Author: HKFA Media Team

Elderly-Care Trusts in Demand as Pension Competition Intensifies

During the Spring Festival, banks in China did not let down its guard, but instead took unprecedented action to “attract clients from its competitors”. In fierce competition, banks nationwide have made every possible effort to tempt clients to set up a personal pension account by marketing activities such as the lucky draw, instant discount, referral rewards, etc.   Regrettably, despite the craze for opening a bank account, people are reluctant to deposit, which has become a hidden hazard that cannot be neglected. As of the first half of 2023, the number of individuals participated in personal old-age pension exceeded 40 million, with the amount of deposits exceeding 18 billion yuan, which is merely equivalent to 450 yuan per capita contributions. With a meagre 450 yuan, how can we guarantee our care-free life after retirement? It’s nothing short of a unrealistic illusion.   Therefore, through other effective financial instruments, solving elderly-care problems has become one of the most pressing social issues. In particular, some countries and regions like Japan, Hong Kong, are at the forefront of this trend, having developed full-fledged elderly-care Trust, which provides a solution to address the challenges of an ageing society. Accordingly, it has become a preferred choice of many retirees.   There are the following significant advantages behind its the favour of the general public: Reasonable utilisation of funds. You can pre-arrange living expenses, medical expenses or nursing care expenses for yourself or your parents to ensure a high-quality retirement life. Asset protection has the effect of isolating all types of risks. When assets are transferred to a Trust account, they are held in the name of the Trustee Company and strictly protected by relevant Trust laws. This means that your assets can be protected to the greatest extent possible, thus preventing them from exposed to all kinds of potential risks. Achieve steady growth through professional investment. Your assets are not only protected, but can also grow steadily through professional investment teams, providing you with a stable income. A comprehensive service system ensures a better life in your old age. Trustee Companies can offer you with a variety of elderly-care services, given the long term relationships they have established with many well-known elderly service organisations.   With Elderly-Care Trusts gaining further popularity and growth nationwide, we are fully confident that it is bound to become a wise option for a growing number of people. Meanwhile, Elderly-Care Trusts can safeguard those in need, enabling them to live a more comfortable, secure and care-free life in their old age and enjoy the joy and beauty of old age.

Asia-Pacific Leads Investment as Hong Kong Eyes Family Office Hub

Recently, Union Bank of Switzerland (UBS) released Global Family Office Report 2024, which brings together the insights of 320 single family offices across seven regions of the world. The result shows that the Asia-Pacific region (APAC) looks set to be the top destination of added allocations in family offices globally.   According to this survey, the total net wealth of the family offices exceeded US$600 billion, with an average net wealth of US$2.6 billion. Meanwhile, APAC has the highest number of respondents of all regions. The result presents that global family offices have shown significant changes in investment in terms of regions, portfolios, and methods.   LH Koh, Head of UBS Global Family Institutional Wealth APAC, shared, “almost half of APAC family offices plan to allocate more assets to APAC over the next five years, with APAC set to be the top investment hotspot globally.”    Indeed, Hong Kong’s family office market has been flourishing in recent years. Invest Hong Kong (InvestHK) announced on 18 March that according to the Market Study on the Family Office Landscape in Hong Kong conducted by Deloitte, commissioned by the department, it is estimated that there are more than 2,700 single-family offices in Hong Kong. Furthermore, if we count in the multiple family offices not being included in this survey, the total number of family offices in Hong Kong will be far more than 2,700. The details are set out below:       In recent years, the Hong Kong Government has keenly consolidated its status as a global family office hub and is determined to maintain an unrivalled position. To this end, the Government has introduced a series of policies and complementary measures to attract more ultra-high-net-worth individuals and families to set up family offices in Hong Kong.   The Government has put in place a series of measures to witness its thriving family office sector. As of February this year, the dedicated team of InvestHK has assisted 58 family offices to set up or expand their operations in Hong Kong, and more than 100 family offices indicated that they had decided or were preparing to set up or expand their operations in Hong Kong.   As a leading international centre and well-recognised wealth management centre, Hong Kong provides an enabling environment with many unique advantages for family offices to operate and grow. Being a gateway to the Chinese Mainland, Hong Kong offers outstanding potential for building a lasting family inheritance for business families from both the East and the West, becoming a preferred destination for family offices.

