Best Investments in Hong Kong 2024: Strategies for Long-Term Wealth Growth

28 May 2024

Investing is a cornerstone of personal finance, offering a pathway to wealth accumulation and financial security. Unlike traditional saving methods, investing leverages the power of compounding to grow your money over time, potentially outpacing inflation and building a robust financial portfolio. By diversifying across various asset classes, investors can manage risk effectively, ensuring a balanced approach to achieving financial goals such as purchasing a home, funding education, or planning for retirement.

In Hong Kong, the investment landscape offers unique opportunities and challenges. Whether you're looking to invest in local stocks, international markets, safe investments like time deposits or  having a strategic approach is essential. With no capital gains tax and a thriving financial market, Hong Kong is an attractive destination for investors. Whether you're starting your financial journey or preparing for retirement, investing facilitates wealth growth, shields against inflation, and empowers you to attain your financial aspirations. By crafting a well-informed investment plan and consistently contributing to investment vehicles like the Mandatory Provident Fund (MPF) or other retirement schemes, you can pave your way towards financial independence and a prosperous future.

Understanding the Investment Climate in Hong Kong

In 2024, Hong Kong's investment climate is marked by both promise and complexity, with a projected GDP growth of 2.5% to 3.5%. Moreover, the 2024-25 Budget, delivered on February 28, focuses on bolstering confidence and creating favorable conditions for economic recovery in Hong Kong. The budget aims to attract enterprises, capital, and talent to Hong Kong, with a special emphasis on supporting small and medium-sized enterprises (SMEs). The government plans to enhance economic capacity, competitiveness, and new growth areas to seize global opportunities, forecasting an average annual growth of 3.2% from 2025 to 2028. 

Hong Kong's economic growth is underpinned by a rebound in foreign trade and services exports, despite slower private consumption. Its strategic position as a global financial hub persists amidst geopolitical tensions, supported by initiatives aimed at economic diversification and enhanced connectivity with other regions. Nevertheless, challenges such as high interest rates and pandemic impacts underscore the importance of diversifying investments in Hong Kong. By spreading investments across diverse asset classes, sectors, and markets, investors can mitigate risks and capitalise on growth opportunities, fostering balanced and robust returns in this dynamic economic landscape.

Top Investment Options in Hong Kong for 2024

#1 Digital Wealth Management Platforms/ Robo Advisors

Digital wealth management platforms, also known as robo-advisors, are becoming increasingly popular in Hong Kong as a convenient and efficient way to manage investments. These platforms use algorithms and technology to provide personalised investment advice and portfolio management, making them accessible to a wide range of investors.

One notable option in Hong Kong is StashAway. StashAway offers a variety of investment solutions, including its USD Cash Yield product, which is particularly attractive for those looking for a stable and high-yield investment. The USD Cash Yield product currently offers an impressive return of 5.45% p.a.* (as of April 2024), providing a competitive alternative to traditional savings accounts and other investment options. This product is designed to help investors maximise their returns while maintaining liquidity, making it a suitable choice for both short-term and long-term financial goals.

#2 High-Yield Savings Accounts

High-yield savings accounts in Hong Kong offer a safe and accessible way for investors to earn interest on their deposits while maintaining the flexibility to access their funds when needed. These accounts typically offer higher interest rates compared to regular savings accounts, though they often come with certain conditions, such as minimum balance requirement or the need to sign up for or use multiple bank products.. Additionally, many high-yield savings accounts offer rewards and bonuses, enhancing the benefits for account holders. Some notable high yield savings account include:

High-Yield Savings AccountInterest RateRewards
Standard Chartered Marathon Savings AccountUp to 4.8% p.a. Preferential savings rateNA
HSBC OneBase interest rate is 0.875% with the possibility of step up interest of 4.9% p.a.New account opening of HKD 200; new credit card to enjoy HKD 200 RewardCash and more
Citi Plus® Savings AccountBase interest rate is 1.17% pa with the possibility of step-up interest of 2.67% p.a.New funds rewards of up to HKD 2,000; Citi Plus credit card cash rebate up to HKD 1,600 and more
DBS e$averTotal savings interest rate up to 5.4% p.a.NA
DBS TreasuresProjected rate of return up to 7.19%Multiple cash rewards of up to HKD 29,800
Hang Seng Preferred BankingBase interest rate is 1.17% pa with the possibility of step-up interest of 6% p.a.Total reward of up to HKD 5,000

#3 Certificates of Deposit (CDs)

CDs are a low-risk investment option that typically offers higher interest rates than regular savings accounts, making them a suitable choice for investors looking to park their money for a fixed period without needing immediate access to these funds. CDs are issued by banks and financial institutions with interest paid at regular intervals—such as semi-annually or annually—or upon maturity. They are not covered by the Deposit Protection Scheme in Hong Kong, which means they carry a slightly higher risk compared to time deposits, but they generally offer better returns. Investors should note that CDs require the capital to be locked in for the duration of the term, which can range from a few months to several years, depending on the specific product and issuing institution.

