Despite being less optimistic on the outlook for the Singapore and global economic environment in the next six months, most investors are still planning to maintain their holdings in the local stock market, a JP Morgan Asset Management survey on investor confidence revealed.
Released Jan 12, the survey showed that investors’ confidence in the Singapore market and economy for the first half of the year had dropped to its lowest level in since June 2012, with many citing weak global demand and slower than expected GDP growth in Singapore as the main reasons for the poor sentiment.
Yet, at least 85% of those surveyed plan to stay invested in the Singapore stock market, with almost half citing capital preservation as their main objective for maintaining their positions. But will things improve in the months ahead?
More volatility
To be sure, the Singapore Straits Times Index is down by around 5% in the two weeks since the start of the year, to a low of 2,692 points Jan 12. And, things will likely remain challenging for the first six months for the year.
“Singapore is a very open economy and global trade has not yet shown signs of stabilising,” says Tai Hui, chief strategist at JP Morgan Asset Management.
On the domestic front, the correction in the property market will likely continue in 1H2016, while growth in bank net interest margins will likely be slow on the back of slower lending momentum. “So, investors need to be mentally prepared for more volatility in the Singapore equity market in 2016,” says Tai. Still, Tai reckons investors are doing the right thing by staying invested in the Singapore stock market. “In the past week, even though the China stock market crashed twice, from a fundamental perspective things are not that bad. Sure, manufacturing numbers are down, but that is not unexpected,” he says.
“There is a lot of sentiment driving the market which we would not take as a signal of what is actually happening in the Chinese economy.”
Go for high yield
The way Tai sees it, investors have no way of predicting how the market will turn in the short term. “So the risk is that by shying away or exiting the market now, things may then pick up and investors might miss good capital appreciation opportunities,” he says.
But while trying to time the market is futile given the volatility, staying invested or rechannelling funds into high yield stocks in the current environment might be a good idea. “We cannot predict where stock prices will go given the volatility. But what we have more confidence in is how much cash flows we will get from dividends, which do not swing much in the short term,” Tai says.
While growth stocks are not expected to offer much returns this year, Singapore has a lot of good high yield stocks that will help support returns until things in China and the commodity markets improve. “Now is not the time to abandon high yield equities,” Tai adds.
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Released Jan 12, the survey showed that investors’ confidence in the Singapore market and economy for the first half of the year had dropped to its lowest level in since June 2012, with many citing weak global demand and slower than expected GDP growth in Singapore as the main reasons for the poor sentiment.
Yet, at least 85% of those surveyed plan to stay invested in the Singapore stock market, with almost half citing capital preservation as their main objective for maintaining their positions. But will things improve in the months ahead?
More volatility
To be sure, the Singapore Straits Times Index is down by around 5% in the two weeks since the start of the year, to a low of 2,692 points Jan 12. And, things will likely remain challenging for the first six months for the year.
“Singapore is a very open economy and global trade has not yet shown signs of stabilising,” says Tai Hui, chief strategist at JP Morgan Asset Management.
On the domestic front, the correction in the property market will likely continue in 1H2016, while growth in bank net interest margins will likely be slow on the back of slower lending momentum. “So, investors need to be mentally prepared for more volatility in the Singapore equity market in 2016,” says Tai. Still, Tai reckons investors are doing the right thing by staying invested in the Singapore stock market. “In the past week, even though the China stock market crashed twice, from a fundamental perspective things are not that bad. Sure, manufacturing numbers are down, but that is not unexpected,” he says.
“There is a lot of sentiment driving the market which we would not take as a signal of what is actually happening in the Chinese economy.”
Go for high yield
The way Tai sees it, investors have no way of predicting how the market will turn in the short term. “So the risk is that by shying away or exiting the market now, things may then pick up and investors might miss good capital appreciation opportunities,” he says.
But while trying to time the market is futile given the volatility, staying invested or rechannelling funds into high yield stocks in the current environment might be a good idea. “We cannot predict where stock prices will go given the volatility. But what we have more confidence in is how much cash flows we will get from dividends, which do not swing much in the short term,” Tai says.
While growth stocks are not expected to offer much returns this year, Singapore has a lot of good high yield stocks that will help support returns until things in China and the commodity markets improve. “Now is not the time to abandon high yield equities,” Tai adds.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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