Hong Kong OFC: A New Choice for Global Asset Allocation!

As one of the products designated by New Capital Investment Entrant Scheme,  Hong Kong Open-ended Fund Company (OFC), leading the new trend toward asset allocation, is preferred by the advantages such as openness,flexibility, risk-control capacity, stable return.   The development of open-ended fund company in Hong Kong did not happen overnight. As early as 2014, Hong Kong had planned to build an open-ended fund company system in terms of rules, fees and taxation. The Securities and Futures (Amendment) Ordinance 2016 has formally been implemented since 30 July 2018. This marks that “open-ended fund company” (or “OFC”), a new company form,was introduced into Hong Kong.   As a new form of fund scheme with a wider scope, more inclusiveness and a higher degree of freedom, investors will be able to obtain stable returns by utilising OFC for global asset allocation according to their needs.       In addition, an OFC must be managed by an investment manager who has a Type 9 (asset management) regulated activities licensed/registered by Securities and Futures Commission of Hong Kong (SFC). Similar to the Hong Kong Unit Trust structure, an OFC may be established as an umbrella structure (as illustrated above) consisting of multiple sub-funds operating within a single entity with its own investment objectives in order to diversify risks.   As a late bloomer in asset allocation, OFC provides investors with an importance tool to spread their risks by asset allocation and diversification, and capture its global investment opportunities due to flexible investment strategies, wider investment scope and easier access to international markets.

The Chinese Mainland Capital Is Flooding into Hong Kong

Currently, with a large amount of the Chinese Mainland (hereinafter referred as to the Mainland) capital pouring into Hong Kong, there are 4 hot trends in terms of bank account opening, cross-boarder wealth management, insurance purchasing and real estate investment.     1. Rush to bank account opening: Despite higher entry thresholds for Hong Kong bank account opening, yet it still boost the Mainland investors’ enthusiasm. Banks such as Hang Seng and HSBC have seen a surge in new clients, with non-local residents accounting for a significant proportion, especially those from the Mainland.   2. Cross-boundary wealth management connect “Southbound Service”: “Southbound Service” is available to the Mainland residents to purchase eligible wealth management products in Hong Kong, and the amount of cross-border remittance has surged by more than 60 times, showing the strong demand for freer asset allocation.   3. Hong Kong’s insurance boom: New policy premiums from Mainland visitors hit a record high in the first quarter, up more than 60% year-on-year. Hong Kong Endowment Plan attracts middle-and-high-net-worth families with high expected returns, becoming the preferred choice for risk hedging and appreciation.   4. Buying property in Hong Kong:  After the “Removal of spicy measures”(the Hong Kong government’s decision to completely withdraw all demand-side management cooling measures in the housing market), Hong Kong saw a record purchase surge by Mainland buyers. In addition, the number and cost of registrations in both the primary and secondary markets reached record highs, leading to a significant reduction in taxes and fees. Why does Hong Kong attract so many affluent individuals ? They are three major reasons. Firstly, as interest rates on the Mainland continue to fall, Mainlanders are eager to transfer their money into overseas bank accounts for seeking higher returns. Secondly, some affluent Chinese are returning to Hong Kong as Singapore and the United States tighten restrictions on investment. Thirdly, the wealthy people adopt risk diversification strategies by allocating cross-border assets. This is also a major incentive for Mainland funds flooding into Hong Kong. With ever closer bond between Hong Kong and the Mainland, we are fully confident that Hong Kong will still emerge as an international hub for capital flows for the Mainland for a long time to come.

Why Do the Wealthy Prefer to Set Up Family Offices in Hong Kong?

