Hong Kong protests, trade war undermine stock fund sales with investors rushing into safety of bonds
- Sales of stock funds slump 52 per cent in the first 10 months this year, while investors put more money into global bond funds
- Asian investors have missed a lot of the returns from US and European markets, Cititrust’s Aldcroft says
A year of political and economic upheavals has left its imprint on Hong Kong-based investors, who dialed back risk appetite in favour of safe haven products.
Sales of stock funds slumped 52 per cent in the first 10 months this year as months of anti-government protests hurt equity market performance, according to the Hong Kong Investment Funds Association. The flight to safety has resulted in bond funds capturing more than a doubling in sales compared to the same period a year earlier.
Hong Kong’s stock market started on a promising note when it rallied 13 per cent in the first quarter. Losses soon emerged as anti-government protests erupted, sending the Hang Seng Index to its worst quarter in four years during the July-September period.
The Hang Seng Index rose four per cent during the period under review, while global bond fund tracked by the Mandatory Provident Fund gained 5.5 per cent, according to data from Lipper.
The current mood may prevail in 2020, keeping investors on the cautious side of the fence, according to Kenrick Chung, general manager of employee benefits at Realife Insurance Brokers.
“The unfolding trade war, the outcome of Brexit terms, and the US presidential election are some of the outstanding issues in the market,” he said. “North Korea is also a wild card that could also stoke volatility in the market. There is still a lot of unknown.”
