Retail investors have kept a generally bullish stance despite recent stumbles in the local stock market, according to a senior executive from one of the city's largest retail fund houses. Hong Kong stocks faced a turbulent time during the last week of February when the Hang Seng Index dropped 8 per cent ahead of profits reports from big names like HSBC, Sun Hung Kai Properties, Cathay Pacific and Hang Seng Bank. 'From the retail investor perspective, they have made decent gains and therefore there has been some profit-taking,' said Terry Pan, head of retail business for JF Asset Management. 'Timing is everything, and with liquidity, one can decide on the right opportunities to enter the markets. But investors should be careful as the volatility in the market is expected to continue. 'A retail investor should look carefully at his available cash and only invest when he has some disposable income. He must not borrow hoping that returns will be greater than the cost of the loan,' Mr Pan said. His comments follow warnings by the Hong Kong Monetary Authority chief executive, Joseph Yam Chi-kwong. that local investors had become bolder in the booming economy, likening it to riding a roller coaster while intoxicated. Mr Pan recommended that investors diversify their cash into a well-balanced portfolio that included all asset classes of stocks, bonds and cash. 'It is important to have an execution plan. Investors should put money to work systematically. This helps clients understand their long-term investment goals, whether they choose to be conservative or aggressive,' he said. Mr Pan suggested that Asian investors must not miss out on long-term investment opportunities in overseas products, as the tendency was to invest exclusively in Asia. Due to the free nature of Hong Kong's economy, most fund management business came from overseas.