Hong Kong regained its position as the world’s leading market for IPO fundraising in 2025 and has maintained this strong performance into 2026
Hong Kong’s long-awaited reforms to its fund exemption rules and carried interest regime will likely prompt a significant influx of regional and global asset managers to the city, according to KPMG’s latest Hong Kong Asset Management and Private Equity Outlook.
As per the outlook, the reforms arrive at a time when Hong Kong’s asset management industry is witnessing renewed momentum.
According to the SFC’s latest Asset and Wealth Management Activities Survey, total AUM (Asets Under Management) rose 20% to a record high in 2025, and net fund inflows nearly tripled during the year (up 193%).
Critically, 56% of assets managed in Hong Kong are now invested beyond the Chinese Mainland and Hong Kong SAR, demonstrating the special administrative region’s enduring role as a genuinely global allocation center.
“The reformed Unified Fund Exemption (UFE) regime—described in the report as the most consequential tax development in a generation—directly resolves the legal certainty gap that had previously driven parts of the alternatives business to other hubs. Under the new framework, qualifying carried interest and performance fees will attract a 0% effective tax rate at both the corporate entity level and in the hands of Hong Kong-based employees. Uniquely, this incentive will apply retrospectively from the 2025 assessment year—a competitive advantage that no rival jurisdiction currently offers,” KPMG stated.
Talking more about the impact of the long-awaited reforms on Hong Kong’s asset management industry, Darren Bowdern, Head of Alternative Investments, Hong Kong SAR, KPMG China, said, “The government’s intent with this landmark tax package is unambiguous: it wants this incentive utilised to its fullest extent. By offering a retrospective 0% effective tax rate on both carry and performance fees, Hong Kong has eliminated the operational ambiguities that historically hindered private equity, credit, and hedge fund structures locally. We anticipate strong immediate interest from global asset managers looking to build permanent investment teams and oversee high-value Asian portfolios from Hong Kong.”
As per Bowden, Hong Kong’s capital markets are also gaining significant momentum. The city regained its position as the world’s leading market for IPO fundraising in 2025 and has maintained this strong performance into 2026, currently ranking among the top two globally, with KPMG forecasting full-year IPO fundraising of around HKD 350 billion.
Vivian Chui, Head of Securities and Asset Management, Hong Kong SAR, KPMG China, remarked, “Markets are showing renewed momentum, capital is returning, and policymakers are taking deliberate steps to strengthen Hong Kong’s position in an increasingly competitive global landscape. From the deepest IPO pipeline in a decade to leadership in tokenization and an expanding ETF product shelf, the foundations for sustained growth are firmly in place. The challenge for the industry now is to invest in the people and skills needed to capture these opportunities.”
The KPMG report has identified exchange-traded funds (ETFs) as a significant growth opportunity for Hong Kong’s asset management industry. The average daily turnover of ETFs for the first six months of 2026 was HKD 39.6 billion, an increase of 17% when compared with the same period in 2025.
KPMG expects the market to expand further as investor demand moves beyond traditional passive index products towards active strategies, income generation, thematic exposure, virtual assets, and tactical trading products.
This changing product mix could strengthen market liquidity, broaden investor choice, and create new distribution opportunities for global and regional asset managers.
Arion Yiu, Audit Partner, Financial Services, Asset Management, Hong Kong SAR, KPMG China, noted, “This next phase of growth must, however, be built on investor trust. As products become more sophisticated, particularly in areas such as leveraged, inverse, and single-stock ETFs, managers and distributors will need to ensure that governance, disclosure, and investor education keep pace. Firms that can combine innovation with strong product oversight will be best placed to capture this opportunity.”
