Asian retail investors favour local equities and income funds

Asian retail investors have a strong domestic bias, Prudential’s Asian boutique Eastspring Investments has found out in a research led in partnership with research group TNS.

A total of 2,400 investors have been surveyed in six Asian markets including Korea, Singapore, Hong Kong, Malaysia, Indonesia and Taiwan.

The research highlights Asian investors’ preference for local equities and income funds. It also underlines their cautious attitude towards global and emerging markets.

Asian retail investors globally expect a higher yield from local equities than other asset classes. Average yield expected for the second half of 2015 in all six countries exceeds 16%. In particular, Hong Kong investors expect up to 26% yield for H2 2015.

Asian investors expect as well high returns from Asian (ex-Japan) equities and Chinese equities, despite China’s slowdown last summer.

The study points out they show strong risk aversion to offshore equity and bond markets while they demonstrate higher risk tolerance in local equity markets.

In Hong Kong, 17% of the investors surveyed say their risk tolerance does not exceed 3% when investing in the Hong Kong equity market. The figure rises up to 40% when investing in US equities and 43% in European equities.

Hong Kong’s investors’ average risk tolerance reaches 10.1% for the local equity market against 7.5% for the European equity market and 7.6% for the US equity market.

Another key finding is that Asian investors still mostly favour income as well as income & growth funds in the second half of 2015. Only Korean and Taiwanese investors demonstrate a slight preference for growth funds.

Michele Bang, deputy chief executive officer at Eastspring, commented: “This one of a kind survey forecasts retail investor behaviour in Asian countries at an interesting time, where traditional investment choices have been and are likely to keep being affected by recent market events. Through this study, we are able to deepen our understanding of the needs and demands of investors in these regions, and offer tailored and relevant investment solutions.”

To read more about the study : Eastspring Investments Asia Investor Behavior Study_Regional Exe Summary_Oct 2015

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