HSBC MPF Sits on a Million Clients — Why Stay Put? Watching Semi-Portability Before Moving

This article is a rewrite of a report from November 2012.

In November 2012’s “semi-portability” era, HSBC and Hang Seng were estimated to hold about a million MPF clients and 32.1% market share — yet chose to lie low instead of joining the price war. Industry watchers decoded two reasons: fear of hurting the profit base, and waiting for rivals to show their hands first.

Why does shaving 0.01 percentage points hurt so much?

Because the base is enormous: 0.01% less means over HK$10 million less a year. At end-June 2012, HSBC/Hang Seng managed HK$123.245 billion in MPF assets; at the market’s 500-plus funds’ average 1.74% annual fee, that’s about HK$2.144 billion a year. Trimming fees by 0.01 points to 1.73% costs over ten million a year — no wonder they moved cautiously.

What moves did the other four of the top five trustees make?

Unit rebates, direct management-fee cuts, new low-fee products. Four of the top five trustees — sharing over 70% of the market — had already acted, with disguised price cuts via fund-unit rebates, straight management-fee reductions, and low-fee launches. HSBC/Hang Seng hadn’t moved since March 2011’s cut, offering only a million-dollar lucky draw for retirement-planning members — soft power, not hard battle.

When would HSBC MPF finally act?

The industry guessed year-end. Using price cuts as a political weapon in response to the authorities, possibly waiting until end-2012; meanwhile watching whether a mass switching wave would erupt. November 2012’s picture shows: the leader’s stillness wasn’t ignorance but arithmetic — every move involves hundreds of millions. Elephants turn slowly.