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Awaken the dragon. A week in Hong Kong

Nathan Lear
Partner/Private Client Adviser
27 Jun 2017

If New York is the finance world’s patriarch, then Hong Kong is the rambunctious upstart snapping at its heels. Ready to jump and move with ferocious stamina, Hong Kong is where it’s at.  

So where better to hold some of Asia’s most important financial conferences? Hoping to learn the latest in investment and finance news, Glenn Fairbairn (Director / Private Client Adviser) and I boarded QF29 on 5 June and made our way to Hong Kong.The first conference on our agenda, the Morningstar Institutional Conference. Morningstar is a highly respected US based investment research and investment management firm with local offices around the world.

The conference featured presentations from financial experts including regulatory bodies and industry professionals. Discussions focussed around the growth of the Asian middle class consumer and the growing importance of technology within the financial services industry. Plus of course examinations of the global market from a macroeconomic perspective.

What did we learn?

  • Investment markets have seen a rapid rise in the popularity of low cost investing, such as exchange traded funds (ETFs). This passive investment strategy strives to replicate the returns of a selected market or index. This approach has gained in popularity in recent times due to its low cost nature. However there is some concern with this type of investing that money would flow into particular markets making overvalued companies even more overvalued.
  • Financial advice firms around the world are, as we always have at Hewisons, slowly transitioning to a fee for service model. Great news for client investors.
  • Technological impacts will become more prevalent as we continue to see rapid technological advancements. Technology should be used to aid the relationship between an adviser and client, not replace it. The point was made that humans add value while machines add efficiency. Robo-advice, which was originally seen as a threat to the advice industry, has not been as successful in servicing the direct needs of clients. Clients still want face to face contact and that human touch.
  • Based on Morningstar’s price to fair value matrix, share markets globally are generally fairly valued, yet Australia’s is the third most overvalued market. Across the regions Asia represents the greatest investment value.
  • There was caution around the value of the US market, which in recent times has been elevated to record highs on the back of the FAANG companies (Facebook, Amazon, Apple, Netflix, Google). The counter argument is that with interest rates so low these markets may not be as expensive as they initially appear.
  • Markets have generally priced in interest rate increases by the Federal Reserve in the US. It is likely that the Federal Reserve will make gradual increases with three to four rate hikes likely over the next 12 months.
  • The recent downgrade in China’s credit rating by Moody’s means very little. China is still A rated and buyers of Chinese bonds are mainly locally based and not concerned with credit ratings. China is maintaining healthy growth and policy makers are acting on credit growth. While there are some concerns with the credit market, it is important to bear in mind that credit growth is not funded by foreigners, it is domestically driven.
  • China remains the biggest source of opportunity and frustration. Its economy is increasing by the GDP of the United Kingdom every three years, which puts its economic growth into perspective.
  • By 2030 China will have more seniors in the US Europe and Japan combined. While this is likely to result in a decline of national savings it should drive consumption.
  • It is likely that Asia and emerging markets will be the key drivers from global economic growth.

At Hewison Private Wealth, we strive to be ahead of the game and deliver our clients the best investment solutions. A deep understanding of investment markets aids us to deliver the best portfolios to our clients.

Hewison Private Wealth are Melbourne based, independent financial planners with over 30 year’s experience. We are entirely independent. We do not accept commissions or kickbacks. We specialists in financial planning, investment advice and self managed super funds (SMSF). Contact us on 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.au


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.