Malaysian investors look to Japan, Asia Pacific in second half of 2015

KUALA LUMPUR: Malaysian unit trust investors, in their search for yield, are increasingly looking at options outside of Malaysia and are eyeing markets such as Japan and elsewhere in the Asia Pacific.
A survey by Eastspring Investments Bhd showed that the majority of investments continue to stay within Malaysia but some outflow can be expected with home allocation potentially dropping from 70% to 59% in the second half of 2015.
“The survey is to see the trend. The biggest trend that we see here is moving into a lot more safer products. The other biggest trend is that investors would now want to diversify outside of their home country to others. Having said that, Malaysian investment commands 59%, which is still significant in the overall portfolio of investments,” its chief sales and marketing officer Yap Siok Hoon told reporters last Friday.
The Eastspring Unit Trust Investor Behaviour study was conducted from July 16-31 this year.
The study also revealed a disparity between risk and expected returns, with Malaysian investors expecting returns of up to 24% when investing in Malaysian equities but are only willing to lose an average of 12% of their invested capital.
“The survey was done in July so it makes a lot of sense if you interview a Malaysian because, if you look at the Malaysian market, over the past, some of these respondents have experienced making good money in Malaysia; that’s why their expectation on Malaysian yield is quite high,” said Eastspring Investments general manager of investment services Yvonne Tan.
“But this year, the Malaysian market didn’t do well. In the first half, the Malaysian market was one of the worst performing markets in the region and the ringgit weakened quite substantially.
“So when we did the survey in July, you’ll find that people will want to have more exposure outside Malaysia because some of the funds globally or in Asia, in terms of currency gain, it is quite substantial.
“From that angle, diversification makes a lot of sense for investors,” she added.
In line with the survey results, Yap said, the company is offering products that will enable investors to invest outside of Malaysia, including in Japan and other Asian bond and high yield segments where Malaysians have very little exposure to.
“Japan investment is still relatively very new. The oldest Japan equity fund in Malaysia is only one year old. In Malaysia, we probably only have three Japan funds. That is an area where we continue to educate Malaysian investors about, of this opportunity for long-term investment benefit.
“The other segment we want to continue educating them about is on Asian fixed income as well, Asian high yield, and so forth,” she added.
Despite the shift in terms of intention to invest outside Malaysia, Yap said, there are still inflows into the Malaysian equities.
“We believe investors, if they were to take a three- to five-year horizon, in terms of positioning their portfolio into Malaysia, equity is still key.”