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Fluctuations in the global stock and commodities markets at the beginning of this year fuelled economic uncertainty, encouraging investors to take an even closer look at where and how they are investing their money. To understand more about public attitudes towards different asset classes, the hottest property markets this year and key barriers to investment, we commissioned YouGov to poll 6,000 adults across five global markets. The results — which reveal trends in the UK, South Africa, the UAE, Singapore and Hong Kong — make for very interesting reading.
In the five major global markets polled, Hong Kong has the highest proportion of investors at 78 per cent, while the UK was almost the inverse, with 68 per cent having any money invested in assets. The UAE followed closely behind Hong Kong with 74 per cent, followed by Singapore at 68 per cent and South Africa at 55 per cent.
Only three in ten Britons are investing their money — a far lower proportion than those in Hong Kong and the UAE. “There are a number of reasons why UK citizens sometimes have a more passive attitude to investing,” says David Bellingham, Director and Head of UK and Europe at IP Global. “Many choose instead to keep their cash in low-interest savings accounts. A lack of knowledge and misinformation around how difficult it is to invest is another key barrier.”
While 20 per cent of people in the UK invest in stocks, shares or bonds, this asset class has yielded returns of just 4.1 per cent per year since 2000, compared with 5.8 per cent returns from UK property. Recent volatility across global stock markets and falling profits — and dividends — also means returns are far from stable. Other savings options such as one-year cash ISAs also offer little respite, with accounts paying an average 0.68 per cent compared with 0.84 per cent a year ago. “The results of the survey in the UK are representative of a number of missed opportunities,” says David.
The same rings true for other markets too. In Hong Kong the survey found most people investing their money in the stock market. A city founded on investment and finance, the culture in the Asian enclave is a speculative one with the ease of opening brokerage accounts contributing to the 67 per cent invested in stocks, shares and bonds and 25 per cent in foreign exchange products.
With demand for property from overseas investors high, in particular from mainland China, many people in Hong Kong have been pushed out of the local property market. Only 12 per cent have invested in property at home, and just 7 per cent in property abroad, finding the financial markets a more accessible place to put their money. Hong Kong is also behind the curve if compared globally: in the UAE 13 per cent invest in overseas property, while in Singapore, Hong Kong’s main regional rival, 8 per cent do.
Jonathan Gordon, Director at IP Global in Hong Kong, says: “Although many Hong Kong citizens are experienced investors, there is still a lot of room for overseas property to expand its popularity as an asset class, especially as we enter a period of volatility across global markets.
Property was most popular as an asset class in the UAE, with 42 per cent of people invested in the local market, and 13 per cent invested in property overseas — also the highest proportion in the markets polled. Stocks, shares and bonds are not excluded though, with 30 per cent of people in the UAE holding these assets. Similar to Hong Kong, in Singapore the majority holding investment assets do so in stocks, shares or bonds at 49 per cent. Property comes in second at 26 per cent, significantly higher than Hong Kong where it is relatively less affordable.
Of the markets surveyed, Singapore has the second-highest number of people investing in property abroad, which Alex Bellingham, Director of IP Global, attributes to better buying power due to the currency play. “Real estate has traditionally been the favoured investment asset choice among Singaporeans. The rising value of the Singapore dollar — which has strengthened against the Australian dollar, British pound and the Japanese yen over the past 12 months — has opened up new opportunities for Singaporean investors in these countries,” says Alex.
The value of currency is significant in South Africa too, where a weak Rand in recent years has contributed to the fact that only 3 per cent of people are invested in property abroad, with 28 per cent invested in property in their home country, and 25 per cent in stocks, shares or bonds.
“South Africans, over all other markets taking part in the survey, are most concerned about costs and currency fluctuations due to South Africa’s volatile economic climate,” says George Radford, Director and Head of Africa at IP Global. “However, it’s in times of uncertainty that we notice more and more people investing in stable asset classes such as property. Many of our clients are liquidating their share and local property portfolios in favour of investing in property offshore—ensuring they have fixed assets, in addition to the fact that they are not solely Rand-asset based.”
Source: Richard Bradstock, Special to Property Weekly
Director and Head of Middle East at IP Global
Al Nisr Publishing accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided.