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Financial freedom depending on assets allocation
Damon Ho
25th March 2023
As an international financial center, Hong Kong market has provided wide selection of a wealth management products to meet individual investor’s requirement. In addition, there are also countless investment vehicles such as stocks, funds, and debt instruments to be chosen by the experienced investors. Hong Kongers are not only property loving investors but are also keen to invest in financial tools. Consequently, they fulfil their strategy to diversify investment risks.
The writer's friend is a general local investor. Indeed, he brought his self-use home and investment properties in the early years, but he still invests in stocks and funds in his spare time. In terms of asset allocation, his financial investments' value represented about 20% of the total asset allocation.
The above-mentioned investor started to buy  different funds for long-term investment more than 30 years ago. After a few years of his initial buy-in, he found that the rate of return was too low. In his portfolio, one-half of the funds suffered losses. Funds with the profit margin had an annual growth rate of less than 4 to 5%, but these funds' annual management fee is 3%. In profit and loss account, the net cash flow was almost zero. For all those funds with losses, fund's managers still charged the management fees from the stakeholders. If the investment loss is 5%, a cumulative loss plus management fee would rise to 8%. The yield of these funds were much lower than expectation, so my friend finally sold all these funds with losses of more than 20%.
With this failure investment in funds, this investor began to invest in Hong Kong stocks since 2003. In the first five years of investment, he focused on short-term speculation. As a result, he had successfully doubled the investment principal until 2008. In reference to the Buffett's value investment theory, he had changed his strategy to long-term holding afterwards. Initially, most of the investments recorded positive return and then turned into negative lately. Consequently, his stocks investment still recorded losses one year ago.
This investor did record investment losses in funds and stocks. On the contrary, his investments in real estate has earned a lot of capital. He purchased his self-use premises 25 years ago, and capital gained has reached six times so far. Moreover, he also invested in residential properties in China and Canada ten years ago, and the capital acquired in mainland China and Canadian properties were more than tripled so far.
The investor is approaching retirement age today, and he does not want to invest in the financial stock market anymore. Nowadays, he is planning to sell a few overseas properties and continue to hold part of these properties for long-term investment. He said if he didn't focused on investing in property, he will likely have no assets in this old age now.
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1. 车位成交升七成 2023-03-26 11:48:56
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楼市向好，住宅买卖活跃之余，纯车位交投量亦回升。据美联物业房地产数据及研究中心综合土地注册处资料显示，本月截至23日纯车位注册量录464宗，已较2月全月274宗增加约69.3%，注册宗数连升2个月，并创5个月新高。
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2. Office market recorded positive net absorption 2023-03-26 22:41:41
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The overall office market recorded positive net absorption of 16,900 square feet last month, the first time after three consecutive months of negative absorption. "The overall vacancy rate climbed to 12.3% as of end-February, partly due to the completion of S22 in Wong Chuk Hang by Empire Group. The office leasing market continued to improve; we received more leasing enquiries from insurance and financial institutions,” Alex Barnes, Managing Director at JLL in Hong Kong, said.
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3. H k ranks fourth in Global Fin Centres 2023-03-26 23:11:25
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Hong Kong is no longer the top financial centre in the Asia Pacific. The city dropped one rank in the Global Financial Centres Index, placing fourth globally and second in Asia-Pacific. The city got an overall rating of 725, losing to Singapore by one point. Markets in the index are rated based on five areas of competitiveness: business environment, human capital, infrastructure, financial sector development, and reputation.
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4. HK dipped to second place in priecest retail 2023-03-27 10:07:12
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The global political conflicts and closure of borders impacted Hong Kong’s top spot in the priciest retail destination. According to Cushman and Wakefield’s 2022 report, Hong Kong has now edged down to second place. The Upper Fifth Avenue located in New York ranked first in the most expensive retail destination report, with $15,622 (US$ 2,000) per square foot (sq ft). In 2019, the US was at the second spot globally. Hong Kong’s Tsim Sha Tsui has $11,216 (US$1,436) per sq ft. The market was in first place before the pandemic hit.
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5. HK Exporters imported in Q1 23 2023-03-28 10:59:09
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TheHong Kong Trade Development Council(HKTDC)Export Index has rebounded in the first three months of 2023, growing 9.3 points to 39.0. According to HKTDC, this growth indicates “a significant improvement in business sentiment among Hong Kong exporters.” HKTDC attributed this improvement to the reopening of borders between Hong Kong and Mainland China in early February. Full benefits of the reopening will likely materialise in the coming months.
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6. Exports goods dropped 8.8% in Feb 2023-03-29 11:44:19
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The value of goods exports fell further in February 2023, declining 8.8% YoY to $286.2b. The Census & Statistics Department (C&SD) attributed the decrease in export value to the “weak external environment.” By major commodity, exports value dropped $20.9b or -13.4% for "electrical machinery, apparatus and appliances, and electrical parts thereof”; by $5.5b or -16.5% for "office machines and automatic data processing machines"; by $4.7b or -36.3% for "professional, scientific and controlling instruments and apparatus."
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7. Over 10000 top talent will come to HK 2023-03-30 10:55:20
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Hong Kong has received over 17,000 applications for the Top Talent Pass Scheme, and granted approval to more than 10,000 applicants as of mid March, said Secretary for Labour and Welfare Chris Sun Yuk-han. Sun released the data on Wednesday as he faced lawmakers in a Legislative Council meeting this morning. Sun noted that an interim review will be conducted mid year and authorities are now analyzing details of the applicants, including their gender, age, work experience, occupation, income and origin, to assess if it is necessary to adjust the criteria of the scheme.
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8. Hk economy rebound due to pickup consumption 2023-03-31 10:22:30
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Despite Hong Kong’s economy shrinking in 2022, economists are positive about the city’s recovery this year. Felix Tong, Hang Seng Bank economist, expects the city's economy to rebound primarily due to a pick-up in consumption activity. Tong said the reopening of the Hong Kong economy and stronger growth of the mainland economy will also support the city’s recovery in 2023. Hong Kong’s opening has led to better performance of the tourism industry, which is closely linked with the labour and retail markets, said Thomas Shik, chief economist of Hang Seng Bank.
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