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BarCap survey: Asian investors love equities and are drawn to risk

Monday, April 11, 2011

Peter Hu
Opalesque Industry Update – The annual Asia wealth management survey by Barclays Capital has shown that majority of Asian investors favor equities as an inflation hedge and at the same time show a strong preference towards ETFs and liquidity. The survey also pointed towards growing sentiments to the return of risk appetite in the region.

Peter Hu, Asia-Pacific head of investment advisory at Barclays Capital in Singapore commented on the report, “I’m not surprised that people choose stocks in inflationary environments rather than putting everything into gold. It’s an obvious inflation hedge.”

According to a report by the Financial Times, a total of 129 advisers took part in the study from 104 wealth managers in nine Asian countries with an aggregate assets under management (AuM) of more than $5,000bn.

An estimated 74% of those polled revealed that their clients were using equities as an inflation hedge, while more than 50% added that investors are looking into gold for the same purpose.

Non-Japanese Asian equities were the preferred portfolio of a majority of Asian investors, followed by U.S. equities. Allocations to non-Japanese equities are 16%, while U.S. equities allocations are placed at 10%.

A separate report by Asian Investors commented that the result of the survey also highlighted the emerging views amongst wealth managers on asset allocations and their perception towards the different markets.

Interestingly, less than three percent of the respondents claimed that their clients make full or significant use of inflation-linked bonds as a hedge against inflation.

“One of the more notable shifts in client sentiment following the financial crisis was the increase in demand for more vanilla or transparent products. However, our survey is clearly pointing towards a shift in that trend over the past year. We now see risk appetite increasing as they feel more comfortable with the recovery of global and regional economies,” Hu was quoted as saying.

Among other things, the survey also provided a clearer picture on structured deposits, funds and ETFs which are the most commonly used wrappers and are expected to rise in usage over the next year, said

Among electronically traded assets, foreign exchange derivatives are the most commonly used by Asian investors. However, there is a growing trend to use a more simple and transparent products, the survey added.
- Precy Dumlao PD

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