Investor Sentiment Survey 2019
The investment landscape in Singapore is going through a phase of fundamental change fueled by the changing needs of the market. Notably, most people want to gain financial independence in time for their retirement. Further, it is clear that millennials are filling up the ranks of investors across the country and that is among the factors fueling the changes.
Investors are mostly neutral about the market
According to a survey of the investor sentiment across the country, it emerged that a majority of Singaporeans want to invest in income generating instruments. Specifically, they would want to have a stake in the stocks of companies that are doing well. Also, there are those interested in fixed income instruments like government bonds and securities.
Interestingly, the varying need for investment vehicles is quite largely under the influence of both domestic and international headwinds that threaten growth. However, it is clear that most of the investors are unsure about the next direction of the global economy. As evidence, more than 60% of the investors surveyed said that they are neutral regarding the condition of the market in 2019. Of the respondents, the bullish investors are a tad more than the bearish ones.
The situation is not any different from the local property market. Notably, a majority of the investors do not have a definite opinion on the state of the Singapore property market. This is to say that a good number said they were neutral in terms of confidence in the market. Interestingly, this is merely a confession that the market could go either way.
ILPs are gaining currency
What is more eye-catching from the survey is that there is an emerging trend of investors going for new investment plans to suit their needs better. This is the Asset Protection, Insurance & Legacy Planning where they tie their investments with insurance plans. Notably, this group of investors prefer to have their money in assets such as Cash, Equity (Stocks) and Property. Another interesting statistic about this group of investors is that they range from moderately conservative to conservative in terms of their investment style.
Notably, a popular type of this kind of investment vehicle is the investment-linked policy (ILP) offered by insurance firms. Interestingly, this is one kind of investment that was previously unfavorable to many investors. On the contrary, there is increasing evidence that investors are getting comfortable with the investment option.
According to Bevan Cheong, Chief Transformation Officer of Tokio Marine Life Singapore (TMLS), the emerging preference for ILPs is firming up. In a telephone interview, Cheong said that the mass affluent and millennial section of investors in Singapore are driving up the demand for ILPs. Interestingly, this section of the population is increasing at a favorable pace. As such, it is clear that demand for the ILPs is going to go up even further in the coming days.
Mass affluent and millennials behind the fresh demand for ILPs
In the interview, Cheong said the mass affluent and the millennials are driven by liquidity and flexibility. Notably, this section of the population will “always think about financial planning in terms of life stages, what’s going to happen next in their lives, whether its career, whether its marriage, buying a house, buying a second house, kids coming along.”
They want a product that meets some of these needs, but at the same time, they struggle to pinpoint exactly when these milestones are going to happen. Are they going to get married in the next two years? Are they going to having children in the next five years? All of that seems very uncertain. At some point, they know one or more of these things are going to happen, but it’s quite difficult to narrow down the “when,” he added.
Even with such elaborate plans underway, the mass affluent and the millennials realize that there are other things to take care of. Since most of them are now taking care of themselves, most of these things they want cannot just happen. As such, they need elaborate strategies to ensure that everything falls into place as it may be necessary.
TMLS introduces the TM Atlas offering
In light of this, Tokio Marine Life Singapore came up with an ILP plan that caters to these needs. Dubbed TM Atlas, the plan comes in two versions where each is tailored to look after a select section of investors according to their investment preference and risk appetite. In a statement, TMLS said that the TM Atlas offering would help the investors create wealth while at the same time accessing the liquidity and flexibility they so desire.
Notably, investors will have the latitude to make withdrawals even before the policy matures. This way, they will be able to facilitate their important milestones while remaining confident of a secured future. Further, the TM Atlas offering comprises of two regimes, the TM Atlas Classic and the TM Atlas Wealth. Each version targets a different section of the mass affluent and millennials.
In the statement, TMLS said, “TM Atlas accelerates customers’ wealth through attractive yearly bonus units, helping them to enjoy multiple degrees of liquidity such as partial withdrawals without penalty to provide for current needs or important milestones like purchasing their first property. Additionally, there is an option for premium holidays should customers need to take a break from premium payments.”
Increasing risks to global economic growth a factor in decreased investor risk appetite
This is evidence that truly, there is a growing market for the new investment vehicles. Further, this is a testament to the tendency of the market to go for less risky assets given the increasing risks to global growth. Further, the low-risk appetite could be down to the fact that many investors would like to put their money in the Chinese market after Singapore. Considering the slowing economy in China as well as the ongoing trade war between China and the U.S., it is becoming imperative that investors take on a cautious view of the market.
In conclusion, it is apparent that investors in Singapore would rather have their money in the local market. Further, it is clear that the investors are neutral in general in terms of market sentiment. By and large, most of them would like to have their money in instruments that generate income, preferably stocks and property.