Sun Life Financial has a neutral outlook on Hong Kong and US stocks for next year, with a preference for AI still having opportunities, encouraging workers to allocate both stocks and bonds

This year's stock market rally has allowed many workers to make significant profits from their MPF investments. Eric Wu, Chief Investment Strategist at Sun Life Asset Management Hong Kong, stated that he maintains a neutral preference for the Hong Kong and U.S. stock markets next year and believes that the interest rate reduction cycle will benefit the bond market. Trudy Dai, President of Sun Life Financial Asia Asset Management, suggested that workers should have a balanced asset allocation of stocks and bonds for their MPF next year.

Hong Kong and Mainland Stock Markets Benefit from Foreign Capital Inflow

Eric Wu believes that the U.S. stock market will still benefit from the AI industry chain next year, while the Hong Kong and Mainland stock markets will gain from foreign capital inflow and improved corporate earnings. He believes that with developments in technology, chips, and AI, investors can continue to focus on the Asian market.

Expecting Four Rate Cuts in the U.S. This Month and Next Year, Advocating a Dumbbell Asset Allocation

Trudy Dai indicated that she is optimistic about the market outlook for next year, as geopolitical relations, whether between China and the U.S. or Russia and Ukraine, are beginning to ease, which is favorable for the upcoming environment. At the same time, she expects the U.S. to cut interest rates once this month and three more times next year, totaling a reduction of 25 basis points, which will benefit risk assets and bond prices. Therefore, she recommends that workers adopt a "dumbbell" asset allocation for their MPF next year, requiring a mix of stocks and bonds, and adjusting the proportions based on their age and risk preferences. She is particularly optimistic about opportunities in six sectors, including chips, robotics, low-altitude economy, AI, non-ferrous metals, and healthcare.

Lower Chance of AI Bubble, Industry Still Faces Risks

On the other hand, Trudy Dai mentioned potential risks to watch for next year, pointing out that although there is a trend of stable development in overall geopolitical situations, there remains high volatility. Additionally, while the probability of an AI bubble is low due to the industry's ongoing growth, risks still exist.

Over 110,000 MPF Members at Sun Life Have Concentrated Investments, More Singular as They Age

Furthermore, Pan Ji-hong, General Manager of Wealth and Retirement Business at Sun Life Financial Hong Kong, stated that the company's MPF members, approximately 116,000, have concentrated investment risks, primarily investing in single markets or asset class funds. Among them, older members tend to have more singular investment orientations, with over 20% of members aged 50 or above investing solely in a single market or asset class fund, most of whom invest in conservative funds, followed by Hong Kong and U.S. stock funds. Currently, the number of Sun Life's MPF members is close to 900,000.

Launching Reward Program to Encourage MPF Adjustments

She noted that in response to this, Sun Life will launch the "MPF Enjoy Rewards Program" in January next year, which combines rewards with educational elements to help members manage and invest their MPF more effectively. Rewards include merchant vouchers and mileage. In the initial phase of the program, selected customers will participate in a trial, accounting for 30% of the total member population.

MPF Easy Launched in October, Administrative Fees to be Reduced by 90% Next Year

The Sun Life MPF plan successfully launched on the MPF Easy platform on October 3. Pan Ji-hong stated that starting January 3 next year, they will reduce nearly 90% of the fund's administrative fees, with the maximum reduction being 38.3%, including the Sun Life MPF Global Bond Fund and the Sun Life MPF Hong Kong Stock Fund, with an average reduction of about 29%. Additionally, over 50% of the funds in the Sun Life Rainbow MPF plan will see a reduction in standard management fees, with the maximum reduction being approximately 16.3% (for the Sun Life MPF U.S. and Hong Kong Stock Funds), with an average reduction of about 10.8%