SFC-HKMA joint product survey in 2022 shows shifts to investments in money market funds

The Securities and Futures Commission of Hong Kong, SFC, and the Hong Kong Monetary Authority, HKMA, have published the results of a joint survey on „the Sale of Non-exchange Traded Investment Products 2022“ which was announced in an SFC circular (Circular SFO/IS/039/2022) in December 2022. Please also see EventID #18670 in this context for more information. The survey, which is conducted annually and mandatory for supervised firms, covered the sale of products between January 1, 2022 and December 31, 2022 by licensed corporations (LCs) and registered institutions (RIs) to both non-professional as well as (corporate) professional investors.
Key statistics and finding are briefly noted below:
– The survey included 371 licensed corporations (LCs) and registered institutions (RIs) with over 800,000 clients, with a total transaction amount of $3,799 billion, down by 24% from the previous year, but in line with global market trends.
– Despite the decline in transaction amount, the manpower deployed by firms for selling investment products remained stable.
– Around 35% of firms recorded an increase in their transaction amount, primarily attributed to offering personalized investment products tailored to individual investors‘ preferences and needs.
– Structured products were the most prevalent, constituting 51% of the total transaction amount, followed by collective investment schemes (CIS) at 23%, and debt securities at 17%.
– Equity-linked structured products accounted for 53% of structured products sold in 2022, but some investors shifted to other product types, such as currency-linked products, due to weak stock market sentiment.
– Investors also showed significant interest in sovereign bonds, including HKSAR Government bonds like Green Bonds and Silver Bonds, which are perceived as having a lower risk profile, but with stable returns.
– In line with this tendency towards security and stable returns, money market funds were the top-selling CIS accounting for 61% of the total top five CIS transaction amount in 2022, up from 33% in the previous year.
– Bond funds and equity funds ranked second and third, representing 14% and 7% of the total transaction amount, respectively.
– The shift to money market funds was due to investors‘ preference for stable income and liquidity in a rising interest rate environment, despite an overall decline in CIS and total investment product sales.
– As far as online distribution is concerned, the number of firms utilizing this distribution channel increased by 19% in 2022, totaling 83 firms. CIS was the most common product type distributed online, representing 83% of total online sales.
– The proportion of online transactions for CIS investors increased from 65% in 2021 to 72% in 2022. Online sales of debt securities also grew significantly, reaching 15% of total online sales in 2022, up from 6% in 2021.
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For more detailed information, please consult the enclosed survey response paper.