Investing in Hong Kong

today i’m going to look at some of the

constraints

investors face while investing in hong kong

[Music] [Music]

the number of investors in hong kong is

relatively high

with almost one and a half million

active clients

and almost 40 percent of them trading or

doing margin trading

they have a strong home bias in the

sense that they prefer to invest through

the hong kong stock exchange

only five percent of hong kong investors

actually invest globally

and also this is primarily in the u.s

markets where they’re familiar with some

of the brands and the global technology

names

traded there unfortunately investing in

hong kong has been

disappointing for a variety of reasons

firstly the returns have been

very poor while the hang seng has

remained in the 24 000 to 26

000 range for the past 10 years nasdaq

has gone up almost

eight times in the same period in fact

the nasdaq has even

beaten hong kong property prices even

the

slow tax has doubled in the last nine

years

going ahead also we see better

opportunities in markets such as china

and india rather than in hong kong

secondly

the costs of investing in hong kong are

relatively high

finance companies have focused on

traditional products such as mutual

funds

which offer exceedingly high fees and

distributor margins

hong kong mpf is one of the most

expensive in the world while fees have

declined over the last 10 years

they still remain over 1.5 percent one

of the highest in the world

local brokers have been hesitant to

adopt new technologies

which could have improved onboarding

processes and reduced brokerage costs

such as elsewhere in the world even the

securities transaction tax levied by the

government in hong kong

is one of the highest in the world hong

kong has also seen

less fintech disruption or digital

absorption

than many other markets even if you

compared with singapore

you can see that there are six robot

risers in singapore compared to only two

in hong kong

even the number of clients using robot

raspberry services

is only a fraction of those in singapore

even virtual banks

have been slow to take off so far in

hong kong

the stock exchange of hong kong has a

very good track record when it comes to

trading volumes

and new ipos it topped the global

rankings

for ipo markets again in 2019 the

seventh time in

11 years with blockbuster ipos such as

alibaba and budweiser however it has

lagged in financial innovation

morningstar rated the hong kong market

is below average

in terms of its development there are

very limited choice of instruments

whether it be etfs or reads or even

trading simple corporate bonds

in order to create an efficient

portfolio the crystal dot ai

algorithm needs cost effective and

diversified etfs

we need both fixed income and equity

investments and also in small sizes

so that we can make them available to

smaller investors

this is just not possible to do in hong

kong local

hong kong dollar etfs have minimum lot

sizes and are limited in number and

liquidity

it’s easier to trade u.s listed etfs

such as mchi

or cnya even when looking to invest in

hong kong

and china markets the krona virus will

have a big impact on the industry

investors who’ve been stuck at home have

had a chance to re-look at their

portfolio strategies

as well as evaluate different online

alternatives

crystal dot ai and other online brokers

have seen a huge surge in demand

at the same time 100 members of the hong

kong securities association

are facing a severe crisis and

almost 15 of them have closed in 2020.

this is as per gordon sri the chairman

of the association

we advise hong kong clients to avoid

concentrating all the investments in

hong kong

and look at diversifying into global

markets

don’t keep all your eggs in the same

basket

if hong kong does badly your investments

and your job prospects

will decline at the same time so check

out our algo

and see what it has to suggest in terms

of your portfolio allocation

thank you

 

 

Leave a Reply