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Market volatility sees Asian Retail Investors show strong home bias and preference for income

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A new survey by Eastspring, the Asian investment arm of Prudential, has revealed a significant domestic bias among Asian retail investors, with expectations of yield as high as 26 per cent from their home market equities. 

Asia Pacific and China equities, despite the China market correction over the summer, are also popular asset classes. Although Malaysian investors expressed plans to reallocate to offshore strategies in the next six months, the overwhelming trend was for retail investors to remain invested in their local markets, highlighting their concerns and uncertainty about global market volatility.

Hong Kong investors for instance are very confident in local and Chinese equities with nearly half expecting a yield of up to 20 per cent in the second half of 2015.
  
Overall, Asian retail investors appear bearish towards the global economy, and this risk aversion to global and emerging markets is highlighted by both mutual fund holders and intenders’ increased appetite for Income and Growth & Income funds. Intentions to decrease exposure to Growth funds in the next six months suggest investors are seeking to dilute exposure to the expected higher risk of growth funds.
 
In Korea, for example, mutual fund intenders’ interest in Growth funds has dropped from 27 per cent to 18 per cent over the last two years, with Income and Balanced funds proving increasingly popular.
 
Michele Bang (pictured), Deputy Chief Executive Officer at Eastspring, says: “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.”
 
The survey also reveals that there is a clear need for the asset and wealth management industry to focus more on investor and product education, on the risks and return of various investment decisions as well as on the importance of retirement planning and solutions.
 
The Eastspring Mutual Fund Investor Behaviour Study is the only forward-looking index focusing on retail fund investors in the region, and is designed to identify the sentiment and behaviour that will drive investment activity in H2 2015. Conducted after the start of the Chinese market crisis, throughout July and August 2015, 2,400 retail investors across Hong Kong, Singapore, Korea, Taiwan, Malaysia and Indonesia were interviewed.

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