As inflation and interest rates rise, most Hong Kong investors have changed or are planning to change their investment strategies, Schroders Global Investor Study 2022 has found.
Schroders’ flagship study, which surveyed more than 23,000 people who invest from 33 locations globally, including 500 from Hong Kong, found that 63% of Hong Kong investors have adjusted their investment strategies, out of the close to 90% who indicated they intend to make changes. Another 26% who have yet to act are also planning to switch gears soon.
Notably, 80% of Hong Kong investors who classified their investment knowledge as ‘expert’ stated they had already made changes to their investment strategies in response to rising inflation. This compared with only 14% of those who regard themselves as ‘beginners’.
Focus on diversification while short termism also on the rise
Faced with increasing uncertainties and risks, over half of the respondents in Hong Kong (52%) said they are considering diversifying their investment portfolios more than ever. In fact, 42% of Hong Kong investors said they have made new investments in stocks and shares over the past six months when the study was conducted, while one-third (30%) said they have added to their exposure to investment and mutual funds that are actively managed by a fund manager over the same period.
Investors in this market are showing a need for speed in returns amid an evolving investment landscape. Despite 68% saying they felt forced to take on more risk than intended to pursue their desired returns, 62% of Hong Kong investors said they would sacrifice long-term investment strategies for short-term gains.
This comes at a time when Hong Kong investors are anticipating returns of 11.50%, compared with 11.42% in 2021.
Many are looking to exercise caution in response to the current market outlook, with 42% being more likely to save more and spend less.
Investor anxiety triggers demand for expert guidance
Meanwhile, the study found that anxiety is commonly felt by Hong Kong investors. Over two thirds (67%) admitted they sometimes make investment decisions under pressure which they later regret. The research also saw a sharp increase in the number of people who felt that investment performance could have a direct impact on their mental wellbeing (72% in 2022, up by 8 percentage points from 2021).
Such findings probably explain why 41% of Hong Kong investors found actively managed investment funds more attractive, as they become more inclined to seek expert advice in challenging times. Over one-third (34%) also expressed they are more likely to speak with a financial adviser as interest rate hikes continue.
The results of this year’s study demonstrate just how closely related investment performance and investors’ mental wellbeing are. Volatile times like these have only highlighted the importance of seeking professional support from active investment managers and financial advisers.
The full report focused on investors’ response to rising inflation is accessible here.
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