Standard Chartered says investor participation in ESG fund sales surges amid climate change focus
- Standard Chartered banker says it is not just the young investors buying ESG funds, investment interest exists across all age groups
- Border reopening helped boost sales of insurance and wealth management products, as 23 million travellers visited the city in the first 10 months
Standard Chartered Bank, one of Hong Kong’s three note-issuing banks, reported a 40 per cent increase in the number of customers buying ESG (environmental, social and governance) funds in the first 10 months of this year, reflecting growing investment interest in products focused on pollution and climate change.
“It is not just the young investors, but we found investors in all age groups are interested in buying our ESG products,” said Alson Ho, Standard Chartered Bank Hong Kong’s head of Wealth Management, at a media briefing on Friday.
“If there are two fund products with similar structure and past performance, investors tend to choose to invest in the fund with an ESG theme and not the one without such features.”
He believes this is a result of ESG advocacy efforts made by many governments and regulators with Standard Chartered itself having promoted ESG investment as a strategy in recent years. Standard Chartered now sells about 90 funds, including those issued by other fund houses, with ESG investment features.
The lender joins another one of Hong Kong’s note-issuing bank Bank of China (Hong Kong), French fund house Amundi and German fund company Allianz Global Investors, in promoting ESG funds in Hong Kong after sales exploded in recent years following the worldwide pandemic, global wars, and natural disasters, which have sharpened the focus on ESG.
Hong Kong’s government and regulators have been promoting the development of the city into a hub for green and sustainable finance, serving mainland and global firms.
Wealth Management Connect scheme to increase eligibility, product range, limits
Green and sustainable debt issued in the city, including bonds and loans, increased by more than 40 per cent year on year in 2022, to US$80.5 billion, accounting for a third of such debt sold in Asia in that period, Hong Kong government data showed.
Besides ESG funds, Standard Chartered’s Ho said sales of other wealth management and insurance products also picked up this year, thanks to the reopening of the border between Hong Kong and China and the rest of the world in January.
In the first nine months, more than 23 million travellers visited the city, including more than 18.7 million from mainland China, according to figures from the Hong Kong Tourism Board. Last year a mere 604,564 people visited the city.
“The reopening of the border has brought the mainland tourists back, which benefits the sales of insurance products,” Ho said.
Standard Chartered’s revenue arising from its wealth management business posted double-digit growth in the first 10 months this year compared to a year ago, Ho said.
The lender’s insurance sales to mainland customers in the first 10 months are 20 per cent higher than in 2019 before the pandemic struck, with medical and protection products in different currencies being the most popular, he said.
Hong Kong insurance industry’s sale of life policies to mainlanders aggregated HK$46.8 billion (US$6 billion) in the year to September, compared with HK$1 billion a year earlier, according to data from the Insurance Authority. It accounted for nearly a third of the policies sold in Hong Kong during the period.
The bank’s revenues from sales of structured products linked with interest rates and having capital preservation features, have risen 80 per cent in the first 10 months compared with a year ago, while fixed income product sales rose 90 per cent. Ho believes these products would continue to be popular in 2024 on account of the elevated interest rate levels.
Ho says the strong demand outlook for wealth management services has encouraged the bank to push ahead with a plan to introduce a mobile phone app, My RM, which will allow better communications with customers and a streamlined sales processes for funds, bonds and structured products.
Standard Chartered Bank has been selling its mutual funds via the Wealth Management Connect scheme, allowing Greater Bay Area residents to buy cross-border fund products since September 2021.
Fund sales via the scheme have been slow due to various restrictions in the scheme. The People’s Bank of China and Hong Kong Monetary Authority on December 1 have started a market consultation process to collect views as to how to enhance the scheme. Proposals include raising the individual quota to 3 million yuan (US$420,369), from 1 million yuan currently, as well to broaden the range of products to be sold under the scheme.
“We believe this enhancement for the Wealth Management Connect scheme would be positive to the development of this cross-border scheme,” Ho said. “There is demand for cross-border sales of fund products, but the scheme now is too restrictive. A relaxation of the restrictions would help boost sales.”
