Where to park your money is an is­sue in trou­bled times

China Daily (USA) - - HONG KONG -

The dras­tic changes that have be­set the in­vest­ment en­vi­ron­ment since early this year have raised the ques­tion of where to park your money in the longer term.

That’s a hard choice, par­tic­u­larly, for Hong Kong in­vestors who have been used to years of low in­ter­est rates, ro­bust eco­nomic growth and surg­ing as­set prices when buy­ing stocks or prop­er­ties.

Not any­more. In­ter­est rates are on the rise and the eco­nomic prospects are now clouded by the es­ca­lat­ing trade war be­tween the United States and the Chi­nese main­land — Hong Kong’s two largest mar­kets. The de­cline of the stock mar­ket in the past few months is a stark re­minder of trou­bled times ahead.

Even the mighty prop­erty sec­tor is show­ing signs of weak­en­ing. The fall in res­i­den­tial prop­erty prices in Au­gust — the first such down­turn in 27 months — is widely seen an in­di­ca­tion of the on­set of the long over­due mar­ket down cy­cle that could last five or more years, based on past ex­pe­ri­ence.

Un­like what de­vel­op­ers have been say­ing, the de­mand for homes is elas­tic. The buy­ing frenzy will fiz­zle out when prices are seen to be fall­ing and prop­erty’s ap­peal as the best stor­age of value wan­ing. The de­vel­op­ers know best. That’s why they’ve been cut­ting prices of new apart­ments to push sales be­fore the crunch sets in.

If you, like many other in­vestors, are pre­pared to tick off Hong Kong stocks and prop­er­ties from your list, where else then can you put your money?

Some peo­ple would say that, in these un­cer­tain times, cash is king. But keep­ing cash in the bank is a los­ing propo­si­tion be­cause the de­posit rates can never catch up with in­fla­tion which is ris­ing to above 2 per­cent. Al­ter­nate in­vest­ments like arts and an­tiques make sense only to the few who can truly un­der­stand the mar­ket.

More in­vestors are now bet­ting on the US stock mar­ket which is buoyed by ro­bust eco­nomic growth and an ap­pre­ci­at­ing green­back. The mighty tech stocks, in­clud­ing Ap­ple, Ama­zon and Google, are the fa­vorites as they are mak­ing in­roads into cloud com­put­ing and other in­ter­net busi­nesses.

For those who in­sist on play­ing it safe, the ob­vi­ous choice is time de­posits as smaller banks are of­fer­ing higher in­ter­est rates to at­tract longer-term fund­ing to lessen their de­pen­dence on the in­ter­bank mar­ket where rates are ris­ing rapidly.


The stock mar­ket’s bear run and a weak­en­ing prop­erty sec­tor are giv­ing Hong Kong in­vestors eye­ing good div­i­dends a hard time.

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