Easing of Covid restrictions, huge prospects in the Chinese Mainland market and dry powder in the system will boost the Asset Management and Private Equity sector in the year ahead.
The end to quarantine and easing of other Covid restrictions in Chinese Hong Kong and the Chinese Mainland have been a promising start to 2023. Assuming that the path to full reopening continues, the momentum will carry the asset management sector into a much brighter year ahead, according to KPMG’s latest report, while private equity in particular will benefit from the reopening of the border.
«Hong Kong’s asset managers are getting ready to seize the opportunities across the region as activity in the sector revives now that restrictions have largely been dropped,» Bonn Liu, head of asset management, ASPAC, KPMG China, said.
Broad Issues and Key Topics
KPMG's «Asset Management and Private Equity 2023 Report» considers the outlook for the asset management and private equity sector, from broad issues including regulatory developments to key topics like ESG and the prospects for the crypto space.
«The removal of most of the remaining Covid restrictions is fantastic news for the sector, it means that Hong Kong can really get back to business in 2023,» Vivian Chui, head of securities & asset management, Hong Kong, KPMG China said.
New Challenges and Competition
However, there are also challenges and competition. Although Hong Kong has a number of incentives aimed at developing the asset management sector, KPMG China would like to see a government task force set up to assess these initiatives, to ensure that we remain competitive and can seize the opportunities ahead.
Hong Kong must refine and promote its range of industry incentives as it faces increasingly fierce competition as an asset management hub.
Likely to Change
The private equity market for dollar funds in the Chinese Mainland slowed in 2022, but this is likely to change in the year ahead as fund managers seek to make use of the dry powder that has amassed.
«We expect that the amount of dry powder in the system will help to boost activity in the asset management sector in 2023 as GPs deploy that capital in key markets throughout Asia,» said Darren Bowdern, head of alternative investments, Hong Kong, KPMG China.
