Hong Kong’s retail investors have shown a marked increase in their interest in cryptocurrencies, as revealed by recent surveys. This surge in interest is not just a fleeting trend but seems to be a reflection of a broader global shift towards recognizing digital assets as a legitimate investment class.
A recent study by the Investor and Financial Education Council (IFEC), an affiliate of the Securities and Futures Commission (SFC), Hong Kong’s securities regulator, has shed light on this growing trend.
The study, which took place between June and July 2023, surveyed 1,000 individuals ranging in age from 18 to 69. The findings were quite revealing: 6% of retail investors in Hong Kong had ventured into the virtual asset market in 2023, a significant jump from a mere 1% in 2019.
This rising interest is not limited to just cryptocurrencies. While every single digital asset retail investor surveyed held cryptocurrencies, there was also a noticeable interest in other digital assets. Non-fungible tokens (NFTs) and stablecoins, although still relatively niche, were found in the portfolios of 6% and 2% of investors, respectively.
Looking ahead, the IFEC report suggests that this trend is set to continue. 11% of those surveyed expressed their intention to invest in virtual assets or related products within the upcoming 12 months. This data indicates that the appeal of virtual assets remains strong among Hong Kong investors.
However, the motivations behind these investments are worth noting. A significant 75% of retail virtual asset investors cited the pursuit of short-term gains as their primary reason for investing. Furthermore, 74% viewed virtual assets as a prevailing investment trend, and 73% expressed a fear of missing out on popular investment opportunities. These findings highlight the importance of comprehensive investor education in the realm of virtual assets.
On the regulatory front, there seems to be a lack of awareness. Only 47% of all surveyed investors were aware of Hong Kong’s newly introduced virtual asset trading regulations, which were implemented on June 1.
Further insights from a separate study by the Department of Applied Social Science at Hong Kong Polytechnic University (PolyU) revealed certain behavioral tendencies among retail investors. Many exhibited overconfidence in their judgment and had a tendency to rely heavily on past information or easily accessible data.
Eric Chui, Head of PolyU’s Applied Social Science unit, emphasized the need for investors to adopt a more deliberate and rational approach. He stressed the importance of enhancing financial literacy and gathering high-quality market information to make informed investment decisions.