Amid turbulence and volatility, global investors are trying to “rebalance” some of their worldwide assets back to the Chinese mainland and Hong Kong markets in a trend that is likely to continue, according to Financial Services Development Council Chairman Benjamin Hung Pi-cheng.
Summarizing an FSDC delegation’s recent business trip to the United States, Hung said on Monday international investors have been underweighting the mainland and Hong Kong markets in the past 15 years and are now mulling rebalancing their asset allocations to both markets.
“US investors have been more open towards allocating money to Hong Kong, otherwise the local stock market’s turnover last year would not have more than doubled,” he said. “That is why the mainland and Hong Kong stock markets have been a lot more active. The valuation has increased even though it is still quite inexpensive compared to the US market.”
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“Last year, the top cornerstone investors of Hong Kong’s initial public offerings tended to be coming from the West, including those from the US,” Hung said, adding he expects the trend of shifting some of the money from developed markets back to emerging markets like Asia to continue.
“There is growing international interest in deepening connectivity with Hong Kong and the wider Asian markets. 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,” the FSDC chief said.
He revealed that a US fund company has decided to set up an office in the special administrative region, having obtained the relevant licenses and is preparing to start business in the city. The company is hiring a team specializing in stocks, 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 a key pillar of a resilient, multi-hub global strategy, complementing other international financial centers,” he said.
According to Aveline San – a board member of the FSDC – there have already been a lot of transactions in Hong Kong in the first quarter of this year despite all the volatility in the world.
“There have also been plenty of inquiries from investors about how to reallocate their global assets. We see US and European investors talking to us about the opportunities on offer,” she said, and global investors are, generally, more interested in Hong Kong’s financial, technology, healthcare and consumer sectors.
Ronald Chan — another FSDC member – noted: “We see opportunities not just in financial-asset management, but also financial advisory. 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 the perspectives and on-the-ground realities.”
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FSDC Executive Director Rocky Tung said it is necessary for Hong Kong stakeholders to tell the Hong Kong and China story much better as US retail investors are pretty much home-biased, meaning they are still unfamiliar with the Hong Kong market.
The FSDC was established in 2013 by the HKSAR government as a high-level and cross-sectoral advisory body to promote the development of the city’s financial services industry.
