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HK retail investors keen to invest despite concerns about economic outlook: HKIFA survey shows

June 22, 2020

71% of retail investors plan to invest in HK stocks and 53% in retail funds in the next 12 months, according to an investor survey commissioned by the Hong Kong Investment Funds Association (“HKIFA”) in May 2020.

 

HKIFA commissioned Cimigo to conduct a survey amongst Hong Kong investors, who have monthly income of over HK$30,000 or liquid assets of over HK$500,000.  The survey was conducted on-line between May 14-18, 2020; and responses from 710 respondents were gathered.

 

36% of the respondents indicate that they will invest in stocks in the next three months, and a similar percentage will do so in the following nine months.  Meanwhile, 13% plan to invest in funds in the next three months; while 40% plan to do so in the following nine months.

 

The high propensity to invest comes despite a high percentage of respondents having negative economic outlook for the next 12 months.  When asked about the outlook for HK, China and the global economy, most respondents (74%, 62% and 75% respectively) have negative economic outlook. 

 

But it must be noted that even for the same market, there are nuanced differences by age.  Only 58% of the baby boomers (“BB”) have negative outlook about the China economy vs 62% by millennials.  75% of the BB  have negative outlook of the HK economy whereas only 70% of millennials think so.  The difference is more obvious with respect to the global economic outlook, with 81% for BB and 70% for millennials. 

 

Generally, respondents believe that China can recover faster (18.6 months) than other markets from Covid-19 (HK and US – both close to 21 months; and Europe 23.4 months).

 

As to which factors would influence their investment decisions most, the top three cited are China-US relations (63%), Covid (60%), and trade tensions (48%).  

 

The outlook probably underlines which markets respondents prefer in the next 12 months.  BB have a stronger preference for global markets (68%) and China (61%); whereas millennials have a preference for HK and global markets.

 

Sector-wise, the respondents’ most favored sectors are health care/biotech  (cited by 74% as amongst the top three), tech (66%) and utility (45%).   They are way above financial (27%) which traditionally has been a core sector in retail investors’ portfolio.  

 

The global capital markets have witnessed extreme market volatilities in the first quarter, especially in March.   As to whether volatilities have changed the respondents’ risk tolerance/return expectations, it seems that the impacts vary with age. 

 

Whereas only 24% BB have become more risk averse, a much higher percentage of the millennials (42%) have become more risk averse.   In terms of returns, 29% of the BB expect lower returns, while 47% of the millennials have such expectations.

 

In general, investors are satisfied with the information and services rendered by the intermediaries to help them manage market volatilities.  85% indicate that the information/services are adequate or that no additional information/services are required.

 

Digital means/online channels have become the key channel for respondents to access investment information and for monitoring their investments.  This is not only the case for millennials, but for BB as well.  

 

Fund investors generally believe that it is important to receive dividend payouts from funds – though more so for BB (64%) than millennials (43%).

 

The findings presented only represent the aggregated views of the respondents and do not represent the views of HKIFA or any member firms.  They should not be construed or relied upon as investment advice or recommendations.

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