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Amid rising risk tolerance, Hong Kong investors have the highest risk tolerance globally
Risk appetite is growing in an environment where investors are dissatisfied with the level of returns on their investments, while investors in Hong Kong are found to have the highest risk tolerance globally.
Darryl Yu 22 Jun 2017

Risk appetite is growing in an environment where investors are dissatisfied with the level of returns on their investments, with investors in Hong Kong found to have the highest risk tolerance globally. However, whilst investors are willing to take greater risks, they don’t always know how. That’s according to Legg Mason’s recently released global investment survey 2017, which found that 37% of participants were planning to allocate more funds to risker asset classes.

On average, investors in the survey were returning approximately 5.67% compared to their average goal of 7.77%. Equities were favoured the most by investors followed by real estate assets.

The growing risk appetite comes at time when more than half of investors are still feeling the effects of the global financial crisis. Fifty-six percent of investors say that the financial crisis is still having an impact on their financial plans. The is felt most among millennials, with 25% saying the crash has a strong impact, compared to 18% of generation X investors, and 15% of baby boomers. Moreover, around 17% of participants stated that they had previously timed the market incorrectly resulting in increased doubt when investing.

Asian participants kept in line with the global trend showing a preference to be more aggressive in their investment strategies. Hong Kong-based investors, in particular, had the highest risk tolerance compared to global counterparts, with 39% of investors saying they were investing aggressively, compared to 35% of Asia (ex-Japan) investors and 28% of global investors.

This is despite the fact that Hong Kong investors were the most pessimistic in Asia (ex-Japan) and the 2nd most pessimistic globally, just behind Japan. In comparison, Chinese investors were some of the most optimistic investors, with 80% of Chinese participants saying that they were viewing the global market favourably.

“Investors want to be more aggressive, but their proclivity to actually increase risk is kind-of hampered by the fact that they don’t know how to. The ability is different from the willingness. You can increase risk without it being so volatile,” explains Ajay Dayal, managing director at Legg Mason Global Asset Management, speaking to The Asset. “I think they are looking at equities because they see the rise of the equity markets, but investors want that with a bit of a cushion, meaning less volatility.”

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