Hong Kong is positioned to attract increased global capital as investors seek safer and more resilient markets amid ongoing geopolitical tensions, according to the Financial Services Development Council (FSDC), a government advisory body.

At a media roundtable on Tuesday, FSDC chairman Benjamin Hung Pi-cheng highlighted the impact of the persistent conflict involving the United States, Israel, and Iran, which has heightened volatility and uncertainty in global markets. This environment has prompted investors to reconsider their investment strategies, with many turning to Asia-Pacific regions that offer robust industrial and economic foundations. Hong Kong, supported by Beijing and recognized as an international financial center, is seen as a key beneficiary of this shift.

Hung noted a growing willingness among U.S. investors to increase exposure to assets in Hong Kong and mainland China compared with the previous year. This trend is driven by a broader portfolio diversification strategy aimed at reducing dependence on developed markets. Reflecting this change, there has been a noticeable rise in Western company involvement as cornerstone investors in major initial public offerings (IPOs) in the city.

To illustrate this trend, Hung pointed to a recent case of a U.S.-based fund establishing a presence in Hong Kong. After securing the necessary regulatory approvals, it expanded its operations to include equity, foreign exchange, fixed income, and commodity trading teams locally.

FSDC executive director Rocky Tung Yat-ngok observed that although these increased capital inflows have yet to significantly influence asset prices, early indicators of revitalized corporate activity are emerging. He cited growing demand for office space in Central, as international enterprises and mainland firms boost their local footprint.

Council board member Aveline San Pau-len emphasized Hong Kong’s enhanced reputation as a neutral platform against a backdrop of global uncertainty. This status is attracting multinational corporations and mainland businesses seeking regional hubs for operations, treasury functions, and cross-border financing. She also pointed to expanding cross-border capital flows and financial services, such as rising interest in exchange-traded funds (ETFs) and liquidity management products as investors adjust their portfolios to mitigate risks.

San further noted that Hong Kong’s ETF market has experienced rapid growth, recently overtaking South Korea and Japan to rank as the world’s third-largest. The segment’s average daily turnover reached nearly HK$40 billion in the first quarter of 2026, representing a 15% increase from the previous year.

FSDC officials said ongoing dialogues with global investors indicate improving confidence in Hong Kong, despite persistent misconceptions about the city’s risks and regulatory environment. They view these developments as positive signs for the city’s long-term position in international finance amid a shifting geopolitical landscape.