For Immediate Release August 26, 2014
  • Hong Kong investors look to mainland China for growth and investment
  • Investor sentiment nudges higher on property and fixed income but still negative
  • Investors plan to deposit two-fifths of lump sum pension payments in bank accounts
  • One in five Hong Kong investors expects age-related healthcare costs to kick-in below 45

Hong Kong - Mainland China is the number one investment destination for Hong Kong investors looking for growth and returns over the next two years, according to the latest Manulife Investor Sentiment Index* survey.

The attraction of the Mainland reflects a broader preference among Hong Kong investors for the emerging Asian markets as a place to invest compared to the developed markets in Asia, particularly Japan, and other regions further afield.

"A third of investors surveyed in Hong Kong are looking to mainland China for the fastest growth in the coming two years and are more positive about actually investing in assets of related themes than in any other markets, including Hong Kong," said Michael Huddart, Manulife's Executive Vice President and General Manager for Greater China.

"As the world's second largest economy, China is maintaining its growth momentum. In the past years, we have seen China's financial markets gradually opening up, bringing more and more investment opportunities to investors outside the Mainland. Hong Kong, with its close tie to the Mainland, enjoys our unique position as a gateway to access the Mainland market and investors here are particularly interested in China related investments," continued Mr. Huddart.

In terms of growth expectations, a distant second after mainland China come South Korea and Singapore (both at nine per cent). India is close behind at eight per cent. Other destinations such as Germany and Japan rank far lower (both at four per cent).

Mainland China economic growth prospects make it the preferred investment location
Optimism among Hong Kong investors about the mainland China economy is reflected in their attitude to investing there as well. They are more positive about investing in the Mainland (index score +19) than in any other markets, including Hong Kong (+5). They are, however, very negative on investing in Japan     (-22) - more so than investors anywhere else in the region.  

Hong Kong investors' views of investing in developed Asia markets are lukewarm at +4, although this would be higher with Japan excluded. Developed markets elsewhere in the world also have little appeal - respondents consider it neither a good nor a bad time to invest in North America (+1) and developed European markets (0).

They are more positive about investing in emerging Asian markets (+15), but have no appetite for European emerging markets (-9) or those of the Middle East and North Africa (-11).

Hong Kong investor sentiment nudges higher on property and fixed income but still negative
With regards to Hong Kong investors' sentiment towards key domestic asset classes, the Manulife Investor Sentiment Index shows a very slight improvement in the second quarter - although at -10 the index remains in negative territory (up just 1 point from the first quarter). It also means that Hong Kong investors are still the most negative of all investors surveyed, substantially below investors in China (+11), Asia on average (+24), and the United States (+23).

The very modest pickup in sentiment was on account of more positive views on primary residence investment (up 7 to -19), fixed income (up 4 to +4), as well as cash (up 2 to -3).

Hong Kong investors remain highly pessimistic about property in general, but in particular towards investment property (down 2 to -36). Stocks meanwhile edged lower (down 3 to +2), echoed by a fall in mutual funds (down 2 to -6). Despite the drop in sentiment towards equities, equities are still a very common investment vehicle for Hong Kong investors, with 76 per cent saying they currently own equities, versus 48 per cent regionally. Cash remains the most popular among Hong Kong investors, with 86 per cent saying they hold cash in their portfolio.

"The Hang Seng Index gained 4.7 per cent during the second quarter, but the small and mid-cap sectors experienced selling pressure and IPOs debuted with heavy losses. Concern about a slowdown in China in the first half of 2014 also weighed on sentiment," said Kai Kong Chay, Senior Portfolio Manager, Greater China Equities, Manulife Asset Management. "However, we see reasons to be optimistic on the Chinese economy in general and on Hong Kong equities, and we expect sentiment to pick up in the coming quarter."

Explaining his positive outlook for stocks, Mr. Chay said: "The Hong Kong economy should benefit from recent positive economic developments on the Mainland. In fact, we are already seeing signs of renewal in Hong Kong, with the gaming sector remaining robust and the government reportedly considering relaxing property market cooling measures."

