Wise heads reap benefits of doing their research

PUBLISHED : Monday, 07 May, 2012, 12:00am
UPDATED : Monday, 07 May, 2012, 12:00am


Retail investors often rush to buy stocks or invest in financial instruments without proper research. Strategists say it is imperative that retail investors know about the products or stocks they are buying. Research by a regional bank proves this point.

DBS Bank (Hong Kong), in its latest Investors' Behaviour and Sentiment Study, which measures investment habits and behaviour, reveals that effective preparation before engaging in investment activities can optimise returns.

The research was conducted with Nielsen on a monthly basis since June 2009. About 30,000 respondents were involved throughout the past 33 months.

About 30 per cent of respondents said they invested last year. This ranged from 27 per cent to 34 per cent over the period, indicating a stronghold of a core group of investors during a period that saw the United States credit rating downgrade by Standard and Poor's and the European debt crisis.

Stocks were the top preference for investment products, selected by 77 per cent of Hong Kong investors from January last year to February this year.

They were trailed by investment funds on 33 per cent, with foreign currencies closely following on 32 per cent. The yuan, which secured the interest of 26 per cent of investors, was a notable mention. Based on data collected in January and February this year, 41 per cent of investors reported a gain from their investment activities during the previous three months.

The average profit recorded was about 10.5 per cent of their invested capital. In contrast, 46 per cent of respondents reported a loss, with an average drop of 15 per cent in capital.

The most cited reasons by the latter group for their losses concerned the lack of investment knowledge and not being sensitive to market fluctuations, a fact which had been previously cited by strategists and investment advisers.

The group members claimed they failed to keep track of their investments regularly, and had made the wrong calls about market changes. These showed the importance of gathering information before engaging in any investment.

'There are roughly one-quarter of investors spending 10 minutes a day or even less on investment research,' says Janet Chong, senior vice-president, consumer investment and insurance products, consumer banking, DBS Bank (Hong Kong).

'Some investors often neglect the importance of an information search as part of their investment decision-making process, subsequently failing to achieve their investment objectives.'

Among the investors who gained from their investments, those who spent more than one hour a day on research recorded 67 per cent more profit than those who spent less than 10 minutes a day. The outcome showed that time devoted to investment research helps optimise returns. With a wide range of information available, the ability to acquire comprehensive investment information is a prime factor in successful wealth management.

DBS has launched a comprehensive Investment Platform which pools specialists with Asian intelligence, experience and vision, helping investors to grasp opportunities and maximise returns.

Through online videos, market commentaries and financial information reports, the specialists share their investment insights on Hong Kong and the Asia-Pacific to give customers an edge in tapping wealth opportunities.

'To cater for customers' sophisticated wealth management needs, DBS provides information and tools for customers to perform information search, analysis and investment trading in one single platform,' Chong adds.

'DBS launched invest-wise fund services jointly with Morningstar, an authority on fund research, to provide independent fund market analysis. Online analytical tools offer fund information, comparisons and portfolio analysis. This online platform allows customers to place investment fund trading orders any time, anywhere.'