Hong Kong Survey Reveals Shifts towards Investments in Money Market Funds

A recent survey conducted by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) has revealed that money market funds were the top-selling collective investment schemes (CIS) in Hong Kong in 2022. The survey, which involved 371 licensed corporations (LCs) and registered institutions (RIs) engaged in the sale of investment products, collected data from over 800,000 clients.

According to the survey findings, money market funds accounted for 61% of the total top five CIS transaction amount in 2022, a significant increase from the previous year’s 33%. Bond funds and equity funds ranked second and third, representing 14% and 7% of the total, respectively. This shift towards money market funds can be attributed to investors’ desire for stable income and liquidity in the face of a rising interest rate environment.

Despite an overall decline in CIS sales and total investment product sales, the transaction amount for money market funds saw an increase. The total transaction amount for all investment products declined by 24% to $3,799 billion, in line with the decrease in turnover observed in other major stock markets throughout the year.

However, it is worth noting that despite the decrease in transaction amounts, the overall manpower deployed by firms to sell investment products remained stable. Around 35% of firms recorded an increase in their transaction amounts, which some attributed to the offering of personalized investment products that catered to the preferences and needs of individual investors. By providing tailored solutions, these firms were able to navigate market challenges and even thrive.

The survey not only aimed to collect information about the types and value of investment products sold but also aimed to help the SFC and HKMA better understand market trends, identify selling activity risks, and coordinate responses to address areas of concern. The collected information is expected to be useful to market participants as well.

In summary, the survey conducted by the HKMA and SFC highlighted the growing preference for money market funds among investors in Hong Kong. Despite an overall decline in sales, firms that offered personalized investment products were able to adapt and succeed in the market. The collected data will enable regulatory bodies and market participants to gain insights into market trends and identify potential risks.

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