#4 Time Deposits

In Hong Kong, time deposits serve as a popular investment option, offering protected and predictable returns to investors. This involves depositing funds with a financial institution for a fixed period at a predetermined interest rate, appealing particularly to conservative investors or those with short-term savings goals. Time deposits typically provide competitive interest rates compared to savings accounts and offer simplicity and ease of access, with minimal documentation requirements. While they offer guaranteed returns and protection under the Hong Kong Deposit Protection Scheme, investors should weigh the lower potential growth against riskier investment options and consider factors such as their risk tolerance, investment objectives, and time horizon when incorporating time deposits into their investment portfolio.

Some of the best time deposits offered include:

  • 12-month HKD time deposit rate from traditional banks = Fubon Bank (new funds) at 3.95%, with a minimum deposit requirement of HKD 500,000.
  • 12-month HKD time deposit rate from virtual banks = WeLab Bank and AirStar Bank at 4.00%, with a minimum deposit requirement of HKD 10 and HKD 1,000 respectively.
  • 6-month HKD time deposit rate from traditional banks = Fubon Bank (new funds) at 3.95%, with a minimum deposit requirement of HKD 500,000.
  • 6-month HKD time deposit rate from virtual banks = WeLab Bank at 3.90%, with a minimum deposit requirement of HKD 10.
  • 3-month HKD time deposit rate from traditional banks = Citibank (Citigold) at 3.95%, with a minimum deposit requirement of HKD 50,000.
  • 3-month HKD time deposit rate from virtual banks = Fusion Bank at 4.00%, with no minimum deposit requirement.
  • 1-month HKD time deposit rate from traditional banks = Bank of China and Nanyang Commercial Bank at 4.00%, with a minimum deposit requirement of HKD 50,000 and HKD 30,000 respectively.
  • 1-month HKD time deposit rate from virtual banks = WeLab Bank at 2.00%, with a minimum deposit requirement of HKD 10.

Alternatively, read our comprehensive time deposit guide to get the full time deposit offerings available in Hong Kong.

#5 Stocks and Equities

As of May 2024, the Hong Kong market has shown resilience with the Hang Seng Index gaining 3.11%, reflecting positive sentiment among investors despite broader global economic uncertainties. The Hong Kong stock exchange is home to some 2,600 public companies, with about 300 being local companies. Among these, around 190 pay dividends. This backdrop creates an interesting scenario for dividend-seeking investors, as stable, high-yield stocks are particularly appealing in an environment where steady returns are prized amidst fluctuating markets.

Some of the top dividend stocks in Hong Kong offer attractive yields, making them excellent choices for investors seeking regular income. Here are a few notable mentions:

NameTickerDividend Yield
Chongqing Rural Commercial BankSEHK:36188.24%
CITIC Telecom International HoldingsSEHK:18838.88%
Consun Pharmaceutical GroupSEHK:16818.57%
China Electronics Huada TechnologySEHK:857.50%
Playmates ToysSEHK:8698.70%
S.A.S. Dragon HoldingsSEHK:11848.54%
Bank of ChinaSEHK:39886.62%
China MobileSEHK:9416.46%
Sinopharm GroupSEHK:10994.03%
International Housewares RetailSEHK:13738.48%

#6 Bonds

Bonds are debt instruments issued by governments, corporations, or other entities to bondholders, who effectively lend money to the issuer in return for regular interest payments and the repayment of principal at maturity. Investing in bonds can grow your wealth and diversify your overall portfolio, making them an essential component of a well-balanced investment strategy.

Given the unpredictability and volatility of international markets, it is important to plan ahead and prepare for unexpected risks and which is why bonds typically offer decent coupon rates in the range of 3% to 6% with a longer maturity period of up to 10 years or more

There's a common misconception that bonds are expensive and only accessible to wealthy investors. However, the minimum subscription amount for bonds depends on the issuer. While some bonds have high minimum denominations, such as USD 100,000 or USD 200,000, retail bonds like iBonds issued by the government have a much lower minimum subscription amount, typically around HKD 10,000. This makes bond investing accessible to a wider range of investors, allowing even those with smaller capital to participate in the bond market.

