On hold
Survey shows consumers delay investing due to global economy
As much as HK$23 billion in cash could be sitting idly in banks across Hong Kong because consumers are putting off important investment decisions in light of uncertainties in the global economy, a recent study has estimated.
The research, commissioned by Convoy Financial Services, made the estimate by first taking the number of Hong Kong people who earn more than HK$12,000 a month (about 1,450,000), multiplying with the average amount of liquid assets (about HK$441,600) they are expected to have on hand. It was also based on the assumption that 69 per cent of people who invested money made gains in the period between July 2006 and June 2007, that on average they made a 19 per cent gain on their investments, and that 29 per cent of these gains were put into savings.
However, the research also predicted that with rising inflation, consumers are expected to use at least part of this stockpile of cash to hedge against the increasing cost of living.
About 76 per cent of respondents said they planned to offset the rise in prices through investment activities. The most popular investment vehicles were stocks (63 per cent), funds, and foreign currency (both 31 per cent).
Ernest Chan, director of product and research at Convoy Financial Services, said: 'Investors generally lack time and professional knowledge to take care of their investments. On the other hand, we often find them overconfident in their investment skills. As we expect to see a bear market alongside high inflation in the near term, common investment tools such as stocks and bank saving accounts are no longer the best choices to reduce the financial burden. Convoy suggests long-term investment strategy, and recommends investing in precious metals, inflation-related products, short-term deposit notes and real estate investment trusts. Regarding the stock market, investors may consider medical and health-care related as well as consumer staples stocks which cover products of necessity which are in more stable demand.'
About 57 per cent of respondents said they would also seek to cap their spending, and 41 per cent said they would try to increase their income.