Thanks to its competitiveness, unique geographic location, solid market foundation, and mature financial and legal environment, Hong Kong is well positioned to be a top destination to allure the world’s wealthy to set up family offices.   Firstly, Hong Kong is backed by the Chinese Mainland, the world’s second largest economy, which offers infinite wealth growth potential for family offices. As China’s economy continues to grow, the Mainland market brings vitality and opportunity into family offices in terms of investment options and asset appreciation. Meanwhile, Hong Kong assumes “super-connector” role between the Chinese Mainland and the rest of the world, being a global destination for setting up family offices as it offers access to a wide range of resources for global perspectives to help them achieve global wealth allocation and risk management.   Secondly, Hong Kong’s well developed financial system and sound legal system provide a reassuring level of protection for family offices. As the world’s largest offshore RMB hub, Hong Kong has one of the highest concentrations of the world’s top financial institutions and professionals, providing diversified financial products and services for them. Moreover, thanks to its well-established and transparent legal system, Hong Kong provides stronger legal support and protection for family offices to ensure a smooth succession of family wealth and sustain enduring family business.   Thirdly, capitalising on cultural commonality with the Chinese Mainland and the city’s diverse talent pool, Hong Kong possesses unrivalled advantages for family offices. Besides, as a fusion of East and West, it has unique cultural diversity to attract global talents. All these help Hong Kong better understand and serve the Mainland clients so as to satisfy their needs for family culture inheritance and wealth management.   In general, Hong Kong offers an ideal environment for setting up family offices with many unparalleled advantages that encompass the strong backing from the Motherland, its mature financial and legal environment, cultural commonality and global talent pool.   During this era of global economic growth amid accumulating family wealth, looking ahead, we are fully confident that the prospects for family offices in Hong Kong are even more promising.

Dubai Is Becoming A New Magnet for Global Affluent Migrants

The Henley Private Wealth Migration Report 2024, released today by international investment migration advisory firm Henley&Partners, shows that the United Arab Emirates (UAE) continues to take first place as the world’s leading wealth magnet for high-net-worth-individuals (HNWIs), with a record-breaking 6,700 affluent migrants the by the end of 2024.     There are a variety of factors driving Dubai’s attraction for global immigrants, such as high-quality real estates, investor-friendly framework, large-scale industrial advertisement, the United Arab Emirates Golden Residency Program or the UAE Golden Visa. In particular, there are five major reasons as follows:   1.  Strategic and economic resilience As part of forward-looking economic initiatives, like Abu Dhabi Economic Vision 2030, Dubai Economic Agenda “D33”, the UAE is actively strengthening its position as a leading global financial hub by growing and diversifying its economy.   2. Leveraging its geographical advantages as a trade hub As a major business and commercial hub between the East and the West, the UAE serves as crucial links to trade and investment worldwide by the Port of Jebel Ali and its two national airlines, particularly in collaboration with key markets such as India.   3.  Favourable tax and residency policies Tax-free policies and golden visa schemes offer financial freedom and long-term residency for investors and top talents, thus attracting capital and talents around the globe.   4.  Family office hub As a new global focus for family wealth management, Dubai becomes a magnet for global giants by actively developing its family office business.   5.  Prosperous real estate market Dubai, well-known for its luxury properties and high-end projects, attracts a large number of investors around the globe. Its real estate market demonstrates strong growth potential as the transactions appear to be on a continuous upward trend. In conclusion, Dubai emerges as a preferred destination for global HNWIs due to its resilient economy, tax incentives, thriving property market and high quality of life. Notably, HKFA (Hong Kong Fiduciary Association Limited) has already established a presence in Dubai by offering HNWI clients in the Middle East and the rest of the world, professional Trust and financial advisory services to Middle East and global HNWI clients, helping them seize the investment opportunities in Dubai and realise their wealth appreciation. We welcome your inquiries.

