HK investors return to US equities
Brokerage says players are adjusting to the buoyant market
Interest in the United States equity market among Hong Kong investors is slowly returning to the pre-September 11 level, according to the world's biggest online retail brokerage.
An internal survey by Charles Schwab (Hong Kong) showed that in September, 57 per cent of its Hong Kong clients' portfolio was invested in the US stock market, compared with 49 per cent in September last year and 56 per cent at the end of 2001.
The proportion of investment in US fixed-income products, viewed as a haven by investors during an economic downturn, remains the same at 19 per cent, compared with 11 per cent in 2001.
Marketing director Gary Leung said customers who had shifted to other investment tools in the past two years because of market uncertainties were now readjusting their equity market exposure.
'Many of our clients are mature investors. They tend to diversify their portfolios when things are not looking good,' Mr Leung said.
'When the stock market plunged in 2001, a lot of people began to look at bonds and other products with lower risk. And because Hong Kong had only a small market and little choice for fixed-income, they needed to go to bigger markets such as the US.'
The number was still a far cry from that at the peak of the internet bubble.
In 2000, the same survey showed 79 per cent of Charles Schwab clients invested in US equity, compared with 6 per cent in fixed income.
Mr Leung said he was not concerned about the change in the composition of client portfolios because the company could still make money through other investment services, such as fixed income, mutual funds, or stock options.
'Our business wouldn't be hurt too heavily by this because when customers diversify their risk, it helps us diversify ours as well,' he said.
The firm was not severely affected by the Sars epidemic.
'We were not that heavily affected by Sars because we diversified in many different investment vehicles,' Mr Leung said. 'We benefited by it to a certain degree because when people had to stay home with nothing to do, trading stocks online became one of their options to kill time.'
In the past year, there has been a rise in the number of US investors re-entering the market - a trend Mr Leung said was an indication of Hong Kong investor attitude towards US equities.
'We took snapshots of this year and last year and found the number of new accounts opened in US investments jumped almost 10 per cent,' he said.
'While this may not be too scientific, my conclusion is that when Hong Kong and US markets go up, those who had experience in US stocks but stopped because of the turbulent market would come back, while those who focused on the Hong Kong market would continue to do so.'
There was also a shift in what investors expected from the firm, with many now looking for investment advice.