Hong Kong Fund Industry Grew 4.3% in 2004

by Mary Swire, Tax-News.com, Hong Kong

16 February 2005

The fund industry in Hong Kong recorded gross sales of US$20.34 billion for 2004, representing a 4.3% increase compared to gross sales in 2003, according to the Hong Kong Investment Funds Association.

The HKIFA report revealed that the industry recorded a total net inflow of US$2.6 billion last year, up 18.5% from a year earlier, although it recorded an outflow of US$459.9 million in December, the second month of outflow in the second half of last year.

Equity funds accounted for the largest share of total gross sales last year, growing 7.2% to US$6.27 billion. Net inflow increased to US$1.66 billion, almost three-quarters (73%) of which came during the first quarter.

However, the report revealed that gross sales of bond funds fell 61% to US$1.6 billion as a net outflow of US$223.7 million was recorded. This reversed a US$1.17 billion inflow in 2003, which was attributed to rising interest rates in the United States.

Guaranteed funds recorded a 4.7% decline in gross sales in 2004 to US$3.1 billion while net sales decreased by 37.6% to US$485.7 million.

“The year started off with strong inflows into Asian equity funds. However, the momentum faltered in subsequent quarters, though sales have gradually picked up of late,” noted association spokeswoman Sally Wong, according to a report in The Standard.

Wong added that the outlook for the Hong Kong investment fund sector in the year ahead was somewhat uncertain due to speculation over interest rates and economic growth.

“In view of market volatilities, investors will generally have a lower risk appetite and focus more on diversification and income,” she observed.

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