mr funny
18-10-10, 04:26
http://www.straitstimes.com/Invest/Story/STIStory_591687.html
Oct 17, 2010
Singaporeans more bullish but still play it safe
Investment sentiment positive but many opting for safe havens
By Gabriel Chen
# 71 per cent feel market conditions have improved over the last 6 months, survey shows
# The favoured choices for investors are the traditional safe havens of gold and property
Singapore investors are becoming more confident about the economy and increasingly positive about investment conditions - but they are still careful about where they park their money.
According to the latest quarterly findings from British financial firm Friends Provident International - which polled 2,750 people in Singapore, Hong Kong and the United Arab Emirates (UAE) - 71 per cent of Singaporeans felt market conditions had improved over the last six months.
This is a marked jump from the previous quarter, when only 64 per cent of respondents here felt the same way.
The Friends Provident data found Singapore investors, who in the survey mostly fell in the middle to upper middle income range, were more bullish about current investment opportunities than those in Hong Kong and the UAE.
But locals still err on the side of caution when it comes to selecting where to invest their hard-earned funds, preferring to put their money in safe haven assets.
All asset classes, notes the report, apart from stocks, experienced positive moves in investment sentiment, with significant increases for bonds and cash.
The traditional safe havens of gold and property were among the favoured choices for investors here.
Financial advisers say the latest poll bears out what they are seeing on the ground: Although generally an optimistic lot, Singaporeans are playing it safe by taking a less aggressive approach to investing.
They are showing reduced interest in penny stocks or leveraged instruments like warrants, and the more risk averse are holding on to their cash, despite banks' rock-bottom interest rates.
Mr Albert Lam, IPP Financial Advisers' investment director, said caution and nervousness were unavoidable given the near-collapse of the financial system two years ago.
But he cautions that Singaporeans 'need to recognise that a sensible allocation of assets is fundamental, effectively diversifying their investments'.
'Neither too conservative nor too aggressive a portfolio is beneficial to anyone.'
Mr Wyson Lim, OCBC Bank's head of wealth management, points out that the overly cautious could be missing out on the wealth of investment opportunities.
But Friends Provident International Singapore's principal officer Chris Gill thinks the rise in confidence among investors should see them putting more of their money into riskier options going forward.
With this in mind, The Sunday Times looks at how Singaporeans can make their money work harder for them.
Stocks
Emerging market stock funds have returned about 10 per cent to 20 per cent this year, but there is still more upside for Singapore investors, says Dr Mark Mobius, chairman of Templeton Asset Management.
Dr Mobius' comments come at a time when stock markets, especially those of South-east Asia, are soaring.
Indonesia, the Philippines and Colombia have hit all-time record peaks, and Brazil and India are trailing not far behind.
He figures that if these economies are growing fast, so will the returns they generate.
Also, as emerging countries make up about 32 per cent of the world's market value, investors should not ignore them.
'Singaporeans may be invested in the Singapore market, but most don't have a diversified portfolio of emerging market stocks,' stresses Dr Mobius, one of Asiamoney's top 100 most powerful and influential people.
'You can see the danger that they have in their portfolio, because if the world is 32 per cent emerging markets, then obviously they are running into the danger of being underexposed.'
Dr Mobius recommends that Singapore investors do not put all their money into emerging market funds in one sitting.
'Over a two- to three-year period, if you've equal payments on a monthly basis, you'll get in at a good average price,' he says. 'What often happens is that you get people coming in at the top and getting disappointed. And then they get out again at the wrong time.'
The MSCI emerging market stock index trades at around 13 times forecast 2010 earnings, or 11 times 2011 earnings. This is roughly in line with their five-year average.
Property
Despite the prices of some private residential properties reaching record highs, there are still opportunities for home buyers and investors hoping to benefit from capital appreciation and long-term investment in private residential property.
Mr Ong Kah Seng, senior manager for Asia-Pacific research at Cushman and Wakefield, reckons that against the backdrop of moderating home-buying sentiment, projects with project-specific micro-market strengths and opportunities, such as new infrastructural projects or plans to revitalise neighbourhoods, are going to stand out.
But OrangeTee's head of research and consultancy Tan Kok Keong advises investors to be selective at current price levels.
'While we feel that the traditional prime districts of 9, 10, 11 offer the best capital value protection, not all locations within these districts are favourable,' he says.
'For mass market projects, investors are advised to look for properties with that extra dimension, not just near good schools and MRTs, but properties with lifestyle enhancers, the example being near parks, with good views, near large shopping centres.'
Mr Ong adds that understanding the underlying tenant demand base is crucial for those looking purely to invest.