Key Concepts and Terminologies

  • Coupon vs. Yield-to-Maturity (YTM): The coupon rate is the annual interest paid on the bond's face value, while YTM is the total return if the bond is held until maturity.
  • Unrated Bonds: These are not necessarily riskier; they may simply lack a rating due to cost or size considerations.
  • Interest Rates and Bond Prices: Bond prices and interest rates are inversely related. Higher interest rates generally lead to lower bond prices and vice versa.

Types of Bonds By Structure

  • Zero-Coupon Bonds: These bonds do not make periodic interest payments but are issued at a discount to their face value. The earnings accumulate until maturity when they are redeemed at face value.
  • Perpetual Bonds: These bonds do not have a maturity date, and the issuer is not obligated to repay the principal. However, the issuer must make interest payments indefinitely until the bond is recalled.
  • Callable Bonds: These bonds can be redeemed by the issuer at a predetermined price on or after a specific date before maturity. They usually pay a higher interest rate to compensate for the early call option.
  • Convertible Bonds: These bonds can be converted into a predetermined amount of the issuing company's equity at certain times during their life, usually at the discretion of the bondholder.

Types of Bonds By Issuer

  • Government Bonds: These are debt securities issued by the government to finance its spending. They are considered low-risk investments as they are backed by the government. Examples include iBonds, Retail Green Bonds, and Silver Bonds.
  • Corporate Bonds: Issued by corporations to raise capital for business operations, expansion, or other expenditures. These bonds tend to offer higher interest rates than government bonds to compensate for the increased risk.
  • Quasi-Government Bonds: Issued by entities that are government-sponsored but operate independently, such as state-owned enterprises or public utilities. These bonds typically carry lower risk than corporate bonds but higher risk than government bonds.

To purchase bonds in Hong Kong, investors can conveniently acquire newly issued bonds through placing banks, the Hong Kong Securities Clearing Company (HKSCC), or securities brokers participating in the Central Clearing and Settlement System (CCASS). This requires having a securities account with these institutions. 

For bonds already trading in the secondary market, they can be bought through recognised dealers of the Government Bond Programme, securities brokers over the counter, or on the Stock Exchange. Corporate and quasi-government bonds are available through securities brokers, financial institutions, and online trading platforms. It is advisable to contact your banker or securities broker for detailed procedures and requirements.

#7 Real Estate Investments

Buying real estate in Hong Kong can be challenging due to the city’s reputation for having some of the most expensive real estates in the world. However, you can still participate in the real estate market by investing in Real Estate Investment Trusts (REITs).

REITs are companies that own, operate, or finance income-producing real estate. They allow individual investors to earn a share of the income produced through commercial real estate ownership without actually having to buy, manage, or finance any properties themselves. REITs are traded on major stock exchanges, making them highly liquid investments.

In Hong Kong, REITs are regulated by the Securities and Futures Commission (SFC) and are listed on the Stock Exchange of Hong Kong Limited (SEHK). The SFC’s guidelines ensure that REITs offer investors a high level of transparency and protection. Hong Kong REITs invest in a diversified portfolio of income-generating real estate, such as shopping malls, office buildings, hotels, and industrial properties. By law, Hong Kong REITs must distribute at least 90% of their income to shareholders in the form of dividends, making them an attractive investment for those seeking regular income.

List of REITs in Hong Kong

Here are some of the REITs currently listed on the Hong Kong Stock Exchange:

NameTickerDividend Yield
Link Real Estate Investment Trust8234.45%
The Wharf Real Estate Investment Company19974.90%
Fortune Real Estate Investment Trust7785.00%
Champion Real Estate Investment Trust27784.60%
Yuexiu Real Estate Investment Trust4056.50%
Sunlight Real Estate Investment Trust4355.80%
Spring Real Estate Investment Trust14266.20%

Investing in REITs can be a good way to gain exposure to the real estate market without the high entry costs and management responsibilities associated with direct property ownership. Additionally, REITs offer the benefits of professional management, diversification, and liquidity, making them a versatile option for both individual and institutional investors.

#8 Mutual Funds

A mutual fund is a mature and well-established investment vehicle managed by portfolio managers. These investment schemes pool together capital from various investors and then invest in diverse asset classes, including equities, bonds, and money market instruments. The holdings of a mutual fund can cover dozens of securities, providing broad market exposure and diversification.

For investors looking to diversify internationally, the Mutual Recognition of Funds (MRF) scheme between Hong Kong and certain overseas markets facilitates the distribution of mutual funds, enhancing the variety of funds available to investors in Hong Kong. This scheme allows funds that are authorised in participating jurisdictions to be offered in Hong Kong and vice versa, thereby broadening the investment landscape for local investors.

