SFC-HKMA joint survey shows strong rebound in sales of investment products in 2023
A joint survey by the Securities and Futures Commission (SFC) and the
Hong Kong Monetary Authority (HKMA) on the sales of non-exchange-
traded investment products by licensed corporations (LCs) and
registered institutions (RIs) (Note 1) showed a 14% increase in total
transaction to $4,338 billion (Note 2) in 2023 from $3,799 billion in
2022.
Respondent firms saw an improvement in overall market
sentiment in 2023 amid market recovery from the pandemic, easing of
inflationary pressures and anticipation of the end of the monetary
tightening cycle in major economies. Against this backdrop, the number
of firms engaged in the sale of investment products grew to 380 in
2023 from 371 in 2022. About 68% of these firms reported year-on-year
increases in transaction amount, and about 29% of them expanded their
sales force by 50% or more to meet growing business needs. The number
of participating clients also grew by 15% to over 940,000 (Note 3).
The solid sales growth of investment products was fuelled
largely by an increase in the sales of collective investment schemes
(CIS) (up $394 billion), debt securities (up $80 billion) and
structured products (up $59 billion).
According to the
survey, sales of money market funds increased in 2023 and accounted
for 76% of the total transaction amount of the top five CIS reported
by the large firms (Note 4), up from 61% in 2022. Sales of sovereign
bonds also rose, representing 44% of total debt securities sold in
2023, up from 29% in 2022. The rise in popularity of money market
funds and sovereign bonds was attributable to investors’ preference
for lower risk products with more stable yields amid the persistent
high interest rate environment.
“The survey findings reflect
a notable recovery in Hong Kong's investment market, demonstrating the
resilience of the securities sector, and the growth across various
product segments has highlighted the industry’s adaptability and
commitment to meeting investor needs,” said Dr Eric Yip, the SFC’s
Executive Director of Intermediaries. “The SFC remains committed to
fostering stability and growth of the financial market while ensuring
that investor interests are protected. ”
“The survey shows an
upward trend in the sales of a wide range of product types and
increased participation by investors in Hong Kong’s investment market,
indicating a recovery of the investment market and investors’ interest
in 2023,” said Mr Alan Au, Executive Director (Banking Conduct) of the
HKMA. “The survey also provides valuable insights for regulators in
formulating policy and carrying out supervisory work related to
investor protection. ”
Other major observations from the
survey included: Structured products continued to be the top product
type sold by the respondent firms, representing 46% ($1,980 billion)
of the total transaction amount in 2023. CIS and debt securities
rounded out the top three spots, accounting for 29% ($1,278 billion)
and 17% ($728 billion) respectively. The transaction amount of
equity-linked products stood at $1,206 billion, representing 61% of
all structured products sold in 2023, up from 53% in 2022. The major
underlying equities of the top five products sold by the large firms
were from the internet (29%), automotive (27%) and technology (20%)
sectors. There was an upward trend in utilising online platforms for
distributing investment products. The number of firms distributing
investment products online increased by 11% to 92 in 2023, up from 83
in 2022. Online sales accounted for 12% of the aggregate transaction
amount of all respondent firms, as compared to 7% in 2022. CIS
represented 72% of all online sales, followed by debt securities,
which accounted for 25%.
End
Note: The annual survey
questionnaires were sent to 2,310 LCs and 112 RIs licensed or
registered for Type 1 (dealing in securities), Type 4 (advising on
securities) or both regulated activities, and were answered by more
than 99% of these firms. The survey covered the sale of non-exchange-
traded investment products from 1 January to 31 December 2023 (the
reporting period) by respondent firms to non-professional investor
clients, individual professional investors (PIs) and certain corporate
PIs. The transaction amount refers to the amount paid or payable by
investors for investment products. For structured products and
derivative products, the transaction amount refers to the maximum
exposure of the contracts at the point of sale. Respondent firms were
requested to report only one side of the transaction. Rollovers,
redemptions and position close-outs were not included. The number of
participating clients refer to clients who completed at least one
transaction in non-exchange-traded investment products during the
reporting period. The number of clients of LCs and RIs were 341,124
and 605,399, respectively. Large firms refer to LCs and RIs with
respective total transactions of $1 billion or more and $30 billion or
more during the reporting period. They were requested to provide
details about the investment products they sold, such as the
transaction amount of products by types of investors and the details
of the top five products ranked by transaction amount.