26-9-2024 (SINGAPORE) A recent report has unveiled a stark contrast in investment approaches between Singaporean investors and their counterparts in Asia and the Middle East, with the city-state’s investors demonstrating a markedly more conservative outlook.
The study, conducted by Swiss financial services provider Avaloq, reveals that a substantial 42% of Singapore-based investors favour a steady, risk-averse strategy. This conservative approach is significantly higher than the regional average, where only 30% of investors in other parts of Asia and the Middle East opt for such caution.
Conversely, the report highlights a mere 24% of Singaporean investors pursuing aggressive investment tactics, compared to a more robust 34% of their regional peers who are willing to embrace higher risks for potentially greater returns.
In terms of asset allocation, Singaporean investors show a clear preference for traditional investment vehicles. Stocks and equities top the list, followed by real estate, bonds, fixed income instruments, and cash equivalents. This conventional approach underscores the city-state’s reputation for financial prudence.
The comprehensive study, based on two surveys conducted in February and March, encompassed 3,012 investors aged 18 and above across Europe, Asia, and the Middle East. The participant pool was predominantly composed of high-net-worth individuals, with over half possessing investable assets ranging from US$250,000 to US$1 million, 40% holding between US$1 million to US$30 million, and 4% commanding assets exceeding US$30 million.
Interestingly, despite Singapore’s reputation as a tech-savvy financial hub, local investors appear less enthusiastic about emerging investment trends. Cryptocurrency and digital assets, for instance, have yet to gain significant traction among Singaporean investors. The report cites a lack of knowledge, perceived volatility, and low trust in crypto exchanges as primary deterrents.
Similarly, while Environmental, Social, and Governance (ESG) investments are gaining global momentum, only 31% of Singaporean investors have allocated funds to such opportunities. Many still harbour doubts about the long-term sustainability of ESG-focused investments.
The report also sheds light on potential dissatisfaction among Singaporean investors regarding the digital services provided by their financial institutions. This sentiment is particularly noteworthy given Singapore’s status as a digital-first market, suggesting that local investors may hold higher expectations for technological integration in financial services.
Indeed, nearly half of the surveyed Singaporean investors admitted to having considered switching their wealth management advisers at some point. Reasons for this consideration included poor portfolio performance, lack of transparency and communication, and reluctance to adopt modern technologies.
On the wealth management front, the study reveals that 80% of Singapore-based professionals acknowledge the future criticality of artificial intelligence (AI) in their work. However, they remain sceptical about local investors’ willingness to trust AI for investment responsibilities and financial planning.
Notably, wealth management professionals in Singapore appear to face greater technological challenges than their global peers. A significant 43% report relying on 10 or more specialist technology systems or applications for their daily work, compared to the global average of 25%. Moreover, 70% of respondents believe their current systems are outdated, while 62% struggle to access necessary information efficiently.
