Many Taiwanese investors and fund managers expect global financial markets to remain volatile this year and many intend to adopt a conservative investment approach, a survey by Fidelity Investment Taiwan showed.
About 75 percent of Taiwanese investors surveyed held the view that the global markets would continue to see wild swings this year, after a tumultuous year last year, mainly because of the European debt crisis, according to the survey released on Jan. 16.
The sentiment has checked risk appetite, with 50 percent of investors indicating that they would favor a conservative strategy when allocating assets this year, according to the survey.
Consequently, only 20 percent of investors had plans to increase holdings in equities funds because they are more vulnerable to negative news flows, the survey said.
Greece and Italy are due to repay huge amounts of government debt between next month and April, and reports of potential defaults or high yields are likely to jolt global bourses, as they did last year, analysts have said.
More than 40 percent of investors planned to buy more fixed-income products, with 46 percent interested in high-yield bonds and 34 percent eying emerging market bonds, the survey indicated.
Fidelity fixed-income specialist Andrew Wells said investors may put their money in investment-class corporate bonds from advanced economies as they are better defense against market volatility.
Aggressive investors may consider high-yield bonds issued by companies with strong credit ratings, as their values tend to be underestimated in times of dislocated corrections, Wells said.
Almost 80 percent of investors said they preferred to channel money to fund products targeting emerging Asian markets this year as they promise stronger growth potential, the survey said.
Citing Citigroup, Fidelity equities specialist Dominic Rossi said emerging Asian markets may see their GDP growth outperform that of mature economies, despite an expected slowdown from last year.
“Asia will supply the growth momentum for the world this year thanks to its high national savings, resilient consumer spending and increasing intra-regional trade,” Rossi said.
That, coupled with low valuations, may help Asian shares stage a comeback this year, Rossi said.
About 70 percent of fund managers advised investing in Southeast Asian countries where domestic demand is expanding fast, making them less dependent on exports to advanced economies, the survey said.
Fidelity Taiwan put its support behind Thailand and Indonesia, saying the two emerging markets put up a strong economic showing last year and were less reliant on China, when compared with Taiwan, Singapore or South Korea.
“It is private consumption that is driving growth in Indonesia and Thailand, as evidenced by exports to advanced nations accounting for 7.9 percent and 18.7 percent of their GDP last year respectively,” the company said.
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