Investors learn from downfall
THE recent collapse in Asian equity markets has had a positive impact on Hong Kong investors' attitudes, according to Joseph Lam, vice-president and head of Asia Pacific Global Mutual Funds Group for Chase Manhattan Bank.
'In terms of developing investors' knowledge, it has had a very good effect. People are starting to look outside the region and they are starting to look at how to get a good return without taking high risk.' Chase has recently noticed a growing appetite among Hong Kong investors for global investment. In the final quarter of last year, 70 per cent of Chase Manhattan Vista Funds' sales in Hong Kong were earmarked for investment outside of Asia, with 30 per cent aimed at Asia. This was a complete reversal of earlier investor behaviour, Mr Lam said.
The advantages of diversifying outside of Asia are clear with the benefit of hindsight. Between the beginning of 1994 and the end of 1997, the MSCI World Index rose about 55 per cent in US dollar terms, while the MSCI Far East excluding Japan Index fell by about 50 per cent.
Mr Lam said: 'If you invested in a diversified global portfolio at the beginning of 1994, by the end of 1997, even with those two bad years [1994 and 1997] you still have an annualised return of about 13 per cent with relatively lower volatility. Unless you went into global equities in September 1997, you would have made money whenever you went in.
'We have always asked clients to invest on a global basis, then adjust their allocations according to market conditions. It has always been a good strategy.' According to consumer research by Chase Manhattan, security of the investment ranks with performance among the top criteria used by investors in selecting an investment.
