Total sales of all non-traded investment products in Hong Kong increased by 34% to HK$508bn during the period of April 2017-March 2018, from HK$380bn in 2016, according to a survey by the Securities and Futures Commission (SFC).
The increase of sales was “mainly driven” by mainland-based firms, the survey said, adding that some of them have expanded their wealth management business during the reporting period. The SFC did not a give a breakdown of the sales attributable to mainland-based firms, however.
The report added that a number of larger firms said they provided more product training and information to staff, as contributors to the increase in sales.
Non-exchange traded investment products include structured investment products, government and corporate bonds, swaps and repos, collective investment schemes and hedge funds.
The survey questionnaire was sent to 1,844 corporations licensed to deal in or advise on securities – all of which responded. Only 252 corporations, which comprise investment advisers, asset management firms, securities brokers and international financial conglomerates, said they sold investment products to individual investors.
The top 10 firms continued to dominate the market, representing 71% of total sales. Of these market players, four international conglomerates accounted for 38% of the total transaction amount, with four mainland-based brokerage groups accounting for 24%, the report added.
Non-authorised investment products, or those only available to professional investors, continued to account for at least 90% of total sales during the period.
Meanwhile, nearly all of the SFC-authorised investment products, which are those that could be marketed to retail investors, were collective investment schemes, the report added.
Product type breakdown
Mutual fund sales up
Of all the investment products sold to individuals, structured investment products were the most popular, at 42% of total sales, followed by fixed income products (29%), collective investment schemes or mutual funds (20%), and swaps and repos (6%).
The report noted that the transaction amount for collective investment schemes increased significantly by 84% to HK$101bn, with authorised and non-authorised collective investment schemes contributing 45% and 55% respectively during the reporting period.
Of the 164 firms selling collective investment schemes, five of them contributed 62% of the total transaction amount. These included an international financial conglomerate, an investment advisory firm, an asset management firm and two brokerage groups. One of the brokerage groups said it expanded its wealth management team in turn driving an increase in the turnover of collective investment schemes.
Bond funds were the most commonly sold collective investment scheme, especially high-yield ones, for which sales increased to $18bn.
On the flipside, the transaction amount for hedge funds decreased to HK$5bn from HK$8bn. Of the top five hedge funds, equity long/short continued to be the most common strategy.