemes and the Hong Kong Monetary Authority’s Supervisory Policy Manual.

Despite these improvements, the report notes that nearly two-thirds of respondents reported compliance costs rising by 5% to 15% over the past year, primarily due to regulatory complexity. The industry is also grappling with talent shortages, particularly in legal, compliance, and trust administration roles.

The trust industry plays a crucial role in Hong Kong’s status as a leading global financial center, employing a diverse range of professionals across banks, independent trust companies, insurance firms, and legal, tax, and accounting services. It is essential for protecting the financial well-being of Hong Kong’s residents, with 87% of the working population’s assets held under the Mandatory Provident Fund (MPF) and the Occupational Retirement Schemes Ordinance (ORSO).