Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Thursday, Mar 30, 2023

Where are affluent Hongkongers investing amid high inflation, volatility?

Where are affluent Hongkongers investing amid high inflation, volatility?

The proportion of affluent Hongkongers investing in overseas markets has nearly doubled this year, but inflation and market volatility are weighing on overall financial confidence, according to Charles Schwab.

The proportion of affluent Hongkongers investing in overseas markets has nearly doubled this year, but inflation and market volatility are weighing on overall financial confidence, according to a survey by US brokerage Charles Schwab.

An index tracking the financial well-being of this group of “rising affluents” in the city showed that 37 per cent of respondents are investing in overseas markets, compared with 20 per cent last year. The US remains the preferred destination, with allocation doubling to 19.7 per cent from last year’s 9.7 per cent, according to Charles Schwab’s annual survey released on Tuesday.

“Rising cost of living is clearly top of mind for Hong Kong’s rising affluents this year due to the current higher inflationary environment,” said Michael Fong, managing director at Charles Schwab Hong Kong. “As a result, investors are looking to obtain higher returns and are increasingly recognising the importance of overseas investments in helping them achieve their goals in a volatile macro environment.”

The brokerage, which manages almost US$7 trillion of clients’ money, commissioned Nielsen to conduct an online survey from September 7 to 22 this year. It interviewed 1,048 people in Hong Kong aged 18 to 65 earning between HK$20,000 and HK$80,000 a month, the city’s so-called “rising affluent”.

Well-to-do Hongkongers have shown an affinity for US stocks, according to a Charles Schwab survey.

Some 8.2 per cent more respondents compared with last year were concerned about the impact of rising cost of living on personal debt and children’s education.

Hong Kong’s overall consumer price index (CPI) – a measure of changes in the cost of goods and services bought by households – rose by 1.8 per cent in October year on year. Electricity, gas and water charges soared 13.4 per cent, while the cost of clothing and footwear increased by 4.5 per cent and food bills went up by 3.4 per cent. For the first 10 months of this year, the overall CPI increased by 1.9 per cent year on year.

On overseas investments, Fong said “the US market in particular offers Hong Kong investors serious portfolio diversification opportunities given its size, liquidity and transparency, all of which are critical in helping deliver risk-adjusted returns during periods of high market volatility.”

Most global markets have been affected by geopolitical tensions, rising interest rates and galloping inflation. However, the Dow Jones Industrial Average has fared better than the Hang Seng Index, losing about 7 per cent so far this year compared with nearly 16 per cent for the Hong Kong benchmark.

The survey found that diversification to improve overall financial security and a higher return on investment were the top motivators for overseas investments.

With the current market uncertainties and challenging macro environment clouding investor confidence, the financial confidence sub-index of the rising affluents has fallen by 3.76 per cent from last year.

The group is investing less as shrinking personal liquid assets and rising cost of living affected their overall savings and investments, according to the survey.

However, the survey showed that rising affluents with overseas investments were financially more confident than their peers. Some 15 per cent of overseas investors were more satisfied with their personal financial status compared with non-overseas investors’ 8.9 per cent.

Overseas investors were also optimistic about their personal financial growth prospects this year, with a 7.3 per cent jump compared with last year, according to the survey. They also believe that their financial situation will improve over the next five years. While for non-overseas investors, the sentiment dropped by 4.1 per cent.

More than half the respondents chose stocks, fixed-term deposit and insurance as their preferred investment products. About 33 per cent owned wealth management products offered by banks, doubling from last year’s 15.3 per cent, according to Charles Schwab.

“A great number of rising affluents believe that they need a financial plan as well as a clearer and longer timeline to achieve their financial goals,” Charles Schwab said in the survey, indicating a strong preference for long-term investments to weather the volatile macro environment.


Related Articles

Hong Kong News
China and Brazil have signed a new deal that will allow them to trade in their own currencies, bypassing the US dollar as an intermediary
Elon Musk and Others Call for Pause on A.I., Citing ‘Profound Risks to Society’
“We've had evidence prior to the pandemic that masks were largely ineffective at preventing community transmission of influenza “
Former Starbucks CEO Howard Schultz:
Former Starbucks CEO Howard Schultz rejects being labeled a "billionaire"
Jamie Dimon is being deposed over JPMorgan Chase role in Epstein lawsuits
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
Social Media censoring users for saying the true
Smart Iranian fashion designer teaching dummy TV anchors lesson about reality
U.S. charges FTX's Bankman-Fried with paying $40 million bribe
Fallen 'Crypto King' Who Owes Millions to Investors Was Kidnapped and Tortured
Regulators blame social media for SVB's rapid collapse: 'Complete game changer'
AOC explains why she opposes banning TikTok
Singapore’s Prime Minister says China and US need to stabilize relations because world can't afford a confict between the two superpowers
In a dramatic U-turn against His Government: Judicial Reform Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
Gordon Moore, a co-founder of Intel Corporation, died at 94
Powell: Silicon Valley Bank was an 'outlier'
Bordeaux town hall set on fire in France pro democracy protest
Police violence in Paris
Paris: Some of the police are stepping down and showing solidarity with the protesters.
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
The US government has charged Chinese businessman Guo Wengui with leading a $1 billion fraud scheme that cheated thousands of followers out of their money.
Credit Suisse to borrow $54 billion from Swiss central bank
The BBC problem about China
Russian Hackers Preparing New Cyber Assault Against Ukraine
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
If this was in Tehran, Moscow or Hong Kong
Announcing GPT-4
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
A brief banking situation report
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
A primitive judge in Australia sparked outrage when he told a breastfeeding woman to leave his courtroom for being “a distraction"