Amid turbulence and volatility, global investors are seeking to “rebalance” some of their assets back into the Chinese mainland and Hong Kong markets — a trend likely to continue, according to Benjamin Hung Pi-cheng, chairman of the Financial Services Development Council.
He made these remarks at a news conference on Monday, summarizing a recent business trip to the United States by an FSDC delegation. The FSDC is a high-level, cross-sector advisory body to the Hong Kong Special Administrative Region government, tasked with engaging the industry to promote Hong Kong’s financial services sector.
Hung said that international investors have underweighted the mainland and Hong Kong markets over the past 15 years but are now considering rebalancing their asset allocations toward these markets.
“US investors have been more open toward allocating money to Hong Kong; otherwise, the local stock market’s turnover last year would not have more than doubled,” he said. “The valuation has increased even though it is still quite inexpensive compared to the US market.”
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Hung added, “Last year, the top cornerstone investors of Hong Kong’s initial public offerings tended to be from the West, including the US.” He said he expects the trend of shifting some capital from developed markets into emerging markets like Asia to continue.
“There is growing international interest in deepening connectivity with Hong Kong and the wider Asian markets,” he explained. “Hong Kong stands out as a preeminent financial center satisfying the needs of supply-chain flows, manufacturing base changes, IPOs, wealth flows, currency diversification and treasury centers. The interest in Hong Kong has certainly gone up in terms of setting up offices here, putting more investments and allocating capital.”
Hung also revealed that a US-based fund company has decided to set up an office in Hong Kong, having obtained the relevant licenses and hiring a team specializing in equities, foreign exchange, fixed income, and commodities trading.
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“Hong Kong is well positioned to serve as a safe, stable and predictable platform for global capital and as a key pillar of a resilient, multi-hub global financial strategy, complementing other international financial centers,” he said.
Aveline San Pau-len, an FSDC board member and CEO and head of banking at Citi Hong Kong, said that despite global volatility, there were many transactions in Hong Kong in the first quarter of this year.
“There have also been plenty of inquiries from investors on how to reallocate their assets worldwide. We see US and European investors talking to us about the opportunities on offer,” she said. Global investors are, generally, more interested in Hong Kong’s financial, technology, healthcare and consumer sectors, she added.
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Ronald Chan Wai-yan, another FSDC member and founder and CIO of Chartwell Capital, agreed. “We see opportunities not just in asset management, but also in financial advisory services. A lot of family offices are not ready yet to deploy capital in Asia because they want to seek more advice. Hong Kong could be their financial advisors by sharing perspectives and on-the-ground realities.”
FSDC Executive Director Rocky Tung Yat-ngok said it is necessary for Hong Kong stakeholders to share positive stories about the Hong Kong SAR and the nation, as US retail investors tend to be home-biased, and are still relatively unfamiliar with the Hong Kong market.
Contact the writers at oswald@chinadailyhk.com
