HK urged to chase long-term 'patient capital'

Hong Kong ought to chase "patient capital," money that remains stable rather than assets that flee at the first sign of trouble, according to the Financial Services Development Council (FSDC). In a new report, the council outlined strategies to entice this type of capital from pension funds and insurers based in Hong Kong, on the mainland, and overseas.

FSDC Vice-Chairman Ding Chen revealed that the report's central objective is to transform Hong Kong into not only a place for capital accumulation and trading but also a hub for managing, investing, and reinvesting capital over a longer duration.

The report suggests introducing more investment products, such as bonds and diverse stocks, along with enhanced risk controls. It also advocates for increased cross-border channels, particularly for pensions and insurance. Rocky Tung, the council's executive director, posited that this more stable investment could serve as a "stabilising force" amidst market fluctuations, fostering new financial products and long-term growth.

Tung noted that investors often enter and exit markets for brief periods, pulling money out when conditions are less than ideal. Consequently, this behavior can generate significant market volatility and exacerbate economic cycles. Patient capital, on the other hand, embodies a long-term perspective, positioning itself as a stabilising force in the financial landscape.

The report highlighted that mainland insurers possessed ¥41.3 trillion in assets by the end of the previous year, but only 5.4% of that was invested outside mainland China, significantly below the permitted 15%. Pension savings in mainland China totaled ¥15.66 trillion in 2024. The report indicated that as populations age, the demand for diversified cross-border investments and a more appropriate alignment between assets and long-term liabilities would present immense growth prospects for Hong Kong's patient capital.