Published July 2, 2009

Wealthy locals miss out on recent rallies: survey

By GENEVIEVE CUA

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SINGAPORE investors saw opportunities earlier this year when markets were on the floor, but felt that the risk of further price falls was too high.

Opportunity and risk: In the study, 45 per cent of Singapore investors say that they will invest only in what they know, compared with 53 per cent globally

A survey suggests the wealthy here - and elsewhere - missed out on the sharp rally in equities that started in March.

The study, by Barclays Wealth and The Economist Intelligence Unit, also found that half of Singapore respondents do not intend to change the risk level in their portfolios over the next 12 months.

The survey was conducted between March and May this year. Respondents included the mass affluent, high net worth and ultra high net worth segments.

Forty-five per cent of Singapore investors said they will invest only in what they know, compared with 53 per cent globally.

According to Didier von Daeniken, chief executive of Barclays Wealth Asia-Pacific: 'There are always early adapters, those who are risk takers. The average investor would have missed out because they were too nervous. A few who are lucky or very prescient did very well.'

Slight differences in behaviour among countries could reflect varying economic backdrops, he says. 'If you are in an economy doing very poorly, you would be extremely reluctant to invest worldwide.'

Barclays has sought to harness behavioural finance in its advisory process.

Greg Davies, the bank's head of behavioural finance, says it is seeking to use psychometrics to better understand clients' profiles.

'Instead of just measuring risk tolerance, we measure clients' composure or people's short-term engagement in the market,' he says.

'We have clients whose actual financial objective is to grow their wealth in the long run. At the same time, most of us have an emotional time horizon that is very short term. And when things are bad, it gets even shorter.'

The bank has been nudging up the risk exposures of its portfolios gradually.

Asia strategist Manpreet Gill says: 'The survey was done in a period where there were opportunities. From a strategic point of view, we see opportunities, but we also see a risk of correction. If there is a correction, that should be used as an opportunity to add risk.'

The fixed-income space in particular has yielded 'unusual' gains in the past three months, he says. 'But spreads are still wide, and there are still opportunities to make better-than-normal gains.'