‘Malaysians are increasingly sophisticated in investing’

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There is also a growing number of Malaysians recognising investment opportunities that are available at home and abroad. — Bernama photo

KUCHING: Majority of Malaysians already have exposures to investments other than bank deposits, reflecting the growing sophistication of the market here, reveals Franklin Templeton Investments (Franklin Templeton) yesterday.

Franklin Templeton noted that close to 70 per cent of them have their money in unit trust funds, which is second on the top of the list after bank deposit.

According to the annual Franklin Templeton Global Investor Sentiment Survey (GISS) Malaysia report released yesterday, there is also a growing number of Malaysians recognising investment opportunities that are available at home and abroad.

The survey polled over 11,000 investors in 22 countries across Asia Pacific, the Americas, Europe and Africa on their current attitude towards investing and their expectations for 2014 and the decade ahead.

More than half of the respondents believe Asia will deliver the best equity and fixed income returns in 2014 and the next 10 years. In terms of equity, 37 per cent of them expect Asia (ex-Malaysia) and 22 per cent think Malaysia will deliver the best equity return this year.

Meanwhile 30 per cent and 21 per cent expect Asia and Malaysia, respectively, to deliver the best fixed income return this year.

Referring to the data, Sandeep Singh, Franklin Templeton’s country head for Malaysia said, “It is interesting to see this shift as it shows that Malaysians are open to the idea of investing further abroad, in addition to their home country and Asia, the latter two markets that they are traditionally comfortable with.

“This is shown in the findings where 14 per cent of them believe the US market will generate the best equity return in 2014 beyond Asia and the home country.

“This is supported by another finding in our survey that 45 per cent of Malaysians plan to invest in funds based in foreign currency and 52 per cent of them ranked US Dollar as their top foreign currency choice.

“This is a healthy trend, as it reflects the local investor’s growing sophistication and interest in diversifying one’s investment portfolio and managing single-country and currency risks.”

Sandeep added that he believes the vote of confidence for Asia and Malaysia was also due to proximity and familiarity with the markets.

“We believe the positive expectation is also attributed to the fact that several Asian economies display solid economic fundamentals and long-term growth prospects. In the case of investing in the US market, the respondents’ sentiment could be driven by the improving US economy.

“We believe the US is in the middle of transitioning from a recovery economy to a self-sustaining growth cycle due to improved consumer sentiment and spending, rising corporate profit margins and strong balance sheets,” he explained.

In line with the Asian counterparts, an overwhelming 84 per cent of Malaysians are optimistic about reaching their financial goals, with the average rate of optimism by the Asia Pacific respondents stood at 80 per cent.

When it comes to confidence of investment returns by asset class, Malaysian investors have similar view as the rest of the Asians as well in terms of their top two choices, which are stocks and real estate.

Specific to the Malaysian respondents, 15 per cent of them expect stocks to be the best performer this year and 38 per cent ranked real estate. This is consistent with respondents in China, India and Australia who all ranked stocks after real estate to be the best performer in 2014.

“There was a rise in confidence in stocks as an asset class compared to last year’s GISS survey. Nearly half or 46 per cent of the local investors believe stocks will be the top performer this year versus 39 per cent when same question was asked in 2013.

“This shift could be due to the positive global economic outlook that is on a recovery path primarily driven by the US. Many believe this recovery will eventually have a spillover effect to the exporting nations in Asia as well as Malaysia.” Sandeep opined. Based on the GISS survey, close to half or 45 per cent of Malaysians, own Shariah fund(s). That comes as no surprise to us as the acceptance for Shariah funds among the investor here is high.

Malaysia is currently home to the highest number of Islamic funds globally and the country is among two largest Islamic fund markets in the world.

When asked about the top reasons they invest in Shariah funds, Franklin Templeton noted that 46 per cent of Malaysians do so to diversify their portfolio, 43 per cent invest because it harmonises with their religious belief system, and 42 per cent believe Shariah funds could offer potentially higher returns that its conventional peers.

“As a global investment firm, Franklin Templeton’s presence in Malaysia is timely as we can offer our global investment expertise to the growing sophistication of Malaysian investors.

“The establishment of our Malaysian office as the global strategic Shariah hub for Franklin Templeton allows us to be part of the exciting growth of the Islamic finance industry here,” Sandeep concluded.