Thought leaders at Morningstar forum sees increased opportunities as the market exhibits renewed strength and investor confidence

At a recent Morningstar Direct Forum, winners of the Morningstar Awards for Investing Excellence - Hong Kong 2025 were presented with their coveted trophies. The award recognizes funds and asset managers that have served investors well over the long term and which Morningstar's manager research team believes will be able to deliver strong risk-adjusted returns over time.

Optimism rules

In his welcome address, Nick Cheung, Morningstar’s Managing Director for Greater China, extended his hearty congratulations to the Award winners. He was upbeat in his market review, citing 2024 as an exciting year for the financial market. “It is a significant milestone as it marks the first time in five years since 2019 that the local market has turned around, recording a hefty 40% improvement,” he noted. “The market was abuzz with activity with the return of confidence and optimism amongst investors.”

With sustained developments in the various connect and exchange programs with the Mainland, Cheung believes they further open up opportunities for investors and the broader asset and wealth management industry in the new year.

AUM trending up

In his presentation on “Key investing trends - charting the course with Morningstar”, Wing Chan, Head of Manager Research, APAC, pointed out that the industry is consolidating, with global asset managers concentrating among the biggest players like Vanguard, Blackrock and Capital, from accounting for 32% of the market in 2018 rising to 37% in 2023. He also noted that global assets under management (AUM) have notched up new heights in 2024, reaching almost USD$60 trillion.

Chan noted that ETF assets reached an all-time high last year with a record net inflow of more than USD1.5 trillion. The US topped the league, although the APAC region was not far behind with China emerging fast, followed by the Taiwan market.

On thematic funds, Chan raised the question, “Has the day of reckoning arrived?” During the year, there was a marked outflow with closures exceeding launches for the first time since 2005. Chasing past winners has led to inferior long-term success, he said.

Thriving cross-border wealth management

Wing Chan next chaired a panel discussion on “Sharing the future - Crafting the ideal solutions for cross-border wealth management”, with two distinguished guests sharing their perspective and expertise, namely, Belle Liang, Chief Investment Officer, CIO & Investment Advisory, Hang Seng Bank; and Matthew Chan, Executive Director, Head of Product & Investment Solutions, CITIC Securities Brokerage (HK) Limited.

Belle Liang estimated that 20% of Hang Seng’s AUM are from the Greater Bay Area. “They are queueing to open an account with us as it appeared to be the trendy thing to do!” she quipped. She observed that, with the revival of the stock market, there has been a noticeable shift from fixed deposits to structured products among Mainland investors as an integral part of their portfolio re-positioning.

Matthew Chan echoed this development among CITIC’s onshore clients who are diversifying their investment from money market into products such as high-yield bonds, Treasury bonds, hedge funds, and more. “It’s an exciting period both for us and for our clients as we seize the many opportunities opening up,” he added.

Chan pointed out that as the Mutual Recognition of Funds (MRF) arrangements had been implemented for almost a decade, investors on both side of the border are familiar with it. What matters now is for funds to reinforce their branding. “To help us sell to our clients, the funds must have an interesting and convincing story to tell, such as introduction to the founder, their background and values,” he said.

While the primary focus of investors is on yield, Belle believes in order to arouse client interests, fund products cannot be too fancy or complex. “There must be total transparency at all times,” she added. “Independent rankings like Morningstar’s are also very helpful.”

The forum concluded with Michael Kan, Morningstar’s Director, Product Management, giving attendees an overview of the comprehensive range of products and solutions aiming to empower investors. Morningstar Direct, for example, is a global investment analysis application that combines Morningstar data and research with analytics, data science and productivity tools.