Asian Investors Keep Close To Home, Wary Of Global Economic Outlook - Eastspring Investments

Tom Burroughes

30 October 2015

A survey among 2,400 investors in Hong Kong, Indonesia, Korea, Malaysia, Singapore and Taiwan reveals they are bearish about the global economy and take a risk-averse approach, preferring to hold assets in their home markets rather than venture further afield.

There is a preference for local equities and income funds and investors are moving away from growth-orientated funds, the survey, conducted by Eastspring Investments, found. Eastspring Investments is the Asian investment management arm of UK-listed financial services group Prudential. The Mutual Fund Investor Behaviour Study was conducted with market research group TNS.

The study showed a “significant” domestic bias among Asian retail investors, with expectations of yield as high as 26 per cent from their home market equities. Asia-Pacific and China equities, despite the China market correction over the summer, are also popular asset classes. Although Malaysian investors expressed plans to reallocate to offshore strategies in the next six months, the overwhelming trend was for retail investors to remain invested in their local markets, highlighting their concerns and uncertainty about global market volatility. Hong Kong investors, for example, are very confident in local and Chinese equities, with nearly half expecting a yield of up to 20 per cent in the second half of 2015.

Overall, Asian retail investors appear bearish towards the global economy, and this risk aversion to global and emerging markets is highlighted by an increased appetite from both mutual fund holders and "intenders" for income and growth and income funds. Intentions to decrease exposure to growth funds in the next six months suggest investors are seeking to dilute exposure to the expected higher risk of growth funds. In South Korea, for example, mutual fund intenders’ interest in growth funds has dropped from 27 per cent to 18 per cent over the last two years, with income and balanced funds proving increasingly popular.

Education
The survey also reveals that there is a clear need for the asset and wealth management industry to focus more on investor and product education, on the risks and return of various investment decisions as well as on the importance of retirement planning and solutions.

Eastspring managed more than $134 billion of client assets as at 30 June.