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Offshore advisers in favour of their local economies, says Skandia


Offshore advisers feel more confidence in the shape of their local economies than in the global economy as a whole, according to a recent survey conducted by Skandia International.

Confidence levels in advisers’ local economies , in particular Hong Kong and Singapore, scored at 6.2 compared with the outlook for the global economy which achieved a score of 5.4 on a scale of 1-10 (10 signifying the highest degree of confidence). 

A third of offshore advisers fear global contagion to be the greatest economic threat to their local regions, whilst nearly a quarter feel rising inflation could have the greatest impact.

Not surprisingly, 37% of advisers feel their clients have become more risk averse over the past six months as the outlook for investment growth continues to remain uncertain.  At the same time, 17% of advisers believe that some of their clients may be prepared to accept a greater degree of investment risk.

This may explain why a significant 59% of advisers currently recommend specific fund solutions which are designed to match their clients’ attitudes to risk and return aspirations.

In terms of future investment returns, 25% of offshore advisers feel that Emerging Markets continue to offer the greatest potential, although this is significantly down from the last quarter’s results, when as many as 55% of advisers felt this to be the sector to deliver the best growth.

Gold (19.5%), Far East Equities ex Japan (15%) and Emerging Markets Debt (9%) were cited as the next most favoured sectors.  Fixed Income was perceived as the asset class least likely to deliver positive returns in the next 12 months.

Interestingly, 24% of respondents believe that whilst Gold may still offer attractive returns, it could be heading towards bubble territory.  Property, and specifically Real Estate in China, were deemed as sectors to potentially avoid in the next 12 months.

Similar to the last survey results, over 70% of offshore advisers felt the use of offshore investment products was likely to increase over the next 12 months.

Phil Oxenham (pictured), marketing manager at Skandia International, says: ‘Financial advisers’ opinions offer a good barometer on key financial metrics.  There is a lot of uncertainty around at the moment but it is good to see advisers’ outlook for their local economies remaining relatively positive.  Despite the continuing turmoil in world markets caused by slowing growth in the US and Eurozone economies, there are areas of strong economic activity, particularly in the developing economies and Asia, which present some great opportunities. The results of this survey clearly echo this view.
*The Offshore Adviser Confidence Barometer was conducted by Skandia International in July 2011 and attracted responses from over 300 advisers from around the world – Hong Kong, Singapore, Dubai, UK, Europe, Africa and Latin America. 46% of the respondents were based in Hong Kong and the Far East, 26% in the Middle East, 14% in Europe, 9% in Africa and 5% in the UK.

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