According to the Schroders Global Investor Study 2023, Hong Kong retail investors demonstrated unshakeable confidence in the prospects for their assets despite high interest rates and inflation, with 98% anticipating positive returns over the next five years.
According to the flagship study by Schroders, which polled over 23,000 investors from 33 locations worldwide, including 500 in Hong Kong, Hong Kong retail investors are projecting an average annual return of 11.21% over the next five years. Approximately 83% of respondents anticipate returns that are either the same as or greater than those of the previous 12 months. This was especially true for “advanced” and “expert” investors, of whom just 2% predicted reduced returns in 2024.
Regime shift emphasizes the significance of managing a portfolio with vigor and agility.
78% of retail investors in Hong Kong stated they would adopt an agile strategy and adjust their investments at least once a year to manage the transition to a new regime of market and policy behavior as inflation and interest rates rise globally. In contrast, 65% of respondents in Asia stated they would follow suit.
According to this year’s poll, Hongkongers who classified themselves as “experts” in investing reacted the fastest, with 72% having already modified their approach. In contrast, more than a third (35%) of those who classified themselves as “rudimentary” in investing had not yet done so.
Retail investors in Hong Kong ranked internet and technology (61%), sustainability (47%), and real estate (45%) as their top three investing themes over the previous six months.
More than one-third (39%) of Hong Kong retail investors stated that private assets have grown more appealing in the current investment climate, with interest growing in real estate (54%), private equity (65%), infrastructure and renewable energy (70%), and private equity (65%). These trends are indicative of the democratization of private assets and the growing desire for diversification. Due to private assets’ capacity to offer diversification, 60% of respondents from the local community said they would invest in them, and 54% said they would do so in anticipation of possibly better investment returns. However, 76% of respondents still believe that long holding periods or illiquidity are a barrier to entry for investing in private assets.
Retail investors, meanwhile, still rely on financial consultants’ advice when managing their portfolios. Their colleagues in Asia and worldwide (46%), nearly half of the respondents in Hong Kong (51%) stated that the appeal of assets or mutual funds that are actively managed by fund managers has increased during market upheavals.
Hong Kong investors continue to place a high priority on the environment.
The public’s interest in sustainable investing is growing, especially about options that prioritize the environment. Compared to a global average of 50%, the majority of respondents in Hong Kong (98%) said they are drawn to sustainable funds, and nearly two-thirds (64%) said they prefer funds with sustainability features.
When asked why, almost 90% of respondents stated that they thought asset managers would help investee companies create long-term value by encouraging them to adopt sustainable practices.
Specifically, the top three concerns that retail investors wish to see on their asset managers’ engagement agendas are climate (26%), natural capital and biodiversity (23%), and human capital management (22%).
The opportunity to make investments by personal values, increased education, and more proof that sustainable investments yield higher returns are what investors who have not yet given sustainable investing a thought believe would entice them to grow their holdings.
Head of Strategy for Asia Pacific and CEO of Schroders Hong Kong, Gopi Mirchandani, said:
“Over the next five years, Hong Kong’s retail investors are generally looking for double-digit average returns, despite the global shift to a new market regime characterized by higher interest rates and slower economic development. The “3Ds” of decarbonization, deglobalization, and demography will progressively influence the investment environment. As such, investors should maintain flexibility and pursue diversification in the hopes of improving risk-adjusted returns on their investments.
To accomplish their goals, Hong Kong’s mass investor population is also willing to invest in private assets outside of the established public markets. As a global asset manager, our job is to help clients understand returns and liquidity premiums in an increasingly complex investment environment by bringing relevant public and private investment options to their attention and guiding them through the process.
The “List of ESG funds in Hong Kong” now includes more products from Schroders, including global multi-asset, individual market stocks, and specialized thematic investing, all supported by our sustainable investment philosophy. Our mission is to provide retail investors with additional investment alternatives that will help them achieve their financial objectives and positively impact the social and environmental issues that are most important to them.”
- Published By Team Hongkong Journalist