Investors in Asia unconvinced it is time to put money into markets, index shows

This contrasts with higher confidence in the emerging markets of Indonesia and Malaysia, as well as in Canada and the US. 

“This first Manulife ISI in Asia shows that the top reason investors believe it is a bad time to invest is that ‘the market is too volatile’. This is the top answer for all assets except property, regarding which the top reason people offered was ‘the current price is too high and a correction is expected’,” said Robert A Cook, president and CEO of Manulife Asia.

Reflecting the relative pessimism across the region, investors in Asia indicated overall that they are holding the single biggest portion of their assets in cash, even though respondents in all markets outside Indonesia and Malaysia have only weak confidence that this is an effective investment strategy.

More than half (56 per cent) of investors in Asia report being either on track or ahead of schedule to meet their financial goals, significantly more than in Canada. While 10 per cent of investors across Asia say they are so far behind schedule they are unlikely to catch up, this is only about half the level in Canada. 

In terms of achieving their financial goals, the top two most commonly cited resolutions this year are to learn more about investing, followed by a desire to develop a financial plan. More investors in Asia place these as their top resolutions by a factor of two-to-one compared to those in North America.

Despite the current pessimism, the Manulife ISI also shows investors across Asia are relatively optimistic about the future, with the sole exception of Japan. Clear majorities report they expect to be better off in two years’ time – very similar to the results in North America.

 

Thai optimism

“For Thailand, optimism has gone up sharply among investors. Investors have been in risk-on mode since March 2009 and have also been more confident to reallocate their assets to invest more in risky assets, especially in the stock market. They believe that equity could generate higher returns than fixed income or bank deposits in the longer term,” said Tor Indhavivadhana, CEO of Manulife Asset Management (Thailand).

Several indicators demonstrate that optimism has increased among equity investors in the post-global financial crisis era, he said.

The Stock Exchange of Thailand Index had surged from its lowest level on October 29, 2008 at 384.15 points to almost hit 1,600 points on March 15, 2013, representing a rise of 316.5 per cent.

Looking at equity funds in Thailand’s mutual-fund industry, he said the company had also seen a strong increase in the number of unit-holder accounts being opened for equity-fund investment, rising by 80 per cent from the end of 2008.

In addition, more local equity-related funds have been launched with high demand over the past few years, mainly in target-date funds.

All indicators will help Manulife in developing new funds with an innovative investment policy in response to the needs of investors, who are nowadays becoming more familiar with mutual funds, he said.

“We will also consider products that can serve demand for savings and are tailored for particular groups of investors, such as equity funds with current income,” he added.