Hong Kong investors drive risk-taking in Asia

Ankie Leung
Image caption Stockbroker Ankie Leung has fewer clients who are active investors now than she did in 2007

Hong Kong native Ankie Leung says it was a simple choice when considering which industry to join after university.

In 2004, she began work at Phillip Securities, a brokerage, before eventually becoming a commission-only stockbroker at the firm.

"In this city, people think it's possible to make money only in financial services. And of course we aim for money and more money!" explains the 32-year-old, dressed stylishly in jeans and rhinestone-studded black trainers.

With residents like Ms Leung, perhaps it is no surprise that this freewheeling capitalist port has the world's most prevalent stock market investors, according to a new survey by market research firm Nielsen.

It found that 55% of Hong Kong consumers had financial investments, compared with a global average of 33%. And 89% of residents here will speculate in the stock market, compared to a global average of 67%.

Led by Hong Kong investors, consumers in Asia have become the most aggressive investors on the planet, with 48% holding financial investments, excluding mandatory retirement funds.

That compares with 27% of North Americans, 21% of African and Middle Eastern consumers, 16% of Europeans and just 13% of Latin Americans.

First-time wealth

The risk appetite among Asian consumers is much higher than elsewhere because they tend to be first-generation wealthy, according to Oliver Rust, managing director at Nielsen Hong Kong.

Because the acceleration of wealth is happening much faster in Asia than in Western Europe and the US, investors here tend to be more active and aggressive.

Image caption Oliver Rust from Nielsen says the speed of wealth accumulation in Asia has never been seen before

"First-generation wealth holders tend to be more aggressive on capital growth, compared to second or third-generation wealth holders," Mr Rust says, adding that people tend to feel confident when opportunities for making big money in business feel more plentiful.

Asian consumers also famously have higher savings rates than other regions. More than 60% of people in the Asia-Pacific region reported putting their spare cash into savings, compared with a global average of 47%.

Perhaps because of the savings cushion, Asians seem more able to withstand market extremes.

Nielsen found that 38% of investors in Hong Kong were willing to accept volatility of more than 15%, compared with 24% of European consumers and 17% of North American investors.

No precedent

Mr Rust says Asia's bullishness is driven by the speed of wealth accumulation, which can best be compared with what happened in the US in the 1960s and 1970s.

"Actually, the rate at which it is changing is much faster in Asia. There's no real precedent for that," he says.

Image caption Rupert Hoogewerf says Chinese investors expect high returns

And driven by rising education and work participation levels, wealth accumulation among Asia's women is happening much faster than among men, Mr Rust says, without citing specific figures.

Rupert Hoogewerf, a Shanghai resident better known by his Chinese name Hurun, compiles an annual list of China's richest people.

He believes Chinese people in the mainland and Hong Kong are used to the high returns from property and stocks that came with the quick economic boom of the past 30 years.

"The expectations are high in the context of China, and the growth it has been seeing," he says. "If you've got spare cash and you're not getting 10% or 15% return, that's not considered good."

Mr Hoogewerf says mainland China has about 2.7 million individuals with $1m (£640m) or more in total assets.

He says their average age is 40, compared with an average age of 55 for US dollar millionaires in the rest of the world.

Global impact

But despite relative optimism among Asians in general, and Hong Kong people in particular, this city's stock market is not immune from the triple whammy of economic slumps in the US, Europe and China.

Growth in Europe and the US has been anaemic for years. Expansion in China slowed to 7.6% in the April to June quarter, the slowest since the first three months of 2009.

Ms Leung, the stockbroker, is able to chat during the trading day because business is slow.

She believes Hong Kong's stock market-crazy investors hit their peak in 2007.

"Right now, only the toughest are still in the market. People just generally lack confidence," Ms Leung says, adding that her commission has fallen between 80% to 90% from the 2007 heyday.

With a client base of 200 people, about 50 are considered active investors.

And these days, because of worries about what Ms Leung calls the never-ending European debt crisis, only a dozen or so are truly active.

Her colleague Roger Chan says Hong Kong's daily transaction volume is now only about HK$30bn ($3.87bn; £2.5bn), compared with more than HK$200bn before 2007.

Both agree, though, that Hong Kong people will come back into the markets when sentiment improves and enough time passes for them to earn back some of their losses.

"Hong Kong's atmosphere is such that everybody invests," says Ms Leung.

"And it's not just about the stock market. We love to gamble, to win money. We have the lottery, horse racing. Anything we can bet on, we will bet on. It's the nature of being Chinese."

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