FOR IMMEDIATE RELEASE Contact: Tatyana Klauzner +852 3652 3038 TJKlauzner@leggmason.com Ni Ko Moo +65 6876 5782 niko@ryancommunication.com Jenny Lai +852 3655 0520 jenny@ryancommunication.com AMID GLOBAL UNCERTAINTY, CONSERVATIVE SINGAPORE INVESTORS EXPERIENCE CONFIDENCE IN THE DOMESTIC ECONOMY AND GOVERNMENT SCHEMES Singaporeans confident in their country The great generational divide between conservative Singapore investors International investments in favour despite global uncertainty, with China and the US as top choices Inflated property prices deter real estate investors SINGAPORE, 15 APRIL 2016 Volatility, coupled with the ramifications of geo-political disruptions, dominated financial markets in 2015. Despite these uncertainties, Singapore investors remained confident in Singapore's economy and government investment schemes, according to the Global Investment Survey 2016 conducted by Legg Mason Global Asset Management, a leading asset manager with US$651.5 billion* assets under management. Singaporeans confident in their country A majority (75%) of over 40 Singapore investors said that they are confident in the economic future of their country. Millennial Singapore investors shared similar views with 8 in 10 (83%) of those surveyed expressing confidence. Almost all of over 40 Singapore investors (95%) did not see economic instability in Singapore as an issue that may derail investment progress. Similarly, only 9% of millennial investors saw this as an issue. These statistics were some of the lowest in the region. Additionally, the recently introduced Singapore Savings Bond (SSB) scheme was viewed positively by both over 40 adult and millennial Singapore investors. 79% of older and 77% of millennial Singapore investors note that the SSB has made investing more accessible for Singapore investors. The ASEAN fund passporting scheme was also favourably
received by both groups of investors, with 75% of older and 77% of millennial investors supportive and interested in investing under the scheme. The great generational divide between conservative Singapore investors Despite their strong degree of confidence in the Singapore economy, the views of older and millennial Singapore investors on the global economy were divided. 60% of older investors viewed the global economy as not having fully recovered from the 2007/2008 financial crisis, compared to only 38% of millennial investors. When asked about optimism around investing in the coming year, only half (54%) of over 40 investors said they are positive, a significant 9% decrease from 2015. Similarly, only 53% of over 40 investors were optimistic about income generated from income producing assets. In comparison, 71% of millennial investors were more optimistic about investing in the next year, with 67% expressing optimism about income generated from income-producing assets. As global uncertainty weighed on Singapore investors, they were among the most conservative in Asia. An overwhelming 78% of older investors identify themselves as conservative, with 69% of millennial investors sharing similar views. More than three-quarters (77%) of over 40 and millennial (78%) Singapore investors agree that they are more risk averse compared to a year ago. Conservatism is reflected in their investment decisions. A decline of 16.7% in financial markets is enough to make the older investors re-evaluate their equity portfolio. Likewise, millennial investors needed a 17.8% drop in financial markets to make them re-evaluate. Singapore investors are also heavily invested in cash. Among peers in the region, over 40 Singapore investors have the highest percentage (29.7%) of their investments allocated to cash. Millennial Singapore investors allocate almost a third (28.2%) of their investments to cash, the highest allocation of a single asset. Cash is also viewed as one of the top 3 investments offering the best opportunities in the next 12 months among over 40 (44%) and millennial (41%) Singaporean investors. Singapore investors are unlikely to align their expectations for income and portfolio returns while holding large cash allocations "Volatility in financial markets has been a concern on many investors' minds and this is particularly pronounced in Singapore. While it is heartening to see the confidence Singapore investors have in their economy, investors need to move away from holding large cash positions into a set of investment solutions, involving better management of risk and diversification strategies that will afford them equity growth with lower volatility in order to meet their investment goals and income needs, said Lennie Lim, Managing Director and Regional Head of Legg Mason Global Asset Management in Asia. International investments in favour despite global uncertainty, with China and the US as top choices The survey also found that Singapore investors were increasingly open towards international investments, with 8 in 10 of both over 40 adult (80%) and millennial (81%) investors having investments outside of Singapore. Older Singapore investors had 20.6% of their assets invested internationally, considerably higher than the global average of 16.4%. The openness to international investments of the over 40 group was notwithstanding the fact that 69% of those surveyed see global uncertainty as the major barrier to investing internationally, the highest percentage in the region.
