In contrast, optimism running high in emerging South East Asia
Hong Kong - The inaugural Manulife Investor Sentiment Index in Asia (Manulife ISI), based on 3,500 interviews across seven Asia markets,1 shows that investors in developed Asia are not confident it is the right time to invest, with Hong Kong and Taiwan the most pessimistic. This contrasts with higher confidence in the emerging markets of Indonesia and Malaysia as well as in Canada and the U.S.
Robert A. Cook, President and CEO, Manulife Asia said, “From an investment point of view, there’s no more exciting place than Asia right now. There are so many opportunities across the region for people to invest to achieve their life goals. To help them do that, it’s extremely important that we understand investors’ needs. The Manulife Investor Sentiment Index helps us do that by providing the kinds of market insights that the Index has been doing in North America now for many years.”
This first Manulife ISI in Asia shows that the top reason investors believe it is a bad time to invest is that "the market is too volatile". This is the top answer for all assets except property, regarding which the top reason people offered was "the current price is too high and a correction is expected".
Reflecting the relative pessimism across the region, Asia investors overall indicate they are holding the single biggest portion of their assets in cash, even though respondents in all markets outside Indonesia and Malaysia have only weak confidence that this is an effective investment strategy.
Over half (56 per cent) of Asia investors report being either on track or ahead of schedule to meet their financial goals, significantly more than in Canada. While ten per cent of Asia investors say they are so far behind schedule they are unlikely to catch up, this is only about half the level in Canada. In terms of achieving their financial goals, the top two most commonly-cited resolutions this year are to learn more about investing, followed by a desire to develop a financial plan. Moreover, more investors in Asia place these as their top resolutions by a factor of two-to-one compared to those in North America.
Despite the current pessimism, the Manulife ISI also shows investors across Asia are relatively optimistic about the future, with the sole exception of Japan. Clear majorities report they expect to be better off in two years time – very similar to the results in North America.
“The results seem to point to a gap between investors’ goals and their strategy to achieve them,” said Philip Hampden-Smith, Chief Marketing Officer, Manulife Asia. “Interestingly, it seems many are aware of that gap, which may explain why the highest resolution is learning more about how to invest. It will be fascinating to see how sentiment tracks over time, especially given that most respondents are optimistic about the future.”
Manulife Investor Sentiment Index - key findings:
Investors across markets in Asia have only low levels of confidence that it is a good time to invest, with Hong Kong and Taiwan investors being the most pessimistic. This contrasts sharply with more enthusiastic levels of investor sentiment in the U.S. and Canada and, by far higher margins, in Malaysia and Indonesia. Overall, young Asia investors, aged 25-29, are more optimistic than other age groups, except in Hong Kong, whose young investors appear the most pessimistic in Asia.
Reasons for not investing
Sentiment on the issue of investing in real estate (either their primary residence or other properties) diverges sharply across markets. In Hong Kong and Taiwan net sentiment was clearly negative, whereas sentiment is positive in all other Asia markets, especially Indonesia and Malaysia, as well as in the U.S. and especially Canada. Nearly two thirds of Asia investors saying it is a bad time to invest in stocks report the main reason is “market volatility,” a reason cited by over three quarters in China and Malaysia.
Investors in Indonesia report it is a good time to hold cash and invest in property (either their own home or other real estate), with little appetite for stocks, a pattern also evident in Canada. In contrast, in Hong Kong the reverse is true. In Malaysia two-fifths of investors’ assets are stored in cash and this aligns with the widely-held sentiment in that country that it is a good time to hold cash. In Japan, though, where cash makes up about the same proportion of investors’ assets, sentiment towards cash was clearly negative.
Two thirds of investors in China say they are either on track or ahead of schedule to meet their financial goals. In contrast, in Japan nearly a quarter report being behind schedule and unlikely to catch up. There was agreement across all markets in Asia and North America on the two most cited steps taken to get back on track, these being increasing savings and reducing spending.
Asia investors using a professional financial advisor report more optimism towards investing than those without an advisor. A quarter of Asia investors have a professional financial advisor, versus two fifths in Canada. Of those who do not have an advisor, over a third in Hong Kong, Singapore and Taiwan said the main reason was a lack of trust, which was a factor for only six per cent in Canada.
Over two fifths of Asia investors report feeling better off than two years ago, though with variance across the region. In China, sixty per cent agreed with this statement, whereas only a fifth did in Japan. In Singapore, a fifth of investors feel worse off than two years ago, while in Indonesia this is true of just four per cent.
A majority (54 per cent) of investors across Asia believe they will be better off in two years time, an almost identical degree of optimism as in Canada. Looking ahead, the most optimistic Asia investors were in China, where 68 per cent expect to be better off in two years time. This again contrasted with Japan, where only a quarter expects to be better off in two years time.
The Manulife Sentiment Index is calculated as a net score of the percentage of “Very good time” and “Good time” to invest, minus the percentage of “Bad time” and “Very bad time” to invest, cited for each asset class. The overall index for each market is calculated as an average of the index figures of all asset classes.
1About the Manulife Investor Sentiment Index in Asia
Manulife’s Investor Sentiment Index (Manulife ISI) in Asia is a quarterly, proprietary survey measuring and tracking investors’ views across seven markets in the region on their attitudes towards key asset classes and investment vehicles.
The Manulife ISI is based on 500 online interviews in each market of Hong Kong, China, Taiwan, Japan, and Singapore; in Malaysia and Indonesia it is conducted face-to-face. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.
The Manulife ISI is a long-established research series in North America. Manulife ISI has been measuring investor sentiment in Canada for the past 13 years, and extended this to its John Hancock operation in the U.S. in 2011. This is the first Manulife ISI launched in Asia.
The research was conducted between mid-December 2012 and late January 2013 by TNS, a leading global research firm. The results of the second wave will be released later this year. The Canadian index was based on an online survey of 2,126 investors by Research House, an Environics Company; the U.S. Index was based on an online survey of 1,127 investors by Matthew Greenwald & Associates. Both North American surveys were conducted between November 30 and December 11, 2012.
About Manulife Financial
Manulife Financial is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Clients look to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife Financial and its subsidiaries were C$532 billion (US$535 billion) as at December 31, 2012.
The Company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States. Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife Financial can be found on the Internet at manulife.com.