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Retail investors in Singapore cautiously confident for H2: JP Morgan

JP Morgan says it is time for investors to start positioning their portfolios for riskier assets as the global economy continues to strengthen, in light of benign inflation and impending rising rates.

SINGAPORE: Retail investors in Singapore remain cautiously confident for the second half of the year despite concerns over a hike in interest rates and a slowdown in the Chinese economy.

This is according to the latest half-yearly survey on investor sentiment released on Thursday (July 17) by JP Morgan Asset Management. However, it also shows that a smaller number is planning to increase their investments.

The JP Morgan Investor Confidence Index stood unchanged from the last survey six months ago at 121.

However, the proportion of those who are planning to increase their investments has declined from 51 per cent to 46 per cent. Among this group, one third cited a possible rate hike as a reason, compared to only 10 per cent six months ago.

12 per cent cited slower than expected growth in China as a reason, up from just 3 per cent half a year earlier.

The proportion of respondents who are either maintaining or decreasing their investments for the next six months has gone up from 49 per cent to 54 per cent, whereas those who are planning to increase their investments has declined from 51 per cent to 46 per cent.

In terms of investments, the survey shows that investors are not making significant changes across asset classes. The local market remains the most popular category - being the top choice among 3 out of 5 investors.

Real estate equity climbed 11 per cent compared to six months ago.

In light of benign inflation and impending rising rates, JP Morgan says, it is time for investors to start positioning their portfolios for riskier assets as the global economy continues to strengthen.

"Those that can tolerate the risk should start looking at adding equities,” said Brian Tan, Head of Fund Sales at JP Morgan Asset Management, “and given where valuation is at with emerging markets, essentially at the 10 year high discount, relative to developed markets, they should think about strategically adding their positions into equities and into some emerging markets.

“Now, for investors that want income, then in a rising rate environment, they should be also looking at asset classes such as high dividend paying equities and also some potentially multi-asset income funds that offer them diversification and exposure to both fixed income as well as equities."

The survey also showed a decline in the number of investors who expect the Singapore dollar to appreciate against the US dollar, while those who chose to invest in unhedged currency investments doubled from 9 to 18 per cent.

The survey covered more than 500 investors on their confidence and outlook for the next six months as well as their planned portfolio composition and asset allocation.

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