Hong Kong’s women are less likely than men to invest, but are they better at it?

YouGov poll shows that women are 10-15 per cent less likely to invest, while a previous study suggests they may have the edge in generating returns

PUBLISHED : Thursday, 13 July, 2017, 9:17am
UPDATED : Thursday, 13 July, 2017, 11:01pm

In an age of gender equality, the investing world is a laggard.

Women in Hong Kong are 10 per cent less likely to invest than men, which is the narrowest gap between the genders among the five major global markets surveyed, according to a YouGov survey of 6,500 adults in Hong Kong, mainland China, Singapore, the Untied Arab Emirates and the United Kingdom.

Despite their apparent reluctance to invest, there’s some evidence to suggest women are actually slightly more successful when they do.

So why does Hong Kong have the most investment-savvy women?

According to the YouGov survey, 83 per cent of men and 73 per cent of women in Hong Kong plan to invest in the next 12 months, reflecting the highest investment participation rates surveyed.

“Hong Kong investors are among the most financially aware in the world, and certainly amongst the most prolific,” said Jonathan Gordon, director at IP Global, an international property investment company.

The financial industry has made it fairly easy to gain the knowledge needed for investing. And the investment environment in Hong Kong is also friendly to most people in terms of liquidity and regulations.

“Women in Hong Kong are better equipped with investment knowledge because of the education opportunities,” said Elizabeth Chu, head of investment at IP Global. She added that the higher divorce rate and marriage age in Hong Kong also motivates Hong Kong women to be more financially independent and take control of their money.

“Investment inclinations are largely dependent on education and confidence. Hong Kong women have both,” said Chu.

Although female investors in Hong Kong seem to have more confidence than their peers in other regions, they still lag behind their male counterparts.

Fidelity, a US investment firm, surveyed about 1,000 investors early this year and asked whether they thought men or women had enjoyed better returns in 2016.

Men and women answered roughly the same. Almost half of each group thought there would be no difference. But among those who guessed that one gender would perform better, the vast majority said it would be men. Only 9 per cent of women (and 9 per cent of men) said they believed women earned higher returns in 2016.

This apparent lack of confidence has led women to develop a different approach to investment.

In all the regions surveyed by YouGov, women were more risk-averse and usually targeted long-term, low-risk investment assets with stable return, such as properties. Men, on the other hand, are more willing to take higher risks and likely to chase higher returns in a shorter period of time. They are therefore likely to invest in stocks and bonds.

The difference in the likelihood to invest in the stock market between men and women was also the largest. Sixty-two per cent of women in Hong Kong plan to invest in stocks, shares or bonds while 74 per cent of men are interested in those assets. The difference is even larger in other surveyed areas.

Women’s fear of high-risk investments like stocks is nothing new. Terrance Odean, a professor at University of California-Berkeley Business School who has spent his career studying investor trends, found that men traded 45 per cent more than women in the 1990s. He blamed it on male overconfidence.

Gender stereotypes have led many men and women think males are the better investors. However, there is growing evidence to show women are just as good at investing, and in fact often better than men.

After checking how 8 million of its customers performed during 2016, Fidelity Investments found in a survey published in May that women did better than men by an average of 0.4 percentage points. The difference may be small, but it confirmed – along with evidence from other studies – that women tend to take a longer-term view of investing and are more likely to buy and hold their investments while taking fewer risks.

“It’s hard to say which gender is doing better,” said Chu. “The fast-in, fast-out investment strategy men like to use would lead to higher transaction costs. Women, in contrast, are more patient and the long-term strategy has its benefits.”

Even though there is no definitive proof that women are better investors, it seems they have reason not to be too pessimistic about their investing abilities.

“The results of Fidelity’s analysis reinforce the idea that women too often underestimate their strengths as savers and investors,” said Alexandra Taussig, senior vice president of women investors at Fidelity. “It’s time to celebrate our abilities and maximise them by making a commitment to get more involved with our money.”

According to YouGov, women aged 18-24 in all regions are the keenest group to invest, compared to those aged over 55 who are most adverse to making investments. The survey also showed the younger age group has bolder investment tastes, with stocks, shares and bonds being their second favourite assets, just behind overseas property.

“I’m glad to see younger generations are planning their futures early,” said Chu. “You can start small, but you have to start somewhere.”