Hello, investors: Nearly 6 in 10 affluent Hong Kongers to invest in Greater China and Southeast Asian funds

Nearly six in 10 affluent individuals in China (59%) and Hong Kong (59%), followed by at least a fifth in Singapore (24%), Taiwan (19%) and Indonesia (19%) and a tenth in Australia (13%) and Malaysia (10%) plan to invest in Greater China and Southeast Asian funds and equities combined in the next six months, according to the latest HSBC Affluent Asian Tracker. A quarter of Indian affluent favor emerging markets funds and equities.

The HSBC Affluent Asian Tracker was conducted by Nielsen across over 4,400 individuals in the top 10 percentile of the population by average liquid assets and/or mortgage value across 8 markets in Asia. On average, three in four affluent Asians (76%) have some form of investment, led by affluent in Hong Kong and China where 9 in 10 of respondents are investors. Over half (52%) on average, plan to increase investments in the next six months, while a tenth will invest for the first time.

On average, over half (53%) of respondents who invest overseas or have plans to do so, want to capture better investment opportunities. Sixty-four per cent of the said respondents in China and 23% in India currently bank and invest in Hong Kong while over half of Hong Kong affluent (54%) maintain accounts and investments in China.

Over half of Malaysian affluent (57%) hold bank and investment accounts in Singapore and 42% of Singaporean affluent invest in Malaysia. A third of affluent in Australia (34%) currently bank and invest in the US.

Bruno Lee, Regional Head of Wealth Management for HSBC in Asia-Pacific, said: “As affluent Asians connect with family in the US and Canada and increasingly travel within Asia for work and school, we expect overseas banking and investments to become an integral part of affluent Asians’ financial portfolios. As the potential for growth in Asia remains robust, affluent investors will continue to look to the region for wealth opportunities.

Our survey shows that young, cash-rich Asians are willing to take a moderate level of investment risk as they increase and diversify investments in the second half of 2011. While over half of affluent assets on average are parked in cash, the asset mix is set to expand as first time investors in a range of products especially in China and India are expected to increase.”

Young affluent Asians
Affluent Mainlanders are the youngest among the region’s affluent with an average age of 36, followed by Indonesians at 38 and Indians at 39. Nearly a fifth of affluent in China (18%) are double income couples with no kids while a fifth (20%) are single, similar to Australia.

On average, affluent Asians hold average liquid assets of over US$190,000 led by Hong Kong with US$315,116, followed Australia (US$296,297), Singapore (US$293,774), China (US$159,253), Taiwan (US$156,936), Malaysia (US$118,750), Indonesia (US$92,835) and India (US$87,910).

In Australia and China, half of these assets are invested in stocks, unit trusts and other investments such as structured products and bonds. In Hong Kong, 22% of liquid assets are in FX investments and deposits, particularly the renminbi. Only 16% of average liquid assets are allocated to stocks and other investments in Indonesia.

Net worth growth
On average, 61% of affluent in Asia reported a rise in net worth in the last 12 months led by India (81%), Malaysia (66%), Indonesia (63%), Hong Kong (63%) and followed by China (59%), Australia (56%), Taiwan (54%) and Singapore (48%).

Mr Lee said: “In the last year, despite market disruptions caused by events in Japan and the Middle East, inflationary pressures in the region and continued uncertainty in the West, the majority of affluent Asians said they increased their wealth, capturing opportunities in the stock and foreign exchange markets.”

All weather investing
Mr Lee expects Asians to gradually become ‘all weather investors’ amidst continued global market uncertainty. HSBC’s survey shows that affluent Asians have the liquidity, appetite for diversification and a tendency towards a balanced risk mentality to help maintain and grow wealth in both good times and bad.

Mr Lee said: “Cash-rich Asians have the flexibility to capture opportunities swiftly and rebalance portfolios as market conditions change. Today’s affluent investors are also open to new asset classes such as FX which, unlike equity or fixed income products, can offer capital growth potential regardless of economic and market cycles.

“Our survey points to a balanced approach to investing across all markets, particularly the faster-growing markets of Indonesia, India and China which will deliver many of the region’s new investors.”

HSBC’s survey shows that around a fifth of affluent in India and China plan to take up structured products (23% of Indians, 20% of Chinese) and bonds (21% of Indians, 17% of Chinese) for the first time, while 16% of Chinese affluent will become new investors in FX. Around a tenth of affluent in Taiwan (13%) and Hong Kong (10%) plan to invest in the renminbi (RMB) for the first time.

On average, 77% of affluent Asians do not intend to invest in products that they are unfamiliar or uncertain about, driving their HSBC investment risk index1 scores to reflect a balanced attitude (100 in a scale of 0-200) towards risk in the next six months: China (97), India (96), Indonesia (96), Malaysia (94), Australia (92), Hong Kong (91), Taiwan (90) and Singapore (87).