Study: S'pore investors are pessimistic
Investors' pessimism can be attributed to unemployment, as well as global economic instability and inflation
Singapore investors are among the world's most pessimistic and conservative, according to a survey of 15,300 investors in 17 markets and countries.
As a result, they have a preference for "defensive" assets such as cash, revealed asset management firm Legg Mason in their annual Global Investment Survey yesterday.
Unemployment was a concern for 60 per cent of the respondents, compared to the 40 per cent average in Asia (excluding Japan), showed the survey.
A total of 900 Singapore investors - about half were millennials, one-third were Gen X and 20 per cent were baby boomers - were surveyed.
Mr Lennie Lim, Legg Mason's regional head for Asia, said that it is likely that last year's resident unemployment rate, which reached its highest level since 2010, was behind their cause for concern. Last year, the annual average resident unemployment was 3 per cent, a slight rise from 2.8 per cent in 2015.
Mr Lim added that Singapore's unemployment rate actually remains low compared with much of the developed world, suggesting that the issue is unlikely to emerge as a significant concern to the local economy.
Unemployment, coupled with global economic instability and inflation, meant Singapore investors were less optimistic than their global peers in terms of investment outlook for the coming year.
They report a net optimism of 9 per cent, significantly lower than Asia's average of 18 per cent and the global average of 20 per cent. This lack of optimism is clearly reflected in asset allocation among Singapore investors, said Legg Mason.
Nearly 40 per cent of their portfolio is held in cash, trailing Japan (53.4 per cent) and Hong Kong (39.7 per cent).
A previous survey in 2015 by Blackrock Global Investor showed similar results - cash made up nearly half of the savings and investments of Singaporeans.
Their survey of 1,000 Singaporeans also showed that the respondents recognised that they are holding more cash than they should be - on average they have a 12 per cent gap between their ideal and actual cash allocations.
The current low interest rate might mean that cash is more likely to contribute negative real returns to a portfolio, said Mr Ajay Dayal, investment director at Legg Mason Global Asset Management, adding that local investors could benefit from boosting their investments by shifting some of their cash to higher risk and potentially higher return assets such as equities.
Another significant consequence is that investors will fail to generate a sufficient return that would enable them to retire on track and on time, said Mr Ho Song Hui, assistant director, research and portfolio management at Fundsupermart.com.