Investing for good? It’s age and never earnings that counts, say findings from Hong Kong’s funding funds physique
Practically a fifth of Hong Kong respondents aged between 18 and 29 mentioned they’d undoubtedly purchase inexperienced funding merchandise – funds, bonds or shares – that can ship a constructive impression on the atmosphere and society, towards solely 10 per cent for these between 45 and 55 years outdated, the survey discovered.
However in Guangdong, the larger curiosity got here from older traders – 31 per cent from the 45 to 55 year-old group, in contrast with 21 per cent of respondents aged between 18 to 29.
The survey interviewed 1,026 traders in Hong Kong, and Guangzhou, Shenzhen and Zhuhai cities within the southern Guangdong province within the third quarter of final yr.
Larger earnings earners in each Hong Kong and Guangdong typically have a better curiosity in inexperienced investing. In Hong Kong, 29 per cent of traders who earned HK$100,000 or extra a month mentioned they’d put money into inexperienced merchandise, versus none from the HK$10,000 earnings bracket.
The commonest causes cited by Hong Kong traders are a lack of expertise on what environmental, social and governance (ESG) merchandise are invested in, and their potential returns
Sally Wong, HKIFA
Whereas the pattern was related in Guangzhou, Shenzhen and Zhuhai for the upper earnings group, the place 60 per cent of respondents have been eager, a notable 32 per cent of respondents who earned a modest HK$10,000 had additionally expressed curiosity.
Nonetheless, actual retail investor pursuits, in response to the survey findings, are solely as a lot as 1 per cent of the respondents, who mentioned they’d purchased inexperienced merchandise.
“The commonest causes cited by Hong Kong traders are a lack of expertise on what environmental, social and governance (ESG) merchandise are invested in, and their potential returns,” mentioned Sally Wong, chief govt of the HKIFA.
Guangdong traders believed that returns could be decrease than the traditional funding merchandise, Wong mentioned. Half of the traders in each markets couldn’t see a transparent relationship between sustainable investing and returns.
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That mentioned, there isn’t any scarcity of research from monetary establishments in recent times to quantify such returns.
UBS’ world wealth administration’s head of impression investing and chief funding officer James Gifford
mentioned research confirmed that 92 per cent of funding portfolios with a sustainable funding idea delivered higher returns than one with out, whereas solely Eight per cent of them had underperformed.
The businesses which take note of social tasks and environmental impression are often those with higher administration
James Gifford, UBS
The MSCI Rising Markets ESG Leaders Index, which tracks the efficiency of listed corporations with excessive scores for his or her give attention to ESG in 24 rising markets, reported a 11.03 per cent annualised return within the three years ending in December, greater than the 9.65 per cent generated by the MSCI Rising Markets Index throughout the identical interval. For a 10-year foundation, the previous posted a return of 11.72 per cent in contrast with the latter’s 8.39 per cent.
“The businesses which take note of social tasks and environmental impression are often those with higher administration,” Gifford mentioned.
In September, the Securities and Futures Fee issued “Strategic Framework for Inexperienced Finance” to push for better inexperienced funding in Hong Kong.
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Jeffrey Chan Lap-tak, the founding companion of funding agency Oriental Patron Monetary Group, mentioned whereas corporations concerned in inexperienced companies may benefit from tax incentives that governments in China and the West have launched to ship good returns, traders nonetheless wanted to be cautious of the dangers tied to sustainable investing.
“We now have discovered that a few of these companies would not have a superb enterprise mannequin and their revenue is principally supported by authorities subsidies. They’d be laborious hit as soon as the federal government withdrew the help,” he mentioned.