Big investors shifting money from stocks to safer products
HSBC poll finds fund houses have dim view of Asia equities
Wong Ka-chun Sep 10, 2008
Spooked by the global financial turmoil, institutional investors have become more cautious of the Asian equity markets outside of Japan this quarter and are switching funds to safer products such as bonds, according to HSBC Holdings.
Its quarterly survey, which polled 10 global fund houses managing US$4.2 trillion, found that 22 per cent had an underweight view on the Asia-Pacific excluding Japan this quarter, compared with none a quarter ago.
Those with an overweight view on the region fell to 44 per cent from 56 per cent while the rest had a neutral view, it said.
For the Greater China markets, none held an underweight view in the third quarter, as in the second quarter, although those with an overweight view dropped to 63 per cent from 86 per cent.
“Fund managers still believe in the China story given the solid high economic growth as well as enormous investment opportunities on the mainland. However, they did turn less bullish,” said Bruno Lee, HSBC’s head of wealth management for personal financial services.
“Apart from the mainland and Hong Kong markets, fund managers have taken action to reduce exposure across the Asian region, such as in Thailand and Vietnam.”
Asia recorded an outflow of US$28.5 billion in the second quarter, the largest quarterly outflow in the past two years, HSBC said.
It reflected investors’ concern about the warning signs of inflation in the region and the global economic slowdown, the bank said.
The MSCI Asia-Pacific excluding Japan Index, which tracks 642 stocks, has declined 31 per cent this year, as concerns over slowing global growth and more than US$500 billion in write-downs and credit losses at financial institutions hurt profits.
The stock market slump prompted more investors to switch to bonds, which are considered a safer investment with stable returns.
Forty-four per cent of the respondents in the HSBC survey held an overweight view on bonds in the third quarter compared with only 20 per cent in the previous quarter.
By comparison, 44 per cent had an underweight view on equities, more than four times the 10 per cent in the second quarter.
About 38 per cent of the respondents would like to hold more cash, up from 30 per cent in the previous quarter.
“Bond investment is more attractive amid a bearish sentiment because of higher and stable return. Good investment grade bond or US bonds are their preferred choice,” said Mr Lee.
The size of funds under management dropped 24.8 per cent for Asia-Pacific equity funds excluding Japan in the second quarter, compared with a 3.2 per cent gain in the emerging market equities including Brazil, the Middle East and India, according to the survey.
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Big investors shifting money from stocks to safer products
HSBC poll finds fund houses have dim view of Asia equities
Wong Ka-chun
Sep 10, 2008
Spooked by the global financial turmoil, institutional investors have become more cautious of the Asian equity markets outside of Japan this quarter and are switching funds to safer products such as bonds, according to HSBC Holdings.
Its quarterly survey, which polled 10 global fund houses managing US$4.2 trillion, found that 22 per cent had an underweight view on the Asia-Pacific excluding Japan this quarter, compared with none a quarter ago.
Those with an overweight view on the region fell to 44 per cent from 56 per cent while the rest had a neutral view, it said.
For the Greater China markets, none held an underweight view in the third quarter, as in the second quarter, although those with an overweight view dropped to 63 per cent from 86 per cent.
“Fund managers still believe in the China story given the solid high economic growth as well as enormous investment opportunities on the mainland. However, they did turn less bullish,” said Bruno Lee, HSBC’s head of wealth management for personal financial services.
“Apart from the mainland and Hong Kong markets, fund managers have taken action to reduce exposure across the Asian region, such as in Thailand and Vietnam.”
Asia recorded an outflow of US$28.5 billion in the second quarter, the largest quarterly outflow in the past two years, HSBC said.
It reflected investors’ concern about the warning signs of inflation in the region and the global economic slowdown, the bank said.
The MSCI Asia-Pacific excluding Japan Index, which tracks 642 stocks, has declined 31 per cent this year, as concerns over slowing global growth and more than US$500 billion in write-downs and credit losses at financial institutions hurt profits.
The stock market slump prompted more investors to switch to bonds, which are considered a safer investment with stable returns.
Forty-four per cent of the respondents in the HSBC survey held an overweight view on bonds in the third quarter compared with only 20 per cent in the previous quarter.
By comparison, 44 per cent had an underweight view on equities, more than four times the 10 per cent in the second quarter.
About 38 per cent of the respondents would like to hold more cash, up from 30 per cent in the previous quarter.
“Bond investment is more attractive amid a bearish sentiment because of higher and stable return. Good investment grade bond or US bonds are their preferred choice,” said Mr Lee.
The size of funds under management dropped 24.8 per cent for Asia-Pacific equity funds excluding Japan in the second quarter, compared with a 3.2 per cent gain in the emerging market equities including Brazil, the Middle East and India, according to the survey.
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