Hong Kong’s AUM explosion down to low global rates, property regulation, says market veteran
31 July 2013
News, Asia, Global, Hong Kong
By Toby Garrod
The market has responded bullishly to recent positive results from the annual Fund Management Activities Survey released by Hong Kong’s Securities and Futures Commission (SFC), with Invesco’s CIO Asia (ex-Japan) Paul Chan saying that a key survey trend unearthed, which saw a 48% AUM rise among asset managers and fund advisory corporations in Hong Kong in 2012, is likely to hold true until change comes to either China or the US.
“With the continuation of a low interest environment in the near future, the demand for yield and multi asset products will prevail, but fund inflows from foreign countries will very much depend on when the US government tapers quantitative easing and whether Chinese economic growth can be maintained at the expected rate,” he said.
He notes that domestic regulation also played a significant role in the gains: “On top of this, a more vigorous stance from Hong Kong’s new administration in regard to controlling the Hong Kong property market drove capital from property investment into mutual fund investments.”
With the prevailing low interest environment in the West, investors there are seeking yield products across income-oriented Asian bonds and global high yield products.
Such tastes were magnified as investment sentiment improved during October 2012, with new quantitative easing initiatives from the US Federal Reserve directing additional funds to the Asian markets in search of attractive valuations and yields.
Regional markets did exceptionally well in 2012. The Thai stock exchange rose nearly 36%, while the Philippines rose over 30%. Meanwhile, the traditional equity markets of Japan and Hong Kong were both up over 20% on the year.
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