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SCMP Reporter

Unit trusts in Hong Kong enjoyed a 10-fold jump in net inflows last year as investors rallied behind Asian equity funds, following the region's return to economic stability.

  Figures released yesterday by the Hong Kong Investment Funds Association (HKIFA) revealed net inflows last year of US$1.46 billion, compared to $134.24 million in 1998.

 Asian equity funds attracted $845.17 million, about 58 per cent of total net inflows - a significant turnaround on the previous year, which saw net outflows of more than $330 million.

 The improving economic outlook across Asia had helped, according to the association's new chairman, Paul Chow Man-yiu.

 Mr Chow said investor sentiment had improved since the second quarter of last year, led by signs of an economic recovery in Japan and fervour in the technology sector.

 Japanese equities reflected the upswing in sentiment there, with the sector attracting net inflows of $312.41 million for the year.

 They have consistently topped monthly inflow tables since the second half of last year.

 Together, the six Asian equities sectors attracted gross inflows of $3.14 billion, or about 46 per cent of the industry's total.

 Overall, 11 out of 14 sectors saw net inflows, whereas in 1998, 10 out the 14 had net outflows.

 Despite a brief period of net inflows, Hong Kong equities was the only Asian sector to record net outflows last year, although the amount was only $1.71 million.

 North American equities and warrants also recorded net outflows.

 While sales of bond funds rose last year to more than $1 billion, redemptions were also higher than in 1998.

 But despite net inflows of $75.07 million for last year, bond funds were markedly less popular than they were in 1998, when they attracted net inflows of $343.86 million.

 The HKIFA said investors deserted fixed-interest vehicles because of expectations interest rates would rise in the United States and the European Union this year, making bonds less attractive than equities.

 In 1998, at the height of the regional financial crisis, bonds were seen as a safe haven against volatile stock markets across Asia.

 International equities were popular last year, attracting net inflows of $257.96 million, compared with $38.44 million in outflows in 1998.

 In December, HKIFA members' funds returned to net inflows of $86.05 million, compared to the previous month when they suffered outflows for the only time during the year.

FUND MANAGEMENT 



Revival boosts unit trusts