The retail-investor market is growing strong in Hong Kong, according to a new report by Celent, a Boston-based research advisory firm.
There are more than 2 million retail investors in Hong Kong, and 10% of them are active traders, the study found. The number of active traders is growing at one of the highest levels in the world, the firm noted.
Last year, 40% of the Hong Kong adult population participated in the retail-investment market, up from just 18% in 2003, according to the five-year study. While the report acknowledged that activity may slow down this year due to the economy, it may rise again “in anticipation of recovery at the end of 2009,” it said.
Hong Kong’s retail investors tend to be well-educated, with 40% having education beyond high school. They also tend to favor equities, allocating 70% to 90% of their portfolios to stocks. Not surprisingly, perhaps, they are wary of derivatives.
“Investors [in Hong Kong] are apprehensive about derivatives because of the large risks involved, and some have already lost money in the derivatives market,” Arin Ray, the report’s author, said in a release.
Mutual funds are also gaining popularity. The net asset value of such funds had a compound annual growth rate of 20% from 2003 to 2008, and it reached $1.3 trillion in assets in 2008.
Responding to the demand, the combined asset management and fund advisory business experienced a 40% compound annual growth rate over the same time period. And that fact hasn’t been lost on U.S. asset managers either, which in recent months have announced plans to expand their presence in the Hong Kong market.
For example,
American Century Investments of Kansas City, Mo., announced plans last month to open an office in Hong Kong this year and finalize two joint ventures with Chinese securities firms to offer mutual funds there.
Boston-based fund giant
Fidelity Investments noted in its annual report that it plans to add to its research staff of six in Hong Kong this year. Fidelity opened an office in Hong Kong in September 2008.
Separately, Pyramis Global Advisors, a Smithfield, R.I., institutional asset management division of Fidelity, also opened an office in Hong Kong last year. Pyramis on Feb. 12 announced plans to add sales and client relationship staff this year to office.
