Hong Kong's role as a major global financial center has been further enhanced with the settingup of a number of overseas asset management companies here in recent years, according to a new report of the Hong Kong Trade Development Council.

One of the largest asset management companies in the United States, Oppenheimer Funds Inc, chose Hong Kong as its first overseas office early this year. Chairman and CEO of the company John Murphy was quoted by the report as saying that the firm was attracted by the sheer size of Hong Kong's mutual fund market.

"The great potential and demand for financial products in this vibrant city provides the ideal environment for us to establish our first overseas office," he said.

Other overseas asset management companies that have flocked to Hong Kong recently include Bank One, Janus International, Pioneer Investments and WestAM, the fund management arm of Westdeutsche Landesbank Girozentrale.

"Hong Kong is one of the most important asset management centers in Asia," said Sally Wong, executive director of the Hong Kong Investment Funds Association (HKIFA).

"Factors that support the growth of the fund management industry here include the rule of law, the well-developed infrastructure, an abundant supply of professionals, a pragmatic regulatory regime that is conducive to market development and relatively low tax rates," Wong said.

According to the Hong Kong Securities and Futures Commission (SFC), the number of unit trusts and mutual funds it has authorizedin Hong Kong stood at 1,981 at the end of February 2004. Their estimated total net asset value amounted to 531 billion US dollars.

Wong said that a 2002 HKIFA survey found that the fund penetration rate is only 9.5 percent. "The opportunity for growth attracts fund managers to set up their business in Hong Kong,"

Mark Konyn, CEO of Allianz Dresdner Asset Management, which setup a base in Hong Kong in 1983, said, "Hong Kong is an extremely reliable place to do business. This is important as finance is based on trust."

Another key factor is the high quality of local staff. "The talent pool is quite deep here and the depth of skills in the marketplace is world class," said Konyn. "The workforce is dynamic,with so many professionals having been educated overseas or havingexperience of working for different international firms."

Wong added that a further factor attracting fund managers is the increasing affluence of the population on the Chinese mainlandand the gradual opening of the capital account there.

Konyn pointed out that his company became the first, via a joint venture, to launch a fund on the mainland last year.

"To really get a handle on what is happening in China, Hong Kong is ideally located," he said. "You must be here."

Source: Xinhua