Bonds drive inflows of US$134m

PUBLISHED : Tuesday, 09 February, 1999, 12:00am
UPDATED : Tuesday, 09 February, 1999, 12:00am

Hong Kong unit trusts registered net inflows of US$134.24 million last year despite the ongoing financial turbulence, according to the Hong Kong Investment Funds Association (HKIFA).

However, the inflows came almost exclusively from bonds, cash and European equities, with Asian equity investment vehicles suffering a serious exodus of money.

Figures released by the HKIFA yesterday showed that bond funds reaped inflows of $343.86 million, while European inflows totalled $196.24 million.

Warrant funds recorded modest net inflows of $16.93 million.

The HKIFA represents 50 fund management companies in Hong Kong.

Bond inflows, while marginal in the first nine months of the year, increased substantially in the final quarter, the figures showed.

'As volatilities in a number of equity markets seem to be high, many investors have turned to bond products, particularly those investing in the more-developed markets as a safe haven,' said HKIFA chairman Desmond Chan Kwok-kit.

In contrast, all Asian unit trusts, particularly regional funds excluding Japan, suffered gross outflows for the year.

Asia-Pacific ex-Japan was worst hit, with net outflows of $134.87 million, while Japanese equity funds saw outflows of $99.55 million.

Hong Kong equity funds recorded net outflows of $82.41 million for the year.

Also badly hit was the Asia-Pacific including Japan sector, which saw net outflows of $35.74 million.

Hong Kong's net inflows represented 4 per cent of the year's gross inflows of $3.65 billion.

'As investors would probably need more signs of recovery from the Asian markets before they are ready to turn to them full scale, we would expect sales of Asian funds to remain thin,' Mr Chan said.

'In the short term, interest in the region would probably be on a selective by-market basis.'