Hong Kong investors have developed a far higher appetite for risk when it comes to allocating their money, according to a new global survey.
The level of risk mass affluent investors say they are willing to take has risen by more than 50% since the same survey three years ago.
Despite Hong Kong investors having greater optimism in their investments, less than half have clear financial goals, and they appear to be more emotional when making decisions than the rest of the world.
Natixis Global Asset Management conducted its annual survey* across global markets earlier this year, interviewing individuals who had at least $200,000 in investable assets.
A total of 67% of Hong Kong investors said that they were willing to take on more risk than a year ago – higher than the Asia Pacific (61%) and global (51%) figures. The number represents an increase from the past three years - 52% (2014); 63% (2013); 64% (2012).
However, less than half (48%) said they have clear financial goals and only 25% have a financial plan in place.
Madeline Ho, head of wholesale fund distribution for Asia Pacific at Natixis, said that the results reflected optimism in the market as well as in the investment climate.
“The anomaly here is half of those surveyed say they don’t have very clear financial goals and only a quarter have a financial plan to achieve what they want to achieve,” Ho said. “So while they are very optimistic, at the same time they don’t really have a financial goal, let alone a plan. This is something we thought was quite conflicting in the survey.”
Hong Kong investors also had strong expectations for the performance of their portfolios, but they were less upbeat than the rest of the world. A total of 67% believed their portfolio would perform well in 2015, compared to 69% in Asia Pacific and 73% globally.
On the other hand, investors in the city appeared to be more sanguine about global economic economic threats, despite the ongoing warning signs from around the world. Only 42% of Hong Kong investors believed a global economic slowdown could pose a threat to their portfolios, compared to 50% of Asia-Pacific respondents and 45% globally.
However, when it came to asset allocation two-thirds of Hong Kong investors said that a traditional approach, such as a mixture of stocks and bonds, was not the best way to pursue returns and manage risk.
As a consequence, the survey revealed that alternatives are growing in popularity, with 48% of investors in the city investing in the asset class, representing a 12 percentage point increase from 2014.
Finally, Hong Kong investors appear to let their emotions get the better of them when making investment decisions to a greater degree than the rest of the world. Seven in 10 Hong Kong investors said they struggled to avoid making emotional investment decisions when market shocks occur, compared to 66% in Asia Pacific and 60% globally.
*Natixis surveyed 1,350 individual investors across Japan, Hong Kong and Singapore. A total of 500 Hong Kong respondents were involved in the survey. The online survey was conducted in February 2015 and was part of a larger global study of 7,000 investors in 16 countries from Asia Pacific, Europe, the Americas, and the Middle East.