Asian Investors Remain Positive About Finance; Inflation Causes Angst – Natixis

Editorial Staff

26 June 2023

Investors in Asia remain positive about their finances, despite inflation, recession risks and last year’s stock market losses, according to an annual global survey of 8,550 individual investors by . The study included 3,300 respondents in Asia.

Across the globe, a survey carried out in March this year found that 69 per cent of respondents had a positive outlook and 65 per cent of Asian respondents do so.

The poll covered investors with more than $100,000 in investable assets.

There is variation between Hong Kong and Singapore when it comes to optimism. In Hong Kong, 73 per cent of investors had a positive sentiment, higher than Asia overall and globally, while at 63 per cent, a smaller proportion of Singapore investors were positive about their finances compared with overall Asian and global levels.

Natixis IM said the results “may highlight critical gaps in investment knowledge and investment portfolios,” because individual Asian investors still think they can make returns of 7.1 per cent above inflation this year.

Investors globally were aware of the changing economic environment and, while largely optimistic in the long-term, are fearful of the associated risks. Two thirds (62 per cent) of investors said higher everyday costs are their biggest financial fear.

Over the longer term, individual investors in Asia expected 14 per cent returns above inflation. Investors in Hong Kong and Singapore also had high expectations, expecting 12 per cent and 15 per cent returns above inflation in the long-term, respectively.

While expectations are still high in Asia and globally, the gap between what investors want and what advisors say is realistic, narrowed from 61 per cent in 2021 to 42 per cent today globally.

“Reassessing portfolios with a focus on long-term goals is key to achieving success in today's complex market,” Dora Seow, chief executive for for Natixis IM Singapore, said.

Globally, two-thirds of investors said inflation significantly hit their ability to save for retirement, while 71 per cent of Asian investors took that view.

In Singapore, 61 per cent of individual investors said that inflation was their top concern.

After inflation, 41 per cent of individual investors in Asia said market volatility was the biggest risk to their portfolio. This is followed by a recession (39 per cent) and rising rates (32 per cent).

Bonds are back
In response to the new environment, exactly half of Asia’s respondents (50 per cent) said they have more confidence in bonds outperforming in 2023 than equities and 54 per cent increased bond investments in response to rising rates. However, while nearly six in 10 (63 per cent) of Asian investors said they understand the role of bonds in portfolios and the impact of rising rates on bonds, when asked about what happens to bonds in a rising rates environment, only 3 per cent (83 out of 3,300) of investors in Asia could provide the correct answers, 29 per cent selected one correct answer, and 22 per cent stated that they did not know.

In contrast, only 38 per cent and 45 per cent of investors in Hong Kong and Singapore respectively, said they have more confidence in bond performance than equities performance, going against the global trend of higher confidence in bonds over equities.