Hongkongers most bullish on local equities in Asia, Legg Mason survey finds

PUBLISHED : Monday, 11 April, 2016, 6:47pm
UPDATED : Monday, 11 April, 2016, 6:58pm

Hongkongers are among those most bullish on domestic equities in the next 12 months, even as many have been shying away from putting money in due to recent volatility, a global investment survey report issued on Monday found.

The survey, done by Legg Mason, a global asset management firm, interviewed 5,370 affluent investors, including millennials and those aged 40 and above, from 19 markets including Hong Kong, China, Singapore, Taiwan, US and UK.

It found Asian investors were the most optimistic on domestic stocks, while Hong Kong investors ranked high in Asia regarding optimism for the coming year.

Seventy-one per cent of Hongkongers 40 years old and above ranked domestic stocks as the best investment opportunity over the next 12 month. Of this group 52 per cent predicted the domestic stock market would rise in 2016. On average the gain was expected to be 15.7 per cent.

However, among both groups of investors, 70 per cent were wary of investing in the Hong Kong stock market because of volatility.

Hong Kong also had the highest percentage of investors in Asia who expressed concern that the economy was on the brink of another financial crisis.

Freeman Tsang, head of China and Hong Kong of Legg Mason, said, “Investors are turning prudent, demanding products with lower volatilities. But they are still optimistic, although less optimistic than last year, mainly dragged by fear of another global financial crisis concern.”

Investors in the city overwhelmingly support the currency peg to the US dollar. Investors aged 40 or above were slightly more optimistic towards the peg, with 84 per cent supporting, while among millennial investors, 78 per cent were supporting.

Mature investors are more fond of the mainland markets than younger ones, the survey found.

Investors aged 40 or older ranked the mainland as the best investing opportunity, with 63 per cent supporting, and the US as the second best, with 36 per cent supporting.

Meanwhile, support among millennials towards the mainland China was weaker with 40 per cent supporting, while 45 per cent selected the US market as the best investment destination.

Older investors were relatively upbeat on the Shanghai-Hong Kong stock connect scheme, with 47 per cent saying they planned to use it in the next 12 months. Among millennials, the support was weaker, with 67 per cent saying that they had no intention of utilising the service.

Kevin Leung director of global investment strategy at Haitong International Securities, said the Shanghai --Hong Kong stock connect had attracted more institutional investor than retail investors.

“Because Shanghai is the camp for big blue chips, while Shenzhen, which offers more small caps, will be more attractive to individual investors,” he said.

The survey also found Hong Kong investors had the lowest risk tolerance in Asia.

Only 14 per cent of Hong Kong investors aged 40 and older and 13 per cent of millennials would remain invested in an underperforming product for three years or more, the survey found.

Hongkongers have the most internationalised portfolio. Eight-eight per cent of investors 40 and older had investments outside Hong Kong. Among millennials, 74 per cent stated they would be looking to invest internationally in 2016.