Hong Kong’s 2026-27 Budget arrives at a defining moment for global wealth and asset management. After two years of volatile markets and shifting capital flows, the city is positioning itself for the next phase of competition, one driven by clarity, sophistication and institutional readiness. This year’s Budget measures, including tax enhancements, infrastructure upgrades and digital finance initiatives, point to a more professional ecosystem for family offices and global investors.

A tax framework that reflects modern wealth-management needs

A major highlight of the Budget is the expansion of Hong Kong’s family-office tax regime. The inclusion of funds-of-one, broader recognition of alternative assets such as digital assets and precious metals, and a more flexible definition of “fund” reflect Hong Kong’s intention to keep pace with international practice.

These measures reflect how wealthy families are allocating capital today. High-net-worth families are blending private equity, private credit, direct deals, thematic real assets, and coinvestments in increasingly customized structures. The ability to build such multiasset platforms onshore, without routing funds offshore for structural or tax reasons, is a meaningful step forward.

However, competitiveness depends not only on scope but also on usability. Predictability, manageable compliance, and clear rules remain top priorities for wealthy families. As these concessions come into effect, timely and practical guidance will be essential. A tax regime that is administratively simple is often more appealing than one that is broadly generous but difficult to operate.

Infrastructure upgrades that support institutional competitiveness

The Budget also places strong emphasis on strengthening Hong Kong’s market infrastructure. Efforts to improve cross-boundary post-trade connectivity can reduce settlement times, enhance liquidity and support greater operational efficiency across equity and debt markets. At the same time, the Hong Kong Monetary Authority’s (HKMA’s) continued development of a digital asset platform for tokenized bonds and other instruments positions the city as a regional leader in regulated digital finance.

Hong Kong remains a core regional wealth hub, supported by growing assets under management and a mature professional-services ecosystem. At the same time, global families are increasingly adopting multihub strategies that consider tax diversification, education, lifestyle, and access to diverse investment networks

Globally, tokenization is gaining momentum as a tool to modernize issuance, shorten settlement cycles and improve product flexibility. Markets that can offer institutional grade digital rails, interoperability and regulatory clarity are likely to lead this next phase of capital markets development.

That said, infrastructure alone is not enough. Tokenized products require active liquidity, robust custody standards and cross-platform connectivity. The Budget sets a clear direction, but coordinated execution across regulators, issuers and intermediaries will be the deciding factor.

AI ambition and the practical realities of adoption

Artificial intelligence features prominently in this year’s policy agenda. Measures to build AI literacy, expand public sector digital transformation and strengthen governance frameworks complement the HKMA’s work on risk data, cyber-resilience and advanced analytics.

AI is already transforming financial operations, from surveillance and reconciliations to onboarding and anomaly detection. However, wider adoption is often constrained by legacy systems, data quality challenges, and talent shortages. Policy support is helpful, but meaningful progress will require sustained investments from institutions themselves.

Experience shows that successful AI implementations begin with targeted, repeatable workflows that demonstrate immediate value. For family offices and asset managers, strengthening data foundations and operational processes will be essential for scaling AI beyond pilot stages.

Competing in a multihub era

Hong Kong remains a core regional wealth hub, supported by growing assets under management and a mature professional-services ecosystem. At the same time, global families are increasingly adopting multihub strategies that consider tax diversification, education, lifestyle, and access to diverse investment networks.

The Budget strengthens Hong Kong’s positioning, especially for families seeking Chinese mainland connectivity and institutional quality infrastructure. However, execution will determine the extent of competitive gain. Clarity, speed and consistency in implementation will matter as much as the policies themselves.

The 2026-27 Budget underlines Hong Kong’s commitment to building a more modern, transparent and institution-ready financial environment. It expands the investment universe for family offices, advances digital market infrastructure, and sets a clear direction for AI adoption. The policy intent is strong. The next challenge lies in turning that intent into predictable and dependable outcomes for global wealth-owners.

The author is managing director, Greater China, of investor-services group IQ-EQ.

The views do not necessarily reflect those of China Daily.