Advantages of Mutual Funds

  • Ease of Access: You can open an investment account and select funds that align with your goals and risk appetite. Regularly review and adjust your investments as needed.
  • Professional Management: Benefit from the expertise of portfolio managers who provide robust research, risk management, and handle administrative tasks.
  • Lower Entry Threshold: Start investing with minimum amounts as low as HKD 1,000 monthly, making mutual funds accessible to investors with limited capital.
  • Diverse Options: Choose from various investment styles and objectives, including money market funds, fixed income funds, equity funds, and multi-asset funds.
  • Reduced Concentration Risk: Diversify your investments globally across numerous securities, reducing the risk compared to holding a single security.
  • Liquidity: Easily buy or sell mutual fund units, providing flexibility and control over your investment portfolio.

Fees Associated with Mutual Funds

  • Subscription Fee (1.5% - 5%): Also known as the front load fee, this is charged by the bank, financial advisor, or broker selling the fund. It is a percentage of your investment amount and should be negotiated.
  • Platform Fee (0.2% - 2% p.a.): Charged by online platforms or banks for administering your investments and using their platform, based on the market value of your portfolio.
  • Switch Fee (0.5% - 1%): Fee charged when switching from one fund to another, common when investing via banks.
  • Redemption Fee (1% - 5%): Fee payable when selling or redeeming a fund. Some funds reduce this fee if you hold the investment for a longer period.
  • Expense Ratio (1% - 3% p.a.): An annual fee covering fund expenses, including management and administrative fees. This is deducted from the fund's net asset value.
  • Trailer Fee (50% - 60% of the fund’s expense ratio): A recurring distribution commission paid by the fund management company to the bank or broker, indirectly reducing the fund's net asset value.

#9 Money Market Funds

A Money Market Fund (MMF) is a type of mutual fund that invests in short-term, high-quality, and low-risk debt instruments, such as government securities, certificates of deposit, and commercial paper. These funds aim to provide investors with a safe place to invest easily accessible, cash-equivalent assets. The primary objective of money market funds is to offer liquidity, safety of principal, and a moderate return of approximately 3% to 5% or more.

Investors can purchase money market funds through various channels, including banks, financial institutions, and online investment platforms. Some prominent banks in Hong Kong, like Hang Seng Bank, HSBC, and Bank of China, offer money market funds. Additionally, you can buy money market funds through licensed brokers and financial advisors.

#10 Index Funds

Index funds is a type of mutual fund that offers investors a simple and low-cost way to invest in a range of assets and markets. These funds track the performance of a specific market index, such as the S&P 500 or the Hang Seng Index, aiming to replicate its returns. This passive management strategy leads to lower fees compared to actively managed funds and helps provide more consistent performance. Because they invest in all the assets of an index, index funds also offer significant diversification, spreading risk across various companies, sectors, and regions.

In Hong Kong, index funds are popular for their ability to offer broad market exposure at a low cost. They are an excellent option for investors who want to invest in a particular sector or market without the complexity of selecting individual stocks. Some of the notable index funds available in Hong Kong include the Tracker Fund of Hong Kong (TraHK), which tracks the Hang Seng Index, and the iShares Core MSCI China ETF, which offers exposure to Chinese equities. These funds can be easily purchased through major banks, financial institutions, and online trading platforms in Hong Kong, providing convenient access to a diversified investment portfolio.An excellent way to access index funds is through the Stashaway Flexible Portfolio, which offers a streamlined and user-friendly approach to investing. Stashaway Flexible Portfolios provide access to a variety of index funds with low fees, allowing investors to build a diversified portfolio tailored to their risk tolerance and financial goals. One of the standout features of Stashaway is its emphasis on low-cost investing, which helps maximise returns by minimizing fees. Additionally, the platform's advanced algorithm adjusts the portfolio to maintain an optimal balance, ensuring investors can effectively hedge against inflation while achieving long-term growth.

 #11 Gold

Gold is valued as a tangible asset that holds its value over time, making it a reliable hedge against inflation and economic uncertainty. It serves as a stable store of value during periods of currency devaluation. However, it is important to note that gold is not a perfect hedge against inflation, as rising interest rates can make non-yielding assets like gold less attractive compared to interest-bearing assets.