KPMG: Hong Kong Reclaims Position Among Top Five Global IPO Venues

On October 3, 2024, according to KPMG’s latest Chinese Mainland and Hong Kong IPO Markets 2024 Q3 review, Hong Kong has regained its position among the top five global IPO venues.     Hong Kong IPO activity displayed signs of recovery in the third quarter of 2024, with 45 listings and a total fundraising of HK$55.6 billion recorded so far in 2024. Both the amount of fundraising and the number of listings spiked 123% and 2% respectively compared to the same period last year. It is worth noting that the consumer markets sector led in terms of funds raised, attributable to the listing of a large Chinese home appliance maker, which alone attracted HK$ 35.7 billion, as Hong Kong’s largest IPO in the last three years. Hong Kong has regained its position among the top five global IPO venues in funds raised. As of the third quarter of 2024, global IPO markets raised a total of US$ 83.3 billion through 851 deals, reflecting declines of 21% in funds raised and 15% in the number of deals compared to the same period last year. Among them, the two stock exchanges in the US continued to lead the world in terms of fundraising, accounting for one-third of the total IPO funds raised worldwide. The National Stock Exchange of India ranked third, while the Hong Kong Stock Exchange and the Shanghai Stock Exchange ranked fourth and fifth, respectively. The KPMG report reflects investors’ renewed confidence in the Hong Kong IPO market, demonstrating that Hong Kong has retained its global financial and trading centre, which is still favourable for doing business.

What Does Donald Trump’s Election Win Mean for the International Capital Market?

Specifically, the U.S. presidential election has triggered more volatility in U.S. stocks, U.S. bonds, gold, and commodities.     U. S. Treasury Bonds Due to the return of inflation and mounting U.S. budget deficit, as much as concerns about yields have grown significantly since October. Moreover, the yields continue to soar as Trump wins U.S. presidency election. Now, republican clean sweep will make it significantly easier to implement its fiscal policy in the U.S., which could further increase the yields. Longer-term trends will still base on economic fundamentals, while the U.S. government’s budget deficit will significantly affect the term spread. Currently, there is a widespread consensus that the U.S. Treasury yield curve may steepen.   U.S. Stocks  When short-term investor sentiment is high, tax cuts and easing regulatory have a positive effect on corporations, the market appears to be favourable to small-and mid-cap stocks, financials and value, etc. It’s worth noting that a continued rise in long-term U.S. Treasury yields may put higher pressure on U.S. stock market valuations. In particular, when inflation or even stagflation makes a comeback, both stocks and bonds may decline simultaneously.   Gold Trump’s “America First” policy may escalate trade frictions, while his fiscal plan will further raise the U.S. fiscal deficit. From a long-term perspective, as a natural currency, gold is considered as a reliable investment over the long term. However, in some cases, overpricing gold prices is partly a result of some investors taking profits in the short term.   Commodities Generally speaking, the most common commodities are energy sources like crude oil, etc. Trump’ preference for traditional energy sources may further increase the U.S. energy supply. From the supply and demand relationship, as there is no shortage of crude oil, the increase in U.S. production capacity may not necessarily be conducive to favourable oil prices.   Virtual Assets Trump’s support for cryptocurrencies could push several digital assets such as Bitcoin to a surge in price. And he advocated for a strategic bitcoin reserve, positively influencing the cryptocurrency market. In fact, the price of Bitcoin hit an all-time record sparked by Trump’s election win rolls on.

