In an informal survey of participants at the FSA Income Forums in Hong Kong and Singapore this month, about 80% of respondents said they have a positive or very positive outlook on the global macro economy over the next 12 months.
The anonymous survey collected real-time responses from about 60 fund managers and fund selectors attending the forum in Singapore on 21 February and in Hong Kong on 23 February.
The participants were also optimistic on Asian equities, with approximately 70% expressing bullish or very bullish views.
Approximately 60% of respondents said they were bullish on Asian corporate credit, but the opinions on Asian sovereign debt were almost evenly split between bulls and bears.
Rising inflation
Half of the respondents said they expected two interest rate increases in the US in 2017.
Approximately 75% of the participants said they perceived rising inflation and close to 65% indicated they would increase their allocation to floating-rate notes in the coming 12 months, to protect against it.
Singapore investors appear to be more demanding of yield from their equity income funds than Hong Kong. According to the respondent’s perceptions, close to 50% of investors expect yields of 6% or higher while a similar number of them want yields between 3% and 5%.
In order to earn this income, half of investors will tolerate volatility between 6%-9%.
Hong Kong-based investors are more moderate in their expectations, with only 20% expecting a 6% yield and 60% content with 3%-to- 5%. They are also more tolerant of volatility, with 54% accepting 6%-9% swings and a further 16% saying they are comfortable with fluctuations of 10% or more.
While multi-asset solutions are touted as tools protecting against market volatility, more money managers in Singapore (55%) are keen on increasing their allocation to this type of investments than their counterparts in Hong Kong (32%).
Survey respondent views on the next 12 months
