A survey jointly conducted by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) showed money market funds were the top-selling collective investment schemes (CIS) as reported by the city’s licensed corporations (LCs) in 2022.
It accounted for 61% of the total top five CIS transaction amount last year, up from 33% a year earlier, according to the survey findings. Bond funds and equity funds came second and third, accounting for 14% and 7% of the total, respectively.
The shift to money market funds was attributed to investors’ preference for stable income and liquidity amid a rising interest rate environment, driving an increase in the transaction amount in such funds despite the overall decline in CIS sales and total investment product sales.
The survey covered 371 LCs and RIs engaged in the sale of investment products in 2022 with the participation of over 800,000 clients. Total transaction amount declined by 24% to $3,799 billion, largely in line with the decrease in turnover observed in other major stock markets in 2022.
However, the overall manpower deployed by firms to conduct the sale of investment products remained stable.
It was noteworthy that around 35% of firms recorded an increase in their transaction amount. Some large firms attributed this to their offering of personalized investment products to meet the preferences and needs of individual investors.
By offering tailored solutions to clients, these firms were able to withstand or even thrive in times of market challenges.
The survey was designed to collect information about the types and value of investment products sold. According to HKMA’s statement:
The information collected helps the SFC and HKMA better understand market trends, identify risks associated with the selling activities of intermediaries and coordinate their responses to address areas of common concern. We believe that the information would also be useful to market participants.
Other major observations from the survey included:
- Structured products remained the most prevalent type of products sold by the respondent firms during 2022, constituting 51% ($1,921 billion) of the total transaction amount. CIS and debt securities followed, accounting for 23% ($884 billion) and 17% ($648 billion), respectively.
- Equity-linked structured products remained predominant, representing 53% of all the structured products sold in 2022. Some investors shifted to other product types such as currency-linked products owing to weak sentiment in stock markets in 2022.
- On debt securities, some investors shifted their interest to sovereign bonds, such as HKSAR Government Bonds including Green Bonds and Silver Bonds, which were perceived to be of lower risks with more stable returns.
- The number of firms distributing investment products online increased to 83 in 2022, up 19% from 2021. CIS remained the most common product type distributed through online platforms, which represented 83% of total online sales. Of all CIS investors, the proportion of investors transacting online also increased from 65% in 2021 to 72% in 2022. Notably, online sales of debt securities increased significantly to 15% of the total online sales in 2022 from 6% in 2021.