How Macao’s investment law is plugging the funding gap

While several key milestones have been reached in the first year of Macao’s revised investment law, considerable work remains for the initiative to reach its full potential. That was the opinion of Henry Brockman, who spoke at yesterday morning’s British Chamber of Commerce of Macao (BritCham) gathering at the Grand Hyatt.

The managing director of Trate Capital Limited explained that even as procedural mechanisms and compliance ambiguities have been clarified, the next step is tackling the institutional barriers that govern capital flows. From his perspective, Macao’s updated framework offers several advantages that could foster niche wealth management industries for a city better known for gambling and gastronomy, though other developments, like attracting overseas talent, need to happen in lockstep. 

Seeded with fiscal reserves and private capital, Macao’s guidance fund is modest in size. Potentially worth 20 billion patacas (US$2.5 billion), the amount is roughly equivalent to the monthly total wagered across the city’s casino tables. Yet it’s not the figure but what it represents that matters.

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There is enormous potential either for this fund to scale or for parallel investment vehicles to follow, Brockman suggested, underscoring the political drive for non-gambling industries to account for 60 percent of the economy by 2030. The law codifies key parameters and definitions, strengthening investor confidence to support economic pillars central to Macao’s “1+4” diversification campaign, such as finance or life sciences.

The updated framework, enacted as Law No. 11/2025, replaces a 1999 decree that was simply no longer fit for purpose, Brockman remarked. In its place, the new statute establishes parameters familiar to qualified professional funds, attracting managers with zero capital gains tax and competitive fiscal incentives designed to streamline capital flows throughout the Greater Bay Area (GBA).

Macao’s investment law: complimentary to Hong Kong 

Yet despite these revisions, Macao’s updated investment framework arrives just as Hong Kong is expanding its already mature capital market infrastructure. As emphasised in its inaugural five-year plan, Hong Kong is reinforcing its role as a premier “superconnector,” not only for the 11-city GBA, but for global investors.

Since 2024, Hong Kong’s New Capital Investment Entrant Scheme has attracted HK$119 billion (US$15.3 billion), with authorised funds and listed equities accounting for roughly 70 percent, according to Brockman’s presentation. Such arrangements have fuelled Hong Kong’s wealth management sector, channelling capital into other areas of the economy, including commercial real estate and the local IPO market.

Identifying distinct advantages over Hong Kong’s deeper investor base and lower capital costs highlights the challenge, leaving Macao to build niche financial services within shallower liquidity pools. Bottlenecks also arise as Macao attempts to attract fund re-domiciliation under its civil-law framework, particularly for Hong Kong-domiciled funds governed by English common law, a system far more familiar to international investors.

Brockman observed that civil-law domiciles like Luxembourg have demonstrated that funds do relocate to leverage specific legal benefits, offering a potential roadmap for Macao to draw new capital from lusophone participants which share the civil-law tradition.

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Macao does offer distinct advantages. Unlike Hong Kong or Singapore, the city’s updated investment law removes all historical participant minimums to enable single-investor entities. Such structures could prove particularly attractive to high-net-worth individuals and multigenerational family offices targeting dedicated GBA alternative strategies without having to accommodate unfamiliar co-investors.

Although Macao is unlikely to match Hong Kong’s capital market infrastructure, it does serve as a complementary financial hub. But for the moment, the investment law is best positioned to fill the historical shortfall Macao companies face by providing the funding capacity to transition local institutions from micro-enterprises to scalable regional businesses in the GBA, Brockman said.

By cultivating a mature network of local private equity and venture capital firms accustomed to evaluating growth investments and assessing market risk, Macao’s investment fund can bridge the “missing middle” left by domestic banks that have traditionally leaned toward conservative property collateral and traditional commercial lending.

While acknowledging that elevated capital costs weigh on earnings and rigid labor policies constrain human capital development, Brockman summarised Macao’s strategic reality simply: there is a clear imperative to start somewhere.