Over half of respondents are positive about the outlook of the global, Hong Kong, and the Mainland China economy, according to an investor survey by the Hong Kong Investment Funds Association (HKIFA).
HKIFA commissioned NielsenIQ to conduct an online survey between May 22-29, 2024 amongst 500 Hong Kong investors with annual income of HK$300,000 or above, and liquid assets of HK$200,000 or above. They are either current or prospective investors in retail funds.
55% of respondents are positive about the global economy in the next 12 months, with 36% and 10% holding neutral and negative views respectively. For Hong Kong’s economic outlook, 52% express optimism and 29% project a negative outlook. For the economic outlook of the Mainland China, 52% hold a positive stance, while 24% share negative views. (Slide 6) Respondents expect Hong Kong’s inflation rate to be 1.8% on average in mid-2025. (Slide 10)
21% of investors consider China’s economic outlook as the most important factor when making investment decisions, followed by the global economic outlook (17%) and the US economic outlook (17%). In terms of the key factors in influencing their investment strategy, most respondents choose global economic outlook (67%), followed by interest rate outlook (59%), and Hong Kong economic outlook (57%). (Slide 11)
Investors Prefer Investing in Hong Kong, Mainland China, and North America
Hong Kong remains the most favored market to invest in the next 12 months (72%), followed by the Mainland China (63%), and North America (49%). There is also interest in Japan (41%), Europe (41%), and India (30%). (Slide 7)
Sector-wise, respondents show the strongest interest in artificial intelligence and related fields (65%), followed by the healthcare sector (51%), green or ESG-related industries (49%), and the banking and financial industry (48%). (Slide 8)
Interest Rate Implications
“Regular collection of interests” is one of the top 3 investment objectives of most respondents (52%), followed by capital growth (49%), and beating inflation (43%). (Slide 12)
The majority of respondents expect interest rate cuts will start in the last quarter of 2024 (32%) or the first quarter of 2025 (32%). On average, respondents indicate that the interest rate needs to be lowered to 2.4% before reallocating from cash and deposits into investments. (Slide 9)
Growing Interest in Cryptocurrencies
Amongst the 75% of the respondents who are interested in trading cryptocurrencies, 41% prefer to gain exposure through investing in the spot or futures cryptocurrency ETFs listed in Hong Kong, whereas 39% prefer products from locally licensed and regulated virtual asset trading platform operators. (Slide 13)
The top 3 key reasons for investing in cryptocurrencies include portfolio diversification (57%), potential higher short-term returns (54%), and the prospect of wider societal adoption (49%). (Slide 14)
Beyond Cash and Home Bias
Mr. Nelson Chow, co-chair of the Unit Trust Subcommittee, says, “Although investors foresee a favorable economic outlook, many still seem reluctant to allocate more cash into investments. As the majority of respondents expect interest rate cuts to start later this year or early next year, they can consider long-term investments such as mutual funds to capture both the potential capital gains and dividend payouts.”
Amongst the performance data of 48 fund categories, 43 of them posted positive year-to-date returns as of Jul 6, according to HKIFA/Morningstar data.
Selective Retail Fund Category Performance
| HKIFA Fund Category | Year-to-date | 1-year | 3-year |
| Europe (Central & East) Equities | 18.4% | 30.5% | -43.2% |
| Indian Equities | 17.3% | 32.0% | 38.2% |
| Taiwan Equities | 16.9% | 29.2% | 12.3% |
| North America Equities | 13.5% | 23.9% | 19.7% |
| Asia Pacific Equities | 10.7% | 13.3% | -16.1% |
| Global Equities | 10.4% | 18.2% | 8.9% |
| Emerging Mkts & High Yield Bonds | 8.1% | 11.5% | -17.7% |
| Japan Equities | 7.6% | 14.2% | 2.7% |
| Commodity – Natural Resources & Energy | 6.6% | 13.6% | 30.6% |
| Greater China Equities | 5.9% | 0.7% | -35.8% |
| Hong Kong Equities | 3.4% | -4.3% | -37.5% |
Source: HKIFA and Morningstar, data as of July 6, 2024. Note: There are 48 fund categories in total for fund performance data.
Mr. Simon Wong, co-chair of the Unit Trust Subcommittee, remarks, “Mutual funds offer a disciplined approach for investors to capture potential growth whilst diversifying and mitigating risks across asset classes and geographies. In addition, those who seek regular income from investments will also benefit from mutual funds with share classes that provide dividends on a regular basis.”
“Amidst the ongoing surge in stock markets, investors should remain vigilant regarding potential market volatilities, such as the timing of interest rate cuts, the risk of a global economic recession, and geopolitical risks arising from the U.S. presidential election in November. To navigate the market effectively, it is important for investors to stay the course with a long-term plan and a well-diversified portfolio,” he continues.
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Note
The findings presented only represent the aggregated views of the respondents and do not represent the views of HKIFA or any member firms. They should not be construed or relied upon as investment advice or recommendations.