HKIFA: Redemption pressure to increase in Q3

Despite net sales of the Hong Kong fund industry reaching its record high in Q2, fund redemptions are set to rise this quarter, according to Desmond Ng, chairman of HKIFA.

In the first half of 2011, gross sales went up 66.3% to $21bn. However, after global share market experienced its double-digit fall in the past few weeks, Ng is more pessimistic for the Q3 sales figures.

“As the market has been more volatile, the redemption pressure of funds would probably go up, particularly in equity funds,” he said.

In regards to the possibility of Ben Bernanke announcing QE3 at Fed’s annual symposium in Jackson Hole, Ng said the current rebound in stock prices has already reflected QE3 expectations. As result, he expects there would be limited upside to stock markets even if Fed confirms the stimulus step.

Ng said conservative investors have become more willing to diversify their portfolio into bond and cash during market instability, while Asia and emerging markets bonds are gathering more supporters. Yet as a whole, he believes the fund market would turn quieter in July and the net sales in Q3 would drop when compared with the last quarter.

As concerns the introduction of RMB Qualified Foreign Institutional Investors (RQFII), Ng said the policy would have little impact on the overall fund market as the quota is small. However, he expects more yuan-related funds would be launched as a megatrend.

 

A version of this article first appeared on Professional Adviser Hong Kong.

 

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