HONG KONG-The confidence level of Hong Kong investors climbed back into positive territory in the first quarter of this year from a decade’s low in the previous quarter, triggered by the central government’s favorable monetary and fiscal policies, according to JP Morgan Asset Management.
“Compelling valuations and a pro-growth stance from central banks facilitated a robust rebound in the first quarter of 2019, driving greater optimism and confidence among Hong Kong investors,” said Chris Tong, vice-president of retail distribution at the global asset management group.
The confidence index in the first quarter of 2019 rebounded to 114 points from a decade low of 88 points recorded in the last quarter of 2018, to be on par with average levels in 2017.
Among the improving sub-indices from November 2018, investor confidence in the Hang Seng Index saw the biggest rise -- from 86 points to 126 points -- with 41 percent of investors optimistic that the stock market gauge would surge past 30,000 points in the next six months.
Earlier this year, the central government unveiled a host of stimuli to boost the economy, including cutting taxes and trimming banks’ reserve requirement ratio.
According to JP Morgan Asset Management, one-third of investors interviewed in a survey said the economic measures implemented have made their risk appetite more aggressive, with roughly the same number of respondents saying they would raise their equity holdings.
However, lingering global uncertainties have also made investors more conservative, including the slowdown in US interest-rate hikes and the escalating US-China trade stand-off, rendering them eager to hold on to more cash and less equity.
Tong said Hong Kong investors are more likely to be affected by short-term market volatility as the trade tensions may have an adverse impact on investment sentiment in the short term.
“We’ve seen some weakness in more recent economic indicators, suggesting that the pace of growth might be wavering and an eventual slowdown,” said Marcella Chow, global market strategist at the asset management group.
She said investors should consider adopting more diversified and defensive asset allocations, such as acquiring more income-generating assets to prepare their portfolios.
Apart from investment sentiment, the survey also asked respondents about their expectations in retirement, with 63 percent saying they were confident of achieving their retirement goals.
They said they value products that offer them regular income, long-term growth potential and diversification, with 70 percent believing that insurance products alone are not enough and that investments are needed to grow sufficient assets for retirement.
Wina Appleton, Asia Pacific retirement strategist at JP Morgan Asset Management, said the findings suggest that some Hong Kong investors lack awareness that mutual funds are an efficient way to provide what they’re looking for as they can play a significant role in complementing insurance products in retirement portfolios, especially in diversifying sources of income.
The survey was carried out in April this year by Hong Kong market research consultancy Cimigo, which interviewed 500 retail investors with at least five years of continuous investment experience, and with liquid assets of more than HK$200,000.
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