79. Hong Kong's wealth and asset management business has been growing exponentially, ranking top in Asia. At end-2012, there were 45 banks operating private wealth management business in Hong Kong. The assets under management of these banks and other fund managers recorded year-on-year growth of 40 per cent, reaching a record high of $12.6 trillion.
80. In last year's Budget, I proposed to allow private equity funds also to enjoy tax exemption for offshore funds to attract them to expand their business in Hong Kong. We have completed an industry consultation and shall take forward the legislative work as soon as possible. As for my proposal on introducing an open-ended fund company structure to attract more funds to establish in Hong Kong, relevant regulatory frameworks have been drawn up and consultation will begin next month.
81. In 2010, I extended the stamp duty concession to cover exchange traded funds (ETFs) that track indices comprising not more than 40 per cent of Hong Kong stocks. The number of ETFs listed in Hong Kong have since seen a substantial increase from 69 at end-2010 to 116 at the end of last year. The daily average turnover of ETFs also increased from $2.4 billion to $3.7 billion, making Hong Kong one of the largest ETF markets in the Asia-Pacific region. I propose to waive the stamp duty for the trading of all ETFs, so that the trading cost of ETFs with a higher percentage of Hong Kong stocks in their portfolios can be reduced as well. This will help promote the development, management and trading of ETFs in Hong Kong.
82. Hong Kong is a popular platform for multinational enterprises to manage their global or regional treasury functions. To draw more of these functions to Hong Kong and to enhance our strengths in financial and professional services, I have asked the Financial Services and the Treasury Bureau (FSTB) to set up a task force in collaboration with the HKMA. The task force will review the requirements under the Inland Revenue Ordinance for interest deductions in the taxation of corporate treasury activities, and clarify the criteria for such deductions. It will come up with concrete proposals within one year.
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