ASIA NEWS NETWORK
WE KNOW ASIA BETTER
Survey finds Taiwan trailing in investor confidence
Publication Date : 04-07-2013
Taiwan trails behind other Asian countries in investor confidence, according to a survey conducted by Manulife Financial.
The financial service firm released its Investor Sentiment Index yesterday, and while the confidence of investors in Taiwan grew slightly in the second quarter, the nation's sentiment index stood at 1, which is much lower than the average of Asian countries, which stood at 21.
Among the seven markets surveyed in Asia, Indonesia ranked the most optimistic with a score of 60, followed by Malaysia with an Index of 52.
The survey found that investors in developed Asian markets are less certain that now is a good time to invest, with Hong Kong and Taiwan the most pessimistic.
Investors across most of Asia reported weak sentiment about investing, with Hong Kong (-4) and Taiwan (-8) the most pessimistic.
People prefer cash
The main cause for Taiwan's low confidence is “fear of making wrong investment decisions”, followed by “high market volatility” according to the survey. As a result, over 30 per cent of the investors surveyed prefer holding cash over making investments.
Further analysis of asset allocation indicates that on average investors in Taiwan hold 20 months' salary on hand. Chinese investors, on the other hand, hold 36 months' salary, the most in Asia.
Despite such a high proportion of cash holdings, over 30 per cent of those surveyed still believe it is insufficient. In regard to cash allocation, less than 20 per cent is reserved for everyday expenses and unexpected events. The rest is reserved for mid- and long-term expenses. Over 40 per cent of those surveyed choose stocks for investment.
Since less than 20 per cent of the cash is allocated for everyday expenses, Manulife Financial said that most people in Taiwan have over 80 per cent of idle funds for investment.
According to the survey, most investors in Taiwan would like to achieve their financial goals through conservative means. Fifty-one per cent choose to lower their everyday expenses, 41 per cent choose certificates of deposit, and 38 per cent choose investment insurance and other deposits products. Only 12 per cent of investors will follow professional investment consultants' advice.
Nearly two-fifths of Asian investors see “saving for retirement” as their top financial priority. Their retirement savings will be used to pay for health care expenses, maintain their pre-retirement standard of living and be financially independent. Malaysians' main financial priority, however, is to “save for a rainy day”.