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Categories
| Retail investors warming up to parting with cash again |
| Business & Market 2009 | |||
| Written by Fong Min Hun | |||
| Monday, 11 May 2009 10:40 | |||
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Retailers have been coming back to the market in strength, as evinced by the volume of trading on Bursa Malaysia last week. A similar development is occurring in the unit trust market as well. However, fund investors’ confidence level has yet to fully recover, although they are back to the market. OSK-UOB Unit Trust Management Bhd executive director and chief executive officer Ho Seng Yee told The Edge Financial Daily that retail investors were just starting to look at more aggressive equity-based funds, although their numbers were still fewer than last year. “Risk appetite is changing gradually. There are fewer investors this year compared to last year, but those who are keen are looking for good opportunities, and the response to more aggressive funds has become better,” he said. “(Risk appetite) hasn’t fully recovered, and we have to put up a better case to convince them to come back.” As far as his strategy was concerned, recovery was still the underlying theme although Ho said the developed markets were still too dicey presently. Asian equities, particularly those in the finance sector, are still resilient with no systemic issues, and hence are poised to recover stronger than the rest of the globe. In fact, a new fund launched by OSK-UOB last week, the One Advantage Fund, takes a bet on the recovery of the finance sector in Singapore. “Yes, we bet on the recovery of the Singapore economy, particularly the banking sector,” Ho said. “Singapore has been very resilient up to now, particularly UOB shares. UOB has been very well managed throughout the years... and produced very good results for 1Q09. “These are the positive things we are talking about. When the global economy is more stabilised — in six to nine months’ time — Asian economies will outperform the global side.” For CIMB-Principal Asset Management, its chief executive officer Campbell Tupling said it had yet to see any significant movement on the part of retail fund investors. From a strategic point of view, however, the fund house has started developing new products with the underlying theme of recovery, such as its recently launched CIMB-Principal China Recovery Structured Fund. Like OSK-UOB, CIMB Principal shares the view that Asia will lead the way in the global recovery, placing its bets on the Chinese economy to pave the way. Tupling said sales of the fund, which closes on June 3, had been very positive. The combination of capital protection and the potential of enhanced returns had been the selling points for the fund, he said. “Initial sales have been very strong. People are presently looking at very low fixed-deposit rates, which are not terribly attractive,” he said. Meanwhile, institutional investors have started entertaining the possibility of moving into equity funds, a development that suggests there are signs of a return in risk appetite. “I wouldn’t say there has been a mass change but the sentiment and the analysis is certainly there, which two months ago wasn’t there. Two months ago, they didn’t want to talk about it, but now they are far more willing to look at the analysis and say, ‘Let’s take a look at this,’” Tupling told The Edge Financial Daily. However, he cautioned against reading this development as a sign that the market was on its road to recovery. HwangDBS Investment Management Bhd head of equities Gan Eng Peng reported that his company had reduced the launch of new retail funds over the last 12 months. Nonetheless, HwangDBS has launched three products, all of which are premised on the prospects of recovery, two on the global financial market and one on the US economy. The strategy employed in its new launches differs from OSK-UOB and CIMB-Principal in that they look beyond Asian borders to bet on a sectoral recovery and to the US, the ground zero of the financial crisis. “In both cases, the question of recovery is not so much if it will recover but when,” Gan said in an email reply to queries by The Edge Financial Daily. “The concepts of most funds, depending on type, are always premised on a specific growth story. In the case of the three funds, they are premised on the eventual recovery of the beleaguered global financial market and the US economy.” He added that the take-up at the launch of the funds was not as ideal as it could have been as “it (the risk) was difficult for investors to stomach” while uncertainties dominated the economic landscape. However, this has changed recently. “In terms of fund take-up, we have seen a gradual improvement in the investments coming through our various channels in the past few weeks, signalling that investors are starting to warm up to the idea of parting with their cash again,” Gan said. This article appeared in The Edge Financial Daily, May 11, 2009.
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