For example, local young professionals are likely to value a central location as a signature of success but are indifferent to size, whereas senior expatriates may require larger units to accommodate family members.
'An investor must understand that the unit he purchases cannot have the best of all worlds in tenant base, but he must be confident enough of the availability of tenants for the property type he is buying,' Mr Ong says.
Bonds
Some of the best-performing bond funds for the first nine months of this year have been Asian.
They have seen huge capital inflows against the backdrop of the region's strong growth, appreciating currencies and sound public finances.
And experts continue to be bullish on this segment.
Mr Kelvin Tay, chief investment strategist at UBS Wealth Management Singapore, recommends that investors consider diversifying into the Asian bonds space, which, on a risk-adjusted basis, is increasingly becoming one of the most attractive investment choices.
'Staying in fixed deposits is not an option due to the increasingly negative real rate of return as a result of higher inflation in the near term,' Mr Tay says.
But investors should also be aware that bonds are not without investment risks.
OCBC's Mr Lim elaborates: 'The key risk to bear in mind is interest rate risk, as inflation is gaining pace at a faster rate in some Asian and emerging markets compared to that in the West and Japan. This means that central banks in these regions may raise rates further to ward off inflationary pressures, which could weigh on bond markets.'
In other words, if interest rates rise, the value of the bonds held by the fund will fall, which could affect the fund's total return.
Gold
Gold is currently trading at an all-time high and topped US$1,350 (S$1,750) an ounce this week.
The rally has been fuelled by the weakness of the United States dollar and by speculation of increasing uncertainty and additional monetary easing by central banks.
UBS' Mr Tay thinks the price of gold could rise even further.
'Our target is about US$1,500 per ounce by next May. We think that prices below US$1,200 represent buying opportunities,' he says.
Those looking to park their money in the yellow metal can buy physical gold directly, or invest in exchange-traded funds (ETFs).
Gold ETFs include SPDR Gold Shares, which offer investors a relatively cost-efficient and secure way to access the gold market by tracking the prevailing international gold price.
SPDR Gold Shares are listed on the Singapore Exchange and can be bought and sold through a standard brokerage account.
Meanwhile, United Overseas Bank sells gold bars and gold coins.
And gold jewellery is even an option.
IPP's Mr Lam points out, however, that gold jewellery - in contrast to straightforward gold - prices in the cost of design, making it more expensive as an investment and also less liquid.
[email protected]
Oct 17, 2010
Singaporeans more bullish but still play it safe
Investment sentiment positive but many opting for safe havens
By Gabriel Chen
# 71 per cent feel market conditions have improved over the last 6 months, survey shows
# The favoured choices for investors are the traditional safe havens of gold and property
Singapore investors are becoming more confident about the economy and increasingly positive about investment conditions - but they are still careful about where they park their money.
According to the latest quarterly findings from British financial firm Friends Provident International - which polled 2,750 people in Singapore, Hong Kong and the United Arab Emirates (UAE) - 71 per cent of Singaporeans felt market conditions had improved over the last six months.
This is a marked jump from the previous quarter, when only 64 per cent of respondents here felt the same way.
The Friends Provident data found Singapore investors, who in the survey mostly fell in the middle to upper middle income range, were more bullish about current investment opportunities than those in Hong Kong and the UAE.
But locals still err on the side of caution when it comes to selecting where to invest their hard-earned funds, preferring to put their money in safe haven assets.
All asset classes, notes the report, apart from stocks, experienced positive moves in investment sentiment, with significant increases for bonds and cash.
The traditional safe havens of gold and property were among the favoured choices for investors here.
Financial advisers say the latest poll bears out what they are seeing on the ground: Although generally an optimistic lot, Singaporeans are playing it safe by taking a less aggressive approach to investing.
They are showing reduced interest in penny stocks or leveraged instruments like warrants, and the more risk averse are holding on to their cash, despite banks' rock-bottom interest rates.
Mr Albert Lam, IPP Financial Advisers' investment director, said caution and nervousness were unavoidable given the near-collapse of the financial system two years ago.
But he cautions that Singaporeans 'need to recognise that a sensible allocation of assets is fundamental, effectively diversifying their investments'.
'Neither too conservative nor too aggressive a portfolio is beneficial to anyone.'
Mr Wyson Lim, OCBC Bank's head of wealth management, points out that the overly cautious could be missing out on the wealth of investment opportunities.
But Friends Provident International Singapore's principal officer Chris Gill thinks the rise in confidence among investors should see them putting more of their money into riskier options going forward.
With this in mind, The Sunday Times looks at how Singaporeans can make their money work harder for them.
