28 October 2016
Many Hong Kong investors have a short-term horizon.  Photo: HKEJ
Many Hong Kong investors have a short-term horizon. Photo: HKEJ

HK stock punters crazier than those in mainland

When it comes to investing in stocks, Hongkongers are crazier than their mainland counterparts.

The latest global investor sentiment survey by Franklin Templeton shows that Hong Kong investors are the most short-sighted in the world, topping even those in mainland China.

Twelve percent of the city’s investors have an investment horizon of less than six months, compared with 9 percent in the mainland, which ranked fifth on this benchmark behind Brazil, Poland and Sweden.

However, the mainland had the biggest proportion of investors with an investment horizon of less than a year (42 percent). Hong Kong placed fourth, with 31 percent, behind South Korea and Greece.

That’s right. Hong Kong investors are just as bad as those in China.

Or at least we should be ashamed to claim we are more rational and sophisticated than our mainland counterparts, laughing at what is known as the fifth generation of mainland investors (born in the 1980s and ’90s), who are notorious for blindly chasing stocks with an all-in approach in search of a quick 100 percent return.

Well, the fact is: we have the same DNA, and we like to gamble for quick profit.

What’s more, the efficient and open financial market in Hong Kong offers a better environment to local investors for speculating in stocks.

The findings are interesting, because Franklin Templeton, a fund house known for its long-term approach to investment, polled more than 11,000 investors, between the ages of 25 and 65 and with at least US$200,000 in investable assets, in 23 countries in one of the largest surveys of its kind.

Worth noting is when the survey was done – from Feb. 12 to March 2 — which covered the Lunar New Year period but was before the Hang Seng Index took off.

“There has been a heightened interest in Hong Kong after China allowed mutual funds to buy shares in Hong Kong using Stock Connect,” said Simon Wong, deputy head of sales at Franklin Templeton Investments Hong Kong.

“This has led to a sharp rally in the city’s bourse, with Hong Kong stocks recently reaching a seven-year high.

“However, investors need to be cautious of the market volatility and the importance of diversification across asset classes and different markets.”

Most Hongkongers’ assets are in stocks and property, and most of us are confident about the returns they will offer in the next decade.

Eighty percent of local investors believe stocks will be a top performer this year, followed by property (56 percent).

The confidence in the home bourse was at a record high of 38 percent, compared with 32 percent in the last wave.

More than 55 percent of local investors believe Hong Kong stocks will go up, and 40 percent say they plan to increase their allocation to equities this year.

That is why local and overseas money is starting to bet that Hang Seng Index can break its record of 32,000 this year, after a subpar performance in the last few years.

Short sellers, you have been warned!

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EJ Insight writer

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