Hong Kong Fintech Ecosystem Report

PART I: HONG KONG FINTECH AT A GLANCE 11 HONG KONG’S FINANCIAL MARKET AND ITS UNPARALLELED ADVANTAGES Ranking third in the latest Global Financial Centers Index 2024 report,²4 Hong Kong is highlighted as a financial center likely to grow significantly over the next two to three years, underscoring its increasing importance as an international financial services hub.²5 The Global Startup Ecosystem Report 2024 ranks Hong Kong first in Asia Pacific and third globally in emerging ecosystems,²6 indicating the city’s robust economy as a host for innovative startups, including those in the fintech sector. The 2023 Frontier Technologies Readiness Index, published by United Nations Conference on Trade and Development, places Hong Kong ninth globally,²7 signifying its preparedness to leverage cutting-edge technologies such as artificial intelligence and Internet of Things. These exceptional rankings attest to Hong Kong’s competitiveness and attractiveness as a major global financial center. Hong Kong possesses a diverse and rich funding landscape, enabling companies to access both government and private funding opportunities for small startups, as well as venture and private equity funding for scale-ups. In the first half of 2024, fintech companies in the Asia Pacific recorded 438 deals totaled US$3.8 billion. Among the top ten deals, Hong Kong’s HashKey Group and LongBridge Security each secured US$100 million.²8 Additionally, Hong Kong ranks as one of the leading IPO markets globally, with funds raised through IPOs in 2022 amounting to HKD 105 billion, positioning the city as the fourth-largest IPO center in the world.²9 It also boasts the second-largest private fund pool in Asia, surpassed only by Mainland China, with private equity capital under management amounted to US$228.1 billion as of the end of 2023.³0 As a vital financial center and a premier gateway to Mainland China, Hong Kong’s pivotal role in facilitating market connectivity between Mainland China and the world positions it as an ideal launchpad for local fintech companies seeking to expand globally, as well as for international companies aiming to establish operations in Mainland China and the ASEAN region. Fintech companies in Hong Kong benefit from proximity to the world’s largest financial institutions in banking, insurance, asset management, and payments.³1 The city hosts over 70 of the world’s 100 largest banks.³2 As one of the four designated “core cities” of the Greater Bay Area (GBA), fintech companies in Hong Kong can also easily access opportunities within the GBA, which has a population of 86 million and a GDP of US$1,958 billion.³3 Notable fintech trends and opportunities in the GBA include cross-border trade finance, cross-border investment and wealthtech, digital payments, and cross-border payment technologies. 24. https://www.longfinance.net/documents/3907/GFCI_36_Report_2024.09.24_v1.0.pdf 25. https://www.longfinance.net/media/documents/GFCI_35_Report_2024.03.21_v1.0.pdf 26. https://startupgenome.com/reports/gser2024 27. https://unctad.org/tir2023 28. https://assets.kpmg.com/content/dam/kpmgsites/xx/pdf/2024/08/pof-h1-2024.pdf 29. https://www.hkexgroup.com/-/media/HKEX-Group-Site/ssd/Investor-Relations/Regulatory-Reports/ documents/2023/230313ar_e.pdf 30. https://www.info.gov.hk/gia/general/202405/20/P2024052000236.htm 31. Ibid 32. https://www.hkma.gov.hk/eng/key-functions/banking/ 33. https://gba.investhk.gov.hk/en.html