Investors plan to deposit two-fifths of pension in bank accounts
Mandatory Provident Funds, government and employer pensions are expected to make up 18 per cent of investors' total retirement income. Upon receiving their pension lump sum, the Manulife survey shows that investors intend to deposit 41 per cent into a bank account for use as ready funds to support their retirement. Another 15 per cent will be used to invest in stocks and bonds, and nine per cent will be set aside to purchase property. A further 10 per cent will be squirreled away for travel during their retirement.

"In 2013, the life expectancy at birth for men and women in Hong Kong was about 81 years and 87 years respectively. Hongkongers are looking at an average of 15 to 20 years in retirement. Some people think of retirement as the finish line; however, just tucking lump sum pension payments away in the bank, and then slowly drawing them down isn't good money management. Proper financial planning in retirement could help make your savings last and ensure they continue to work for you," said Steve Chiu, Vice President, Investment Funds, Manulife (International) Limited.

One in five Hong Kong investors expects recurring healthcare costs to kick-in below 45
Two-thirds of Hong Kong investors cite deteriorating health as their number-one retirement worry, and nearly a third cite concerns about the affordability of healthcare. This anxiety is echoed by the fact that one in five (19 per cent) respondents expects recurring healthcare costs to kick-in before they reach 45 years of age.

"We see that chronic illnesses affect people at younger ages nowadays, for a variety of reasons including lifestyle and environment," said Mr. Chiu. "It's very important to build this into your planning, otherwise you risk having your savings eroded by the long-term medical costs of poor health." 

Investor Sentiment in Asia

For more information on the Manulife Investor Sentiment Index in Hong Kong, please visit http://www.manulife.com.hk/.

*About Manulife Investor Sentiment Index in Asia
Manulife's Investor Sentiment Index in Asia is a quarterly, proprietary survey measuring and tracking investors' views across eight markets in the region on their attitudes towards key asset classes and related issues. The Index is calculated as a net score (% of "Very good time" and "Good time" minus % of "Bad time" and "Very bad time") for each asset class. The overall index is calculated as an average of the index figures of asset classes. A positive number means a positive sentiment, zero means a neutral sentiment, and a negative number means negative sentiment.

The Manulife ISI is based on 500 online interviews in each market of Hong Kong, China, Taiwan, Japan, and Singapore; in Malaysia, Indonesia and the Philippines it is conducted face-to-face. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.

The Manulife ISI is a long-established research series in North America. The Manulife ISI has been measuring investor sentiment in Canada for the past 15 years, and extended this to its John Hancock operation in the U.S. in 2011. Asset classes taken into Manulife ISI Asia calculations are stocks/equities, real estate (primary residence and other investment properties), mutual funds/unit trusts, fixed income investment and cash.

About Manulife (International) Limited
Manulife (International) Limited is a member of the Manulife group of companies.

Manulife is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Clients look to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife and its subsidiaries were approximately C$637 billion (HK$4,626 billion) as at June 30, 2014. Our group of companies operates as Manulife in Canada and Asia and primarily as John Hancock in the United States.

Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife can be found on the Internet at manulife.com.

About Manulife Asset Management
Manulife Asset Management is the global asset management arm of Manulife, providing comprehensive asset management solutions for institutional investors and investment funds in key markets around the world. This investment expertise extends across a broad range of public and private asset classes, as well as asset allocation solutions. As at June 30, 2014, assets under management for Manulife Asset Management were approximately C$300 billion (US$281 billion).

Manulife Asset Management's public markets units have investment expertise across a broad range of asset classes including public equity and fixed income, and asset allocation strategies. Offices with full investment capabilities are located in the United States, Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, and the Philippines. In addition, Manulife Asset Management has a joint venture asset management business in China, Manulife TEDA. The public markets units of Manulife Asset Management also provide investment management services to affiliates' retail clients through product offerings of Manulife and John Hancock. John Hancock Asset Management and Declaration Management and Research are units of Manulife Asset Management.

Additional information about Manulife Asset Management may be found at ManulifeAM.com.

Media Contacts:
Jacqueline Kam / Crystal Tse
Manulife (International) Limited
Tel: 2202 1284 / 2510 3130
Fax: (852) 2234 6875
Jacqueline_tm_kam@manulife.com
Crystal_ym_tse@manulife.com

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