Hong Kong residents leading longer and healthier lives will force changes to long-term asset markets, according to a new report.
The Chinese territory’s median age is expected to reach 55 years in 2049, rising from 45 years and 6 months in 2019, increasing demand for long-term assets, defined as investments with the objective of meeting future expenditures after retirement.
The study finds that demographic trends alone will result in an overall 15% increase in the demand for long-term assets from 2020 to 2049.
The growth in demand will be even larger, up to nearly 32%, due to policies aimed at attracting young talent from outside Hong Kong.
About 70% of the demand for long-term assets now is from Hong Kong people before retirement, but in 30 years, about 45% of the demand will come from people after retirement, according to the report, titled “Demographic Changes and Long-Term Asset Markets: Opportunities and Developments in Hong Kong”.
The report highlights that major pension funds and insurers worldwide are increasingly making allocations to green and sustainable assets, and high-net-worth individuals are also expressing interest in environmental, social and governance (ESG) products.
Researchers found that 83% of respondents would “move towards ESG adoption in their investment strategies”.
“This is consistent with the accumulating evidence that ESG assets, compared with conventional assets, provided similar or superior long-term performance and offered better resilience during market downturns,” the report said.
The report was issued by the Hong Kong Institute for Monetary and Financial Research (HKIMR), the research arm of the Hong Kong Academy of Finance.
It explores the opportunities and developments in Hong Kong’s long-term asset markets, investigates the growth in demand for long-term assets due to demographic trends and reviews long-term assets available in Hong Kong.
The survey found that 89% of respondents would consider investing in the Guangdong-Hong Kong-Macau Greater Bay Area initiative in their strategic plans.
“We are optimistic that the future development of the long-term asset markets in Hong Kong will further facilitate residents’ retirement planning,” said Edmond Lau, deputy chief executive of the Hong Kong Monetary Authority and deputy chairman of the HKIMR.
- George Russell
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