Commuters travel past commercial buildings on a tram in the Central district of Hong Kong on June 21, 2021. (ANTHONY WALLACE / AFP)
Hong Kong residents are eager to increase their personal wealth through investments to ease the adverse impact of the low interest rate environment and inflation on their assets, a Midland Financial survey showed.
The survey found that more than 90 percent of the respondents hope to fill their pockets through investing, and nearly 50 percent of them showed interest in “premium financing”, indicating that people yearn to increase their wealth through investments to combat inflation amid the low interest rate environment.
Premium financing is the purchase of a life insurance policy that provides value appreciation and cash value by taking out a bank loan that is used to pay part of the premium, with the newly purchased life insurance policy then assigned to the bank as security
When it comes to choosing investment products, home ownership remains the first choice for most clients, with 42 percent of respondents preferring to purchase property and 25 percent partial to equities. The increasingly popular investment concept of premium financing also had the approval of 64 percent of the respondents.
In addition, despite the US Federal Reserve’s hint of a rate hike, about 70 percent of Midland clients assumed the Fed will not take any major action in the near future, believing the global low interest rate environment will continue.
Midland Financial conducted the survey via telephone interviews in June and July, and received 316 responses.
Premium financing is the purchase of a life insurance policy that provides value appreciation and cash value by taking out a bank loan that is used to pay part of the premium, with the newly purchased life insurance policy then assigned to the bank as security.
Raising capital through borrowing and pursuing higher return products for wealth enhancement to fight inflation is the general trend in the low interest rate environment, said Pak Leung, director of operations and sales development of Midland Financial.
When choosing a premium financing product, one should not focus solely on the return of the product, but the borrowing costs of the insurance company’s partner banks, as different banks may support different arrangements, he said.
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