Why unpredictability, information overload is the new normal for HK millionaires

Hong Kong millionaires, arguably the most experienced in the region when it comes to dealing with financial crises, believe the world is in the most unpredictable period in history, according to UBS Investor Watch, a survey of the latest wealth management trends in the region.

And perhaps as a result of their experience dealing with one crisis after another since the 1990s, Hong Kong’s millionaires are wary of short-termism when preparing for the future, and recognize the need to separate short-term shocks from longer-term trends.

However, 80% of the 401 Hong Kong millionaires surveyed by UBS admit that short-term risks often distract them from their long-term investment planning. This is the highest among all the 2,842 millionaires surveyed by UBS, which includes respondents from Japan, Singapore, Mexico, Italy, Switzerland, and the UK.

About 79% of Hong Kong millionaires admit to suffering from information overload as they seek to navigate the uncertainty with 82% seeing the global financial system as a source of unpredictability.

“Some people would argue the world is easier to predict than ever before. The world’s wealthy clearly feel the opposite. After a year of uncertain events and high-profile shocks, most believe we live in a very unpredictable age with political, economic, societal and financial risk all prominent. In an unpredictable world, we advise clients to take a long-term approach, focus on goals and invest in a balanced portfolio across a range of assets and locations,” says Jean-Claude Humair, regional market manager, Hong Kong, UBS Wealth Management.

Although 80% of Hong Kong’s millionaires say a wide variety of information sources help them make good decisions, they admit to information overload coming from news feeds being created almost in real time. Millionaires in Singapore and Japan also admit to getting information overload.

Traditional sources of information, like television and newspapers, are highly trusted in Hong Kong, though not quite to the same degree as in Singapore.

Closer to home, there are concerns about local politics and the effect of social unrest on Hong Kong’s development as a financial hub.

The majority of respondents from Japan, Singapore, Mexico, Italy, Switzerland, and the UK, believe emotion has superseded fact in shaping public opinion; an opinion shared by 80% of the Hong Kong millionaires surveyed.

About 60% of respondents from Hong Kong believe that new technologies like big data have the potential to make the world more predictable, compared to 46% of the global sample.

Nevertheless, Hong Kong millionaires are far more positive than their global counterparts when it comes to the potential benefits of big data, artificial intelligence and robotics.

Nearly 70% of respondents are confident in their ability to assess financial risks relating to an uncertain world while Hong Kong's wealthy are more willing to take risks following the 2008 global financial crisis than any of their peers globally.

Cash continues to retain its status as a safe haven in uncertain times with 77% of those surveyed saying that cash offers financial safety, notwithstanding the downside posed by potential inflation. While millionaires in Hong Kong agree that diversification away from home markets is important, less than 20% would consider diversification into the US and only 12% into Europe.