One in five Hong Kongers reported that their net worth decreased in 2012, compared to six months ago, while only a third (31 per cent) claimed that their wealth increased, down from 42 per cent in 2011, according to a new survey.

The HSBC Hong Kong Wealth Tracker, which interviewed over 1,600 individuals aged 18-65, 19 per cent of the city-state's residents saw losses versus 11 per cent the previous year.

This could be because investors are putting less money in high risk, high yield investments. On average, 60 per cent of liquid assets are held in cash, compared to only 40 per cent in investment. A majority of respondents (77 per cent) plan to accumulate more cash, compared to only 61 per cent in 2011.

The survey shows that while Hong Kong people are keen to prepare for retirement and fight inflation, the top financial goals for 43 per cent and 41 per cent among investors respectively, they are holding a wait-and-see attitude when it comes to wealth management.

Eric Fu, HSBC’s head of wealth development for Hong Kong, retail banking and wealth management, said: “With continued economic uncertainty arising from various global events such as the Euro crisis, dampened US growth and shrinking GDP in Hong Kong, people in general are lacking confidence to invest in the market. In light of inflationary pressures, we believe investment products offering an additional and regular income stream to counteract inflation are able to provide retail customers, particularly those who are keen to achieve their retirement goal, with options to protect and grow their wealth.”

The lacklustre performance may also be down to the fact that investors are not reviewing their portfolio often enough, and are not diversified. According to the survey, nearly a third (31 per cent) of investors have not reviewed their investment portfolio in the past 18 months. Over a third (38 per cent) of those who reviewed their portfolio claim to have increased their net worth, compared to only 29 per cent of those who did not conduct any review.

In general, the investment portfolio of respondents were skewed towards stocks, which accounted for over half (57 per cent) of their total investment value. Also, almost half (48 per cent) of the investors surveyed invest only in stocks without any other assets to balance the risk.

Fu added: “While Hong Kongers’ preference for stocks is not likely to change, diversification is the key to successful asset allocation. Asset classes have different drivers of return as they perform differently at various stages of the market cycle.

“Our survey shows that financial planning helps nurture a more diversified portfolio that is aligned to an investor’s own wealth needs, how much risk he is willing to take and how active a part he wants to play in managing his portfolio. In the current investment backdrop, people should consider a blend of assets to meet their objectives and help them smooth the performance of their investments.”