Stocks
Emerging market stock funds have returned about 10 per cent to 20 per cent this year, but there is still more upside for Singapore investors, says Dr Mark Mobius, chairman of Templeton Asset Management.
Dr Mobius' comments come at a time when stock markets, especially those of South-east Asia, are soaring.
Indonesia, the Philippines and Colombia have hit all-time record peaks, and Brazil and India are trailing not far behind.
He figures that if these economies are growing fast, so will the returns they generate.
Also, as emerging countries make up about 32 per cent of the world's market value, investors should not ignore them.
'Singaporeans may be invested in the Singapore market, but most don't have a diversified portfolio of emerging market stocks,' stresses Dr Mobius, one of Asiamoney's top 100 most powerful and influential people.
'You can see the danger that they have in their portfolio, because if the world is 32 per cent emerging markets, then obviously they are running into the danger of being underexposed.'
Dr Mobius recommends that Singapore investors do not put all their money into emerging market funds in one sitting.
'Over a two- to three-year period, if you've equal payments on a monthly basis, you'll get in at a good average price,' he says. 'What often happens is that you get people coming in at the top and getting disappointed. And then they get out again at the wrong time.'
The MSCI emerging market stock index trades at around 13 times forecast 2010 earnings, or 11 times 2011 earnings. This is roughly in line with their five-year average.
Property
Despite the prices of some private residential properties reaching record highs, there are still opportunities for home buyers and investors hoping to benefit from capital appreciation and long-term investment in private residential property.
Mr Ong Kah Seng, senior manager for Asia-Pacific research at Cushman and Wakefield, reckons that against the backdrop of moderating home-buying sentiment, projects with project-specific micro-market strengths and opportunities, such as new infrastructural projects or plans to revitalise neighbourhoods, are going to stand out.
But OrangeTee's head of research and consultancy Tan Kok Keong advises investors to be selective at current price levels.
'While we feel that the traditional prime districts of 9, 10, 11 offer the best capital value protection, not all locations within these districts are favourable,' he says.
'For mass market projects, investors are advised to look for properties with that extra dimension, not just near good schools and MRTs, but properties with lifestyle enhancers, the example being near parks, with good views, near large shopping centres.'
Mr Ong adds that understanding the underlying tenant demand base is crucial for those looking purely to invest.
For example, local young professionals are likely to value a central location as a signature of success but are indifferent to size, whereas senior expatriates may require larger units to accommodate family members.
'An investor must understand that the unit he purchases cannot have the best of all worlds in tenant base, but he must be confident enough of the availability of tenants for the property type he is buying,' Mr Ong says.
Bonds
Some of the best-performing bond funds for the first nine months of this year have been Asian.
They have seen huge capital inflows against the backdrop of the region's strong growth, appreciating currencies and sound public finances.
And experts continue to be bullish on this segment.
Mr Kelvin Tay, chief investment strategist at UBS Wealth Management Singapore, recommends that investors consider diversifying into the Asian bonds space, which, on a risk-adjusted basis, is increasingly becoming one of the most attractive investment choices.
'Staying in fixed deposits is not an option due to the increasingly negative real rate of return as a result of higher inflation in the near term,' Mr Tay says.
But investors should also be aware that bonds are not without investment risks.
OCBC's Mr Lim elaborates: 'The key risk to bear in mind is interest rate risk, as inflation is gaining pace at a faster rate in some Asian and emerging markets compared to that in the West and Japan. This means that central banks in these regions may raise rates further to ward off inflationary pressures, which could weigh on bond markets.'
In other words, if interest rates rise, the value of the bonds held by the fund will fall, which could affect the fund's total return.
Gold
Gold is currently trading at an all-time high and topped US$1,350 (S$1,750) an ounce this week.
The rally has been fuelled by the weakness of the United States dollar and by speculation of increasing uncertainty and additional monetary easing by central banks.
UBS' Mr Tay thinks the price of gold could rise even further.
'Our target is about US$1,500 per ounce by next May. We think that prices below US$1,200 represent buying opportunities,' he says.
Those looking to park their money in the yellow metal can buy physical gold directly, or invest in exchange-traded funds (ETFs).
Gold ETFs include SPDR Gold Shares, which offer investors a relatively cost-efficient and secure way to access the gold market by tracking the prevailing international gold price.
SPDR Gold Shares are listed on the Singapore Exchange and can be bought and sold through a standard brokerage account.
Meanwhile, United Overseas Bank sells gold bars and gold coins.
And gold jewellery is even an option.
IPP's Mr Lam points out, however, that gold jewellery - in contrast to straightforward gold - prices in the cost of design, making it more expensive as an investment and also less liquid.
[email protected]