Five Ways Family Trusts Help Entrepreneurs Secure Wealth Inheritance

  1. Establishing a “firewall” between a family and an enterprise to ensure the better standard of living for families As a kind of risk isolation tool, Family Trust can provide a protective barrier that can safeguard family wealth from various risks. When setting up a Trust in stable operation of business, family financial assets can be placed in the Trust, which can be independent of enterprises’ own assets, so as to effectively prevent from family assets from risks of enforcement due to their debt problems.   2. Avoid equity dispersion caused by marriage, inheritance and debt risks Without setting up a Family Trust, equity is prone to be divided due to divorce, death or debt risks, which may lead to the decentralization or even loss of corporate control, thus resulting in chaos and turbulence in business operations. Upon placing it into a Family Trust, equity can be transferred into the name of trustee, and then SPV (Special Purpose Vehicle) is structured effectively to ensure smooth operations and decision-making rights of enterprise leaders, so as to secure sustainability of family businesses and inheritance across generations.   3. Cross-border asset distribution and tax planning When a Family Trust is set up during the grantor’s lifetime, the Trust property doesn’t belong to the grantor’s personal property due to its judicial independence. Upon the death of the grantor, property held in the Trust is usually not subject to the estate probate process and therefore is not subject to estate tax. Frederick Christ Trump, Donald Trump’s father, leveraged this features of Trust to avoid nearly USD500 million in estate taxes by setting up a GRAT Trust (Grantor-Retained Annuity Trust).   4. Tax planning on distribution of dividends and bonus share According to the relevant laws of Chinese Mainland, when a limited partnership distributes dividends to a Family Trust. As a kind of legal structure, Family Trust does not belong to enterprise legal entity nor other organisations. Therefore, the dividends obtained from the limited partnership enterprise are not required to be declared nor subject to income tax. When the Family Trust distributes benefits to the beneficiaries, until now, the Chinese Mainland has not issued specific tax regulations on the incomes from Trusts. Currently, they are not subject to taxation, thereby achieving tax efficiency.   5. Withoutsuitable successors, long-term planning for family wealth is much needed If entrepreneurs settle these financial assets into a Family Trust, these assets can not only ensure that family members maintain a decent life, but also can embed a ‘milestone’ behavioural guidance mechanism in the Trust benefit arrangements, while offering necessary financial support in terms of school enrolment, graduation, employment, marriage, childbearing, and startup. This approach can motivate and inspire family members to succeed. As the Chinese saying goes, “preparedness ensures success, while unpreparedness lends to failure”. Family Trust is like a complex wealth project that requires careful planning, in which a solid one will be built for passing down through multiple generations after a dilapidated building is dismantled. This requires a joint effort that involves chief designers, architects, and property managers working together. Given that, high-net-worth individuals and ultra-high-net-worth individuals should make planning for setting up Trust as early as possible.