China and the US remained the top two markets representing the best investment opportunities. More than half (51%) of older investors viewed China as representing the country with best investment opportunities, with the US (52%) edging out slightly. Similar sentiments resonated with millennial investors, though 49% favoured China over the US (46%). Inflated property prices deter real estate investors The majority of older (78%) and millennial (89%) investors agreed that Singapore property prices are overvalued. Not surprisingly, real estate had seen a sharp year-on-year decline in Singapore investors' sentiments. Only 29% of the respondents viewed real estate as representing one of their top three investment opportunities in 2016 a sharp decline from 41% in 2015 and 49% in 2014. Countries/markets that over 40 Singaporean investors believe represent the best investment opportunities over the next year were: 1. United States (52%) 2. China (51%) 3. Australia (34%) 4. India (33%) 5. Europe Excluding UK (25%) Average asset allocation among all over 40 Singaporean respondents was: 29.7% cash or cash equivalents 24.7% equities 15.2% investment in real estate 13.3% fixed income 7.7% non-traditional investments 5.1% gold/precious metals 4.2% other Top five investments that older investors in Singapore believe offer the best opportunities over the next twelve months were: 1. International stocks (66%) 2. Domestic stocks (57%) 3. Cash (44%) 4. Non-traditional investments (33%) 5. Real estate (29%) In spite of the uncertainty of a post zero-rate world, investors in Singapore and other parts of the world still view the US as providing the best opportunities, particularly in equity investing. There are several factors for this, including the continued improvement of the US domestic economy and historical performance of the asset class according to returns during past rate-hike cycle. Ajay Dayal, Investment Director at Legg Mason Global Asset Management noted.
About the Legg Mason Global Investment Survey END Northstar Research Partners conducted the fourth annual Legg Mason Global Investment Survey, an online study among 5,370 high net worth investors with a minimum of US$200,000 in investable assets not including their home, including 4,103 aged 40-75 and 1,341 Millennials (aged 18-39), providing the most comprehensive insight into the next generation of HNWIs globally. Fielding was conducted through an online survey between December 3, 2015 and January 8, 2016. Please visit (www.leggmason.com.sg) for full methodological notes. About Legg Mason Global Asset Management Legg Mason is a global asset management firm with assets under management US$657 billion as of February 29, 2016. The Company provides active asset management in many major investment centers throughout the world. Legg Mason is headquartered in Baltimore, Maryland, and its common stock is listed on the New York Stock Exchange (symbol: LM). www.leggmason.com.sg *Source: Legg Mason. As of February 29, 2016 Important Information Source: Legg Mason Global Asset Management. This document, provided by Legg Mason Asset Management Singapore Pte. Limited ("Legg Mason"), is for information only and does not constitute an offer or solicitation to buy or sell any units in any fund. The views expressed are opinions of the portfolio managers as of the date of this document and are subject to change based on market and other conditions without notice and may differ from other portfolio managers or of the firm as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results or investment advice. Although information has been obtained from sources that Legg Mason believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. Neither Legg Mason nor any officer or employee of Legg Mason accepts any liability whatsoever for any loss arising from any use of this document or its contents. The information in this document is confidential and proprietary and may not be used other than by the intended user. This document may not be reproduced, distributed or published without prior written permission from Legg Mason. Distribution of this document may be restricted in certain jurisdictions. Any persons coming into possession of this document should seek advice for details of, and observe, such restrictions (if any).
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