White Collar
by

Chinese investors among most optimistic about returns over the next five years, survey finds

Returns of 12.6pc expected on mainland and 9pc in Hong Kong

PUBLISHED : Monday, 13 November, 2017, 6:19pm
UPDATED : Monday, 13 November, 2017, 10:40pm

Mainland Chinese investors were among the top 10 most optimistic when it came to investment returns over the next five years, according to a survey by Schroders of more than 20,000 investors worldwide.

On average, mainland investors believed they could get a return of 12.6 per cent, higher than the global average of 10.2 per cent. But they are likely to be disappointed as analysts have forecast much lower returns over this period.

Mainland investors ranked ninth among the most optimistic of investors – Indonesian investors were the most optimistic and expected returns of 17.1 per cent, followed by Thailand and Brazil with 15.2 per cent, and the UAE at 14.1 per cent.

Investors in the US believed they could get a 11.2 per cent return over the next five years, while those in Taiwan, Singapore and Hong Kong expected returns of 10.6 per cent, 9.1 per cent and 9 per cent, respectively.

All of these investors will be disappointed going by investment markets’ past record.

According to historical data, the MSCI World index, which measures the performance of global stock markets, achieved annual returns of 7.2 per cent between 1987 and 2017, with all income reinvested.

European investors were among those who expected the lowest return, which would match this number: Italian investors expected an average return of 7.1 per cent over the next five years; the Swedish, 7.4 per cent; and the Swiss, 7.6 per cent.

But they to stand to be disappointed if Schroders’ own prediction were to come true. The Schroders Economics Group has forecast a 4.2 per cent annual return for world equities over the next seven years, or 2.1 per cent a year after inflation is taken into account.

In terms of age, the younger the investors, the more optimistic they were – 54 per cent of millennials (those of ages between 18 to 25) worldwide believed they could get returns of more than 10 per cent over the next five years. Only 28 per cent of millennials thought they could get a return of between 5 per cent and 9 per cent, more in keeping with reality. The rest believed they could get a return less than 4 per cent.

Among members of Generation X (those of ages between 31 to 50), 43 per cent believed they could get a return of between 10 per cent and 20 per cent over the next five years. Only 34 per cent expected a return of between 5 per cent to 9 per cent, while 23 per cent expected a return below 4 per cent.

The baby boomers (those of ages 51 and above) were more realistic, with only 40 per cent believing they could get a return of between 5 per cent to 9 per cent, which matches the actual returns in the past two decades.

business-article-page