The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) today (4 September) published the findings of their annual joint survey on the distribution of non-exchange-traded investment products, showing record sales and level of market participation for these products during 2024 (Note 1).
Total transaction amount of non-exchange-traded investment products by licensed corporations (LCs) and registered institutions (RIs) surged 40% year-on-year to a record $6,073 billion in 2024 (Note 2). Market participation also witnessed broad-based growth last year. The number of firms engaged in the sale of investment products grew by 9% to a new high of 414, with an overwhelming 46% more than doubling their sales year-on-year. The number of large firms saw a 12% increase to 101 (Note 3). Also setting new record highs are the manpower deployed to distribute investment products, which rose by 4% to more than 19,000, and the number of clients completing at least one transaction, which increased by 28% to over 1.2 million (Note 4).
All major investment product types recorded significant sales growth in 2024. Sales of authorised collective investment schemes (CIS) grew 96% to $1,400 billion and unauthorised CIS grew 50% to $844 billion. Sales of structured products and debt securities increased by 30% and 29% year-on-year, respectively. Respondent firms generally observed stronger investor sentiment compared with the previous year as investors actively pursued products that suit their risk appetites and investment goals.
Equity-linked products thrived amidst strong market momentum and remained the top-selling structured product category with sales of $1,729 billion, up 43% year-on-year. Meanwhile, money market funds and sovereign bonds remained attractive to investors due to their perceived lower risks and decent returns under the prevailing high interest rate environment in 2024. The survey showed an increase in the sales of money market funds, which accounted for 80% of the total transaction amount of the top five CIS reported by the large firms, up from 76% in 2023. Sovereign bonds also gained popularity, making up 49% of total debt securities sold last year, compared with 44% in the year before.
“The remarkable surge in product sales underscores the dedication of firms and the trust investors place in our financial markets,” said Dr Eric Yip, the SFC’s Executive Director of Intermediaries. “The SFC is steadfast in fostering a robust regulatory framework that enables businesses to grow while protecting investor interests.”
“The strong growth in investment transactions reflects heightened investor confidence and interest in the vibrancy of Hong Kong’s investment market, and supports the continuous growth and development of the ecosystem,” said Mr Alan Au, Executive Director (Banking Conduct) of the HKMA. “The survey result enables regulators to better coordinate and implement our supervisory activities in light of market developments, thus according protection to investors.”
Other major observations from the survey included:
- Structured products remained the top product type sold by the respondent firms, accounting for 42% ($2,567 billion) of the total transaction amount in 2024. CIS and debt securities rounded out the top three spots, making up 37% ($2,244 billion) and 15% ($941 billion) respectively.
- Equity-linked products made up 67% of all structured products sold in 2024, up from 61% in 2023. The major underlying equities of the top five products reported by the large firms were from the technology (42%), automotive (23%) and internet (22%) sectors.
- Online sales accounted for 17% (2023: 12%) of the aggregate transaction amount reported by all respondent firms. The number of respondent firms that distributed investment products online continued to grow in 2024, increasing 13% to 104. CIS remained the top product type sold through online platforms, making up 77% of the total online sales, followed by debt securities at 21%.
Notes:
- The annual survey questionnaires were sent to 2,368 LCs and 109 RIs licensed or registered for Type 1 (dealing in securities), Type 4 (advising on securities) or both regulated activities, and more than 99% of them responded. The survey covered the sale of non-exchange-traded investment products from 1 January to 31 December 2024 (the reporting period) by respondent firms to non-professional investor clients, individual professional investors (PIs) and certain corporate PIs. The first SFC-HKMA joint survey was published in 2021.
- Transaction amount refers to the amount paid or payable by investors for investment products. For structured products and derivative products, the transaction amount refers to the maximum exposure of the contracts at the point of sale. Respondent firms were requested to report only one side of the transaction. Rollovers, redemptions and position close-outs were not included.
- Large firms refer to LCs and RIs with total transactions of $1 billion or more and $30 billion or more respectively during the reporting period. They were requested to provide details about the investment products sold, including the transaction amount by investor type and the details of the top five products ranked by transaction amount.
- The numbers of clients of LCs and RIs who completed at least one transaction in non-exchange-traded investment products during the reporting period were 493,829 and 714,926 respectively.
