Hong Kong retirement scheme trustees are taking too gloomy a view on the outlook for Hong Kong ac-cording to local consultant Stuart Leckie, the former head of Wyatts and Fidelity Investments.

His personal view is that Hong Kong equities offer better value than the major markets of the US and Eur-ope and that this is not a time to be selling out. 1997 was not a good year in that investment returns were negative. Most funds with a balanced portfolio would still have had 25-30% in Hong Kong equities, with a certain amount in Europe and the US. The av-erage Hong Kong pension portfolio showed a downturn of around 7% last year, which was far less than the fall in the Hang Seng."

From the point of view of the trustee of a Hong Kong retirement scheme, I would suggest that investment should be maintained and maybe even increased in Hong Kong. Hong Kong certainly offers better value. The Hang Seng has more chance of moving from 9,000 to 18,000 in the coming years than the Dow Jones has of doing the same. There is a very high price to pay for investing in the US currently."

The most important thing for trustees and finance committees not to lose is their nerve. Last year, they were too optimistic, now they are too pessimistic. The problems of the region are financial; some companies will go bust but there will be others for whom this part of the cycle is an opportunity. The challenge is to find those companies.

In the meantime, Leckie says the greatest change is happening in mainland China, which is in the process of reforming a pension system that provides 80% of final salary. Richard Newell"