What is a professional investor in Hong Kong?
A professional investor is an individual or corporation that meets a set of criteria that allows them to invest in products not usually available to retail investors. These criteria include a person’s net worth, a preferred level of knowledge in finance, salary and more.
As professional investors can invest in complex investment products that generally accompanied with higher risk, the Hong Kong Securities and Futures Ordinance (SFO) sets out the requirements to be classified as professional investor. In terms of what is needed to become a professional investor, we provide more detail below.
The professional investor regime in Hong Kong
Different countries have their own criteria to qualify as a professional investor, for example you can be such an investor in Singapore – which we covered in our previous blog.
In Hong Kong, as per rules enforced in 2016, you must meet the requirements set out by the Securities and Futures Ordinance (SFO) with regulations delivered by the Securities and Futures Commission (SFC) to qualify. Net Asset Tests showing HK$8 million or more are just one of the criteria required to qualify.
The term ‘professional investor’ can also include financial institutions, government departments and more.
Who can become a professional investor?
There are rules in place to ascertain who can become a professional investor, most of which require an individual to have a certain level of income or assets to be considered.
They must demonstrate both robust financial knowhow and capital, as they will potentially be dealing with investments carrying a higher level of risk. In simpler terms, they must have the resources to operate as an investor at this level and be prepared for the risks involved.
How to qualify to become a professional investor in Hong Kong
To become an individual professional investor in Hong Kong, one must qualify the requirements below:
- Having a portfolio of cash and/or securities of not less than HK$8 million (or equivalent) at the relevant date in any one or more of the following categories:
- your wholly-owned portfolio(s);
- your portfolio on a joint account with another person; and/or
- the portfolio of your wholly-owned investment holding vehicle.
To become a corporate professional investor in Hong Kong, one must qualify the requirements below:
- A corporation/partnership/trust possessing cash and/or securities or having a portfolio held by a custodian of not less than HK$8 million (or equivalent) or total assets of not less than HK$40 million (or equivalent).
In addition, we also look at the below requirements:
- Professional qualifications – have a professional qualification equal to asset manager/investment adviser;
- Investment experience – the individual shows a suitable level or experience in the field of investments including evidenced transactions where frequency and size are taken into account;
- Any other qualifying criteria as identified by the SFC.
What documents will I need to provide?
If you are looking to become a professional investor you will need to provide the following documentation:
- Statements of accounts issued by your bank or brokerage firm
- Certificate issued by certified public accountant or auditor
- A public filing submitted by or on behalf of the individual
For any joint accounts a marriage certificate is needed as proof of your relationship.
Sophisticated Professional Investors
There is also a new subcategory for those who are very high-net worth investors called Sophisticated Professional Investors (SPI). In 2023 the Hong Kong Monetary Authority (HKMA) and SFC introduced a new streamlined approach for compliance when dealing with SPI’s.
These investors must have very high levels of net worth (HK$80 million) and demonstrate significant knowledge, including diplomas in accounting, economics or a finance related discipline, before they can participate as an SPI and invest in any unregistered private security investments.
Financial planning and advice for professional investors
When it comes to investing, it is important to work with a professional team of experts to guide you through the process. The focus of our experienced team in Hong Kong is to help you create a strategy with suitable investments and pension planning that meet your short and long-term financial goals.
Our financial planners hold the highest standards of professional qualifications, and pride themselves in providing trusted and transparent advice to help you discover ideal solutions and create the best investment journey for you.
If you are interested in hearing more about how we can help you manage your wealth, please get in touch.
The information contained in this article is for information purposes only and should not be construed as a solicitation, offer, or as a recommendation to acquire or dispose of any investment. The Progeny Group uses reasonable efforts to obtain information from sources which it believes to be reliable. However, The Progeny Group cannot guarantee that the information or opinions contained in this report are accurate, reliable or complete. The information and opinions contained in this update are subject to change without notice. The value of investments and the income from them can go down as well as up and past performance is not a guide to the future performance.