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Hong Kongers see decline in wealth growth, says survey

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One in five Hong Kongers reported that their net worth decreased in 2012 compared to six months ago, according to a survey by HSBC.

Only a third (31 per cent) claimed that their wealth increased in 2012, down from 42 per cent in 2011.

HSBC’s Hong Kong Wealth Tracker was polled over 1,600 individuals aged 18 to 65. According to the survey, investors have become more cautious in their investments. On average, 60 per cent of liquid assets are held in cash compared to only 40 per cent in investment. A majority of respondents (77 per cent) plan to accumulate more cash, compared to only 61 per cent in 2011.

The survey shows that while Hong Kong people are keen to prepare for retirement and fight inflation, the top financial goals for 43 per cent and 41 per cent among investors respectively, they are holding a wait-and-see attitude when it comes to wealth management. 

Eric Fu, HSBC’s head of wealth development for Hong Kong, retail banking and wealth management, says: “With continued economic uncertainty arising from various global events such as the Euro crisis, dampened US growth and shrinking GDP in Hong Kong, people in general are lacking confidence to invest in the market. In light of inflationary pressures, we believe investment products offering an additional and regular income stream to counteract inflation are able to provide retail customers, particularly those who are keen to achieve their retirement goal, with options to protect and grow their wealth.”

It is no surprise that the survey points to a stronger desire to save for retirement as people get older. More than half of the survey investor respondents aged over 50 see it as their top financial goal. Only 12 per cent of investors consider early retirement as one of their top three financial goals. Nearly seven in ten (68 per cent) respondents worry that they do not have sufficient time to prepare financially for retirement.

According to the survey, nearly a third (31 per cent) of investors have not reviewed their investment portfolio in the past 18 months. Those who have done portfolio review at least once every three months say they have a more diversified product portfolio, holding an average of 2.5 products versus 1.9 products among those who did not conduct any review.  Over a third (38 per cent) of those who reviewed their portfolio claim to have increased their net worth, compared to only 29 per cent of those who did not conduct any review. 

In general, the investment portfolio of respondents were skewed towards stocks, which accounted for over half (57 per cent) of their total investment value. Also, almost half (48 per cent) of the investors surveyed invest only in stocks without any other assets to balance the risk. 

Fu adds: “While Hong Kongers’ preference for stocks is not likely to change, diversification is the key to successful asset allocation. Asset classes have different drivers of return as they perform differently at various stages of the market cycle. 

“Our survey shows that financial planning helps nurture a more diversified portfolio that is aligned to an investor’s own wealth needs, how much risk he is willing to take and how active a part he wants to play in managing his portfolio. In the current investment backdrop, people should consider a blend of assets to meet their objectives and help them smooth the performance of their investments.”

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