Cash and deposits account for more than a quarter of the portfolio of wealthy Singaporeans compared to 19% in Hong Kong, Han said, citing key findings from a Cerulli study published last month.
The study, Asian Wealth Management 2016, on the investment habits of the region’s wealthy, surveyed around 1,800 investors from China, India, Korea, Taiwan, Hong Kong and Singapore.
Because they hold large cash deposits, Singaporeans are slower to invest in mutual funds or make their own investments through direct ownership of property and stocks, Han said.
Aside from cash, another difference between Hong Kong and Singaporean HNWIs is their willingness to invest in alternatives in the near future.
Investors in both Singapore and Hong Kong are the least likely to invest in alternatives
“Investors in both Singapore and Hong Kong are the least likely to invest in alternatives, but over 22% of the investors surveyed in Singapore will invest in them as compared to a mere 8% in Hong Kong,” Han said.
Investors in both markets also highlighted that they are reluctant to invest in the asset class as they do not understand it well, he added.
But both Hong Kong and Singapore HNWIs still generally prefer investing in real estate, with a large part of their assets held in investment properties, according to Han.
When asked about wealthy individuals preferred channels of investing, Han said that investors from Hong Kong and Singapore still predominantly prefer face-to-face contact instead of digital channels.
Overall, Asian investors across the region have become more conservative in their investment approaches, especially after the market volatility seen in the second half of 2015 and early 2016, according to the survey.
The dilemma, however, is that they expect high returns.
A majority of HNWs in the region, with the exception of Korea and Singapore, are looking for returns that are 5% higher than their respective country’s one-year deposit rates, according to the survey. In Singapore and Korea, a majority of investors’ desired returns are 3% higher than the one-year savings deposit rate in their country.
In China, half of the 300 HNWIs surveyed in a separate Cerulli report expect an annual return equivalent of around 6.5%-6.9%, while nearly 30% are eyeing annual returns of more than 10%, our sister publication Fund Selector Asia reported earlier.