HSBC pension unit sharpens its retail focus amid low rates

PUBLISHED : Monday, 12 January, 2004, 12:00am
UPDATED : Monday, 12 January, 2004, 12:00am

HSBC Asset Management, the largest pension fund manager in Hong Kong, will place more emphasis on individual investors this year to capitalise on the low savings rate in Hong Kong.

The firm's Asia-Pacific chief executive, Blair Pickerell, said HSBC Asset Management needed to switch its emphasis to the retail investor sector, which is seeing a growth in demand for investment products.

'Hong Kong has a very large pension business but the market has matured. The future growing potential of the fund industry is on the retail side,' he said.

'The interest rate is low and investors are chasing investment opportunities that would offer them a better return than bank deposits.'

On Friday, the fund house's parent, banking group HSBC, announced it would slash its interest rate for savings account deposits from 0.01 per cent to 0.001 per cent.

The low interest rate environment over the past two years has led many investors to shift their deposits to capital guaranteed funds.

Capital guaranteed funds would continue to be popular, based on HSBC's announcement to lower its interest rate, Mr Pickerell said.

Asian equity funds would also be popular with investors this year, he said.

Mr Pickerell said HSBC had seen more investors moving into equity funds, in particular China and India funds, since the middle of last year.

The total assets of the company's China fund increased fourfold last year, while its India equity fund increased 1.6 times. Mr Pickerell said equity fund sales would continue to be strong, and more than 10 fund houses would launch new funds this year.

The latest sales figures from the Hong Kong Investment Funds Association show strong retail buying interest in funds.

During the first 10 months of last year, gross sales of the fund industry reached US$16.34 billion, surpassing full-year 2002 sales of $12.64 billion.

Retail investors represented US$6.44 billion of the total funds bought, or 47 per cent.

In comparison, non-retail investors - including pension funds, discretionary corporate accounts and other institutional investors - accounted for US$2.26 billion, or just 13 per cent of the total figure.

The rest of the fund sales were from aggregated accounts and switches.

Mr Pickerell said HSBC Asset Management would like to expand in Australia, India, the mainland, Singapore and Taiwan. 'The global economy is growing and Asia will be the highest growing area.'


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