Hong Kong Investors Shun Internet For Mutual Fund Purchases

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

03 May 2001

We have in the past reported on how alternative investment products - that is investment vehicles other than traditional trading of stocks and shares - are gradually catching on in Hong Kong. This is particularly true of mutual funds. A recent survey by the Hong Kong Investment Funds Association (HKIFA) showed that more investors used the Internet last year to seek information on mutual funds available in the SAR. However, whilst more investors were logging on, the parallel significant increase in online transactions one would expect did not in fact occur.

The HKIFA's survey, conducted in the first quarter of 2001, covered the year 2000. A majority, or 41, of HKIFA's 46-member fund companies responded to the survey. Out of the 41 respondents, 33 provided Internet sites, with 20 being Hong Kong sites and 13 linked with, or part of, wider global sites.

Demonstrating how mutual funds have caught the imagination of Hong Kong investors over the last year or so, of the 33 fund companies with websites, around half of these sites were only launched last year. Those that existed prior to 2000 saw an significant increase in visitors from the previous year (1999). These increases ranged from 10 per cent to 50 per cent.

However, of those companies which saw an increase in the number of visitors to their sites, 85 per cent said no sales were conducted online last year. Of the remainder, the percentage of sales conducted online was less than 5 per cent of their total sales.

HKIFA Chairman Paul Chow said in a statement: 'While more fund investors are going to the Web to obtain information, many still prefer to have face to face interactions with the investment professionals when it comes to executing transactions. Investors generally are still concerned about the security of the Net.'

Most of those companies participating in the survey do not see the situation changing in the near future. Traditional channels for distributing mutual funds, such as banks, financial advisers and insurance companies, are expected to maintain their dominance, although the convenience of using the Internet to garner information on mutual funds looks likely to retain its appeal.

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