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BEIJING, October 19 (TMTPOST) — The Hong Kong government will set aside HK$30 billion ($3.82 billion) to set up a co-investment fund to introduce strategic industries.

Hong Kong Special Administrative Region Chief Executive Lee Ka Chiu announced the plan in his maiden policy address on Wednesday.

According to Lee, he has instructed Financial Secretary Paul Chan to set up a Hong Kong Investment Management Company Limited to assume management responsibilities.

In addition to the soon-to-be-established co-investment fund, the Hong Kong Investment Management Company Limited will also manage the Hong Kong Growth Portfolio, the Strategic Tech Fund and the GBA Investment Fund under the Future Fund. The company is led by the government and aims to attract and help more companies to develop in Hong Kong.

Hong Kong’s Future Fund is the city's de facto sovereign wealth fund founded on January 1, 2016. On July 1, 2016, one-third of the 2015-2016 fiscal surplus, or HK$4.8 billion ($611.51 million), was injected into the Future Fund as the first permanent capital injection. The average return on investment of the Future Fund is about 9.8% by 2021.

In its latest budget, the Hong Kong government proposed to increase funding allocated to the Hong Kong Growth Portfolio by HK$10 billion ($1.27 billion), of which HK$5 billion ($637.01 million) is to be used to set up the Strategic Tech Fund, and HK$5 billion ($637.01 million) will be allocated for the GBA Investment Fund, which will focus on investment opportunities in the Greater Bay Area. The funds required for the co-investment fund will also be allocated from the Future Fund.

In July 2022, Hong Kong lawmaker Regina Ip Lau Suk-yee raised the point that the Future Fund is largely placed in the Hong Kong Exchange Fund, which, according to the Exchange Fund Ordinance, was established to stabilize the exchange rate of the Hong Kong dollar, ensure the stability of Hong Kong's monetary system, and maintain Hong Kong's status as an international financial centre. The Future Fund was not suitable for high-risk investments.

She suggested that the Hong Kong government refer to Singapore's Temasek Fund, and establish a government-led wealth fund.

(1 USD = 7.84923 HKD)

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