Investor confidence returns for Hong Kong’s rising affluent
For the first time in three years, confidence among the rising affluent in Hong Kong is at its highest with the appetite for investment looking strong for 2022. That’s according to the latest findings from Charles Schwab’s Hong Kong Rising Affluent Financial Wellbeing Index 2021.
With global economic growth returning in 2021, in Hong Kong and China especially, it’s unsurprising that this year’s survey would report the highest confidence sub-index score in three years.
This suggests that Hong Kong’s rising affluent, those with a monthly income of between US$2,560 and US$10,250, feel better prepared and more optimistic about their financial growth prospects and have a more aggressive appetite towards risk, with respondents reporting increasing their investments across a variety of products.
Compared to last year, they feel more satisfied with their personal financial status, up 5.4%, and believe they have better financial growth prospects, up 2.5%, and are increasingly aggressive when it comes to investment risk, up 4.1%.
Since the onset of the pandemic, 11% say they have increased their monthly investments in products including funds, real estates, bonds and ETFs, compared to just 8% last year.
"We are very glad to see an increasing optimism among Hong Kong's rising affluent and many seem to start seeing the light at the end of the tunnel,” says Michael Fong, Managing Director, Charles Schwab Hong Kong.
Investor confidence returns on back of booming economy
Such findings are a positive sign of recovery, following what has been a tumultuous time economically for Hong Kong, even before the onset of the pandemic due to the 2019 protests. All these factors have taken its toll on the local real estate and stock market, and subsequently affected Hong Kong’s affluent population who are more exposed to both.
The tide is turning once more as Hong Kong experiences a booming economic growth of 5.4% in the third quarter of 2021, despite its GDP for 2021 expected to land lower than levels seen before the pandemic and the protests. Hong Kong’s trade in goods has returned to 2018 levels, and its retail is roaring back to life.
On the back of this, the country’s mass affluent investors (holding liquid assets of US$50,000-US$1m) and HNW individuals (more than US$1m) is expected to grow by 7.8% reaching 3.9 million this year, according to GlobalData.
As one of the main financial hubs of the APAC region, the world’s second-largest IPO market with a strong number of assets under management, Hong Kong is home to a particularly large number of the region’s wealthy population with the affluent population in Hong Kong accounting for 60.6% of its total population in 2021, compared to Singapore (32.2%), China (5.3%) and India (0.7%).
If the past few years of volatility has taught investors anything, however, it’s that diversification in investments is essential.
“We can't stress enough the importance for investors to review their financial plan regularly in order to make sure their portfolios are appropriately diversified. This is critical especially when we are seeing people shifting to more aggressive investing. Being able to rebalance their portfolio regularly will help investors mitigate risk and market volatility," adds Fong.