Hong Kong Trust Global Financial Forum Wraps Up in Shenzhen

On the afternoon of February 25, 2025, Hong Kong Trust Global Financial Forum – Hong Kong & US Listing Networking Session (Shenzhen) concluded successfully in Futian Shangri-La, Shenzhen. Sponsored by Hong Kong Fiduciary Association Limited (HKFA), this event was co-organised by Hong Kong Trust Capital Management Limited, AllBright Law Offices, Ernst & Young, Rainbow Capital (HK) Limited, Hong Kong Enterprise Association Limited, and Inheritance Asset Management Limited.     As the second tour of Hong Kong Trust Global Financial Forum Series, the event continued to echo the theme, focusing on the impact of the “New Nine Guidelines”issued by China’s State Council on mainland enterprises’IPOs and international expansion. It delved into cutting-edge trends in overseas IPOs, key considerations for establishing overseas structures, and strategies for compliance and security.    In addition, the forum gathered many industry leaders and elites, with more than 100 professionals in the financial, tax and corporate sectors, in which participants further discussed the new opportunities of listing and financing in Hong Kong and the US, sharing the latest views and practical experience, and providing valuable ideas and solutions for the growth of Chinese mainland enterprises venturing abroad.   Meanwhile, the forum also focused on the important role of Offshore Trust in cross-border financing for enterprises, especially in the strategy of safe landing for wealth. Through setting up Offshore Trust, enterprises can achieve asset isolation and protection, tax optimisation, which ensures the orderly inheritance of wealth through flexible Trust structures.     1. Gathering of Big Names in the Forum for In-depth Analysis of the Lasted Market Trends   In the guest sharing session, Lawyer Han Meiyun, Senior Partner of AllBright Law Offices, firstly appeared on the stage to share with the guests on the topic of Hong Kong’s IPO Boom and A+H Shares Model.   With her profound legal background and extensive experience in the capital market, Lawyer Han Meiyun analysed the dynamic trends of the A-share and Hong Kong stock markets with practical cases. Moreover, she explained the key role of the A+H Shares Model in cross-border financing of enterprises. Combining with the current actual situation, Lawyer Han Meiyun proposed the capital market development model of “H first and then A”, which provides new Internationalisation strategies for enterprises. It also brought valuable insights and inspirations to the guests, helping enterprises advance their ideas and make precise design in overseas financing.     Afterwards, Mr. Zhang Linghui, Audit Services Partner of Ernst & Young, Shenzhen, shared with the guests the audit differences between A-shares and Hong Kong shares. With his professional insight, Mr. Zhang deeply analysed the key differences between A-share and Hong Kong shares in terms of auditing process, standards and policies. Furthermore, he combined with the characteristics of other major capital markets such as the US stock market, and  sharing valuable information to the guests, which enabling them to have a clearer and more comprehensive understanding of the listing rules of A-shares, Hong Kong stocks and the US stocks. All these provided important references to the enterprises in their cross-border financing and listing.     After that, Mr. Danny Leung, Managing Director of Rainbow Capital (HK) Limited, shared his views on the key preparatory and planning for listing on the Hong Kong Stock Exchange (HKEX) and NASDAQ. Besides, he introduced the listing thresholds, the market environment and unique advantages of the Stock Exchange of Hong Kong Limited (SEHK) and NASDAQ respectively. Through comparing the listing costs and development prospects of the two jurisdictions,he made a clear timeline for listing on HKEX for the guests, covering the whole process from IPO preparation to listing, which designed to help enterprises navigate the listing process.       The last sharing was brought Mr. Melvin Mui, COO of Hong Kong Trust Capital Management Limited (HKTCM). With his profound attainments and professional knowledge in the field of finance, Mr. Mui delved into the key role of Trust structure in the listing process of enterprises. On top of that, he elaborated on how the Trust structure can help enterprises optimise their equity allocation while effectively safeguarding shareholders’ rights and interests during the listing process, as well as how to achieve sound wealth appreciation and orderly inheritance of family wealth.   Mr. Mui noted that Family Trust, as a powerful tool for wealth management, can be particularly well suited for high-net-worth individuals (HNWIs), which plays an effective role in wealth planning and security protection. Prior to IPO, one of the most important functions of Family Trust is its segregation of Trust assets in the establishment of Offshore Trust structure. Through a Trust structure, business owners can separate their personal assets from business assets, so as to shield personal wealth from business risks. His insights were both practical and though-provoking, which aroused much echo among guests.       2. Interactive Exchanges, Professional FAQ Received Positive Feedback   The wonderful presentations by the four speakers were met with enthusiastic applause from the audience. This was followed by an FAQ session featuring Lawyer Han Meiyun, Senior Partner of AllBright Law Offices, Mr. Zhang Linghui, Audit Services Partner of Ernst & Young, Shenzhen, Mr. Danny Leung, Managing Director of Rainbow Capital (HK) Limited, and Mr. Melvin Mui, COO of HKTCM. The panel engaged in vibrant interactions and exchange with the attendees.         Some of the questions about the exchange session are as follows:   1. What kind of circumstances will be met by a domestic enterprise to be recognised as an indirect overseas offering and listing? A: According to Han Meiyun, senior partner of AllBright Law Offices, according to the new filing regulations on overseas listings, the issuer shall be recognised as a domestic enterprise for the purpose of indirect overseas issuance and listing. In accordance with the relevant circumstances, and the regulator will generally consider the proportion of the enterprise’s financial indicators, business activities and the identity of the senior management, etc. However, in actual operation, the new regulations follow the principle of “Substance Over Form Principle”, i.e. in determining whether an issuance is an indirect offshore offering, the total assets, net assets, operating income, percentage of total profit, identity of executives and business operation of the enterprise should be taken into account, rather than just the formal place of incorporation or holding structure.   2. What financial preparations does a company need to make before listing overseas? A: Mr. Zhang Linghui, Audit Services Partner of Ernst & Young, Shenzhen, noted that listing marks an important milestone in the expansion of an enterprise. Prior listing, the key financial considerations includes the completeness of financial documents, business processes internal