Hongkongers must ditch short-term mentality, says BCT

Hong Kong retail investors need to move from a speculative, short-term mindset to a more long-term approach, especially in light of the likely impact of the impending employee choice arrangement (ECA) on the Mandatory Provident Scheme, argues MPF provider BCT.

"That mentality needs to shift," says Ka Shi Lau chief executive of BCT in Hong Kong. She hopes MPF members will acquire acumen in making better informed investment decisions when changes to the retirement-scheme regime take effect in 2011.

BCT is one of Hong Kong's biggest providers of MPFs, which Hong Kong workers pay into for their retirement. To date, the equivalent of 10% of an employee's salary is invested in an MPF scheme nominated by their employer. Under the new arrangements, employees will be allowed to move the mandatory contributions made under their current employment to any schemes in the market.

Official figures reveal that there is more than $300 billion of assets in the MPF system from an estimated number of three million workers in Hong Kong. Some are speculating there will be intense competition among the MPF providers, which are likely to try to attract new members to join their schemes.

Nearly 90% of BCT's 700,000 MPF scheme members have not switched funds or conducted rebalancing over the past decade, so Lau does not see a major increase in members paying more attention to their MPF accounts in response to the ECA. That's down to either a weak sense of engagement or a lack of financial knowledge for retirement investing.