In Hong Kong, investors have several options for investing in gold:

  • Gold Bullion and Coins: Available from reputable dealers, including banks like Hang Seng Bank and Bank of China (Hong Kong), and specialised shops like Chow Tai Fook and Luk Fook.
  • Hong Kong Mercantile Exchange (HKMEx): Provides a regulated platform for trading gold futures contracts.
  • Gold ETFs: Offer exposure to gold prices or gold mining companies without physical storage. Examples include SPDR Gold Trust (02840.HK) and Value Gold ETF (03081.HK) listed on the Hong Kong Stock Exchange.
  • Gold Certificates: Represent ownership of gold without physical storage, typically offered by banks.
  • Gold Tokens: Digital investments representing physical gold stored by the bank, combining the benefits of physical gold with the convenience of digital transactions.

 #12 Cryptocurrency

Hong Kong has emerged as a significant hub for cryptocurrency investment in Asia, despite the ban on cryptocurrencies in mainland China. The city is promoting itself as a global digital asset center, part of its strategy to maintain its status as a leading financial center. The debut of six spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong marks the first launch of such products in Asia, testing the region's enthusiasm for cryptocurrency assets. These ETFs have generated interest from both crypto and traditional investors, signaling a growing market despite initial lukewarm trading volumes compared to the US.

Cryptocurrencies, such as Bitcoin and Ether, are seen as a hedge against economic instability and currency devaluation, often attracting investors during times of geopolitical tension and economic slowdown. For instance, the demand for gold surged in 2023 due to geopolitical tensions and economic issues in China, and a similar trend is observed with cryptocurrencies. These digital assets offer the potential for significant returns, albeit with high volatility and risk. The introduction of cryptocurrency ETFs provides a regulated and accessible way for investors to gain exposure to the cryptocurrency market without directly holding the digital assets.

Types of Cryptocurrency Investments

  1. Direct Trading/Buying: Investors can buy cryptocurrencies directly through approved trading platforms such as Hashkey and OSL, the only two approved trading platforms in Hong Kong.
  2. Cryptocurrency ETFs: These funds offer a diversified and regulated way to invest in cryptocurrencies. Notable examples include:
    •Spot Bitcoin ETFs: Launched by China AMC, Harvest, and Bosera, these ETFs provide a way to invest in Bitcoin without holding the physical asset.
    •Spot Ether ETFs: Managed by the same asset managers, these ETFs allow investment in Ether.

Hong Kong's push to establish itself as a global digital asset hub has opened new opportunities for cryptocurrency investments. The launch of crypto ETFs provides a safer, more accessible entry point for both local and international investors, enhancing the city's financial market and potentially attracting significant inflows from various regions. As the market develops and more participants are approved, the costs associated with these investments are expected to become more competitive, further boosting their appeal.

Investment Strategies and Considerations

Assessing your goals is the initial step in determining your investment strategy. Defining specific, measurable, achievable, relevant, and time-bound (SMART) objectives, such as saving for retirement or funding education, guides the amount to invest, duration, and risk tolerance.

Asset allocation follows, dividing your portfolio among stocks, bonds, and cash based on risk tolerance and expected returns. Diversification across different asset classes, sectors, and countries reduces specific risks and maximises market opportunities, achievable through index funds or ETFs.

Regularly reviewing performance against benchmarks like ROI and adjusting the strategy as needed, considering changing goals or market conditions, ensures alignment with objectives. Seeking professional advice from financial planners or robo-advisors can offer guidance and support in this complex process, aiding in defining goals, selecting investments, and monitoring performance.

It is also important to take dollar-cost averaging (DCA) into account. DCA is a technique used to reduce the impact of volatility by spreading the investment of a fixed sum of money into a particular asset or portfolio over periodic intervals, regardless of the asset price. This method allows investors to avoid making the mistake of investing a lump sum at an inopportune time by smoothing out the purchase price over time.

While DCA can sometimes lead to lower returns compared to a lump-sum investment, it reduces the risk of significant investment mistakes and can be psychologically easier, making it a favored approach for many investors, especially those who are risk-averse or new to investing.

Building a Resilient Investment Portfolio in Hong Kong

Investing in Hong Kong in 2024 offers a diverse array of opportunities that cater to various investor profiles and financial goals. From high-yield savings accounts and CDs for those seeking low-risk options, to the dynamic realms of stocks, bonds, and emerging technologies like cryptocurrencies and fintech platforms, Hong Kong's financial landscape is rich with potential. The introduction of innovative investment vehicles such as ETFs for digital assets further underscores the region's commitment to maintaining its status as a global financial hub.

To build a resilient investment portfolio in Hong Kong, it is crucial to align investment choices with personal financial goals and risk tolerance. Employing strategies such as diversification can help mitigate risks and stabilise returns, while techniques like dollar-cost averaging can reduce the impact of market volatility. By carefully selecting and balancing different investment options based on these strategies, investors can enhance their chances of achieving long-term financial stability and growth in this vibrant market. 

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