Investor sentiment shifts
Updated: 2013-07-05 07:20
(HK Edition)
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Hong Kong retail investors have become notorious in their proclivity for short-term speculative investing ranging from real property to the stock markets.
In the property market, investors often turn over confirmor transactions - property deals in which the assets are resold before the original transaction is completed. When these transactions account for a significant proportion of total property sales, it serves as a barometer on property speculation, revealing upward movement in the local property sector.
To combat the soaring property prices, the Hong Kong government in October 2012 levied a 10 percent to 20 percent Special Stamp Duty on short-term sales of homes - properties flipped by owners within three-year period, and an additional unprecedented 15 percent Buyer's Stamp Duty on home purchases by companies and non-Hong Kong permanent residents. Ever since, speculative short-term property sales have decreased significantly in the city.
Turning to the stock market, local investors are keen in engage in speculative activities to reap quick profits. They hold shares for only a short time after buying them. Quick profits aren't that easy any more. The Hong Kong shares market in June has tumbled sharply, possibly the result of the US decision to terminate its third-round quantitative easing monetary policies, tied in with a spate of economic data indicating the Chinese economy is faltering.
"Local investors who prefer high dividend stocks will show great demand for iBond to earn stable returns amid the recent price tumble of those high-dividend stocks," Tengard Fund Management Investment Manager Patrick Shum tells China Daily.
"If investors really want to balance their investment portfolios' returns, they need more iBond allocations so that the interest payment returns can have a real stabilizing impact on their portfolios," Shum says. "Therefore if the government can raise the iBond issuance to HK$50 billion, investors will seize as many of the bond as they can, to ensure significant, stable returns."
"The iBond can bestow a risk free stable return rate of 3 to 4 percent to local investors and this is very attractive," Centaline Wealth Portfolio Manager David Leung notes.
"After the last two iBond exercises, local investors have become more familiar with the investment product. If the government issues more iBond in the future, market demand will be positive," Leung adds.
(HK Edition 07/05/2013 page3)