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Hong Kong money market funds dominate amid rate hikes, regulators’ poll finds

money market
By Hui Ching-hoo   
September 29, 2023

Hong Kong’s money market funds accounted for 61% of top-selling collective investment schemes last year, nearly doubling from 33% in 2021 as investors sought stable income in a rising interest rate environment, according to a survey by the city’s financial regulators.

But the share of bond funds, the second best-selling scheme, fell to 14% from 23% and the share of equity funds, the third best seller, halved to 7%.

The findings are from a survey by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) earlier this year. They polled 2,280 licensed fund selling companies and registered intermediaries on their sales of non-exchange traded investment products.

“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 collective investment scheme sales and total investment product sales,” Hong Kong’s de facto central bank and the securities regulator say in a joint statement on September 27.

Total sales of collective investment schemes shrank 24% year-on-year to HK$3,799 billion (US$487 billion) in 2022 in line with the decline in turnover in major stock markets, but the number of sales staff remained stable, according to the regulators.

Meanwhile, the survey found that 35% of respondents recorded higher sales last year, with some large firms crediting personalised investment products to meet the preferences and needs of individual investors for the gains.

“By offering tailored solutions to clients, these firms were able to withstand or even thrive in times of market challenges,” the statement says.