To understand more about public attitudes towards different asset classes, the hottest property markets of 2016 and key barriers to investment, we commissioned YouGov to poll 6,000 adults across five global markets. The results – which reveal trends in the UK, South Africa, United Arab Emirates, Singapore and Hong Kong – make for very interesting reading.
In the first of three blogs to be published over the coming days, we will explore the results of the first question we asked: what (if any) investment assets do you currently have money invested in?
In the five major global markets polled, findings show that Hong Kong has the highest proportion of ‘investors’ at 78%, while the UK was almost the inverse, with 68% of British people not having any money invested in assets. The UAE followed closely behind Hong Kong with 74% of people invested in assets, followed by Singapore at 68% and South Africa at 55%.
INVESTMENT ASSETS HELD
A nation of investors? Hong Kong leads the pack with 78% of the public holding an investment asset of some type
Only three in ten Britons are investing their money – a far lower proportion than those in Hong Kong and the UAE. “There are a number of reasons why British people have a more passive attitude to investing,” according to David Bellingham, Director and Head of UK & Europe at IP Global. “Culturally, financial planning for the future is not something the average person takes ownership of, choosing instead to keep their cash in low-interest savings accounts. A lack of knowledge and misinformation around how difficult it is to invest is another key barrier.”
“When it comes to investing in property for example, a lot of our UK clients are overwhelmed by what they perceive as the complexity involved. This includes tax considerations, transaction costs and managing tenants, when in reality these elements are often very straightforward,” David said.
While 20% of people in the UK invest in stocks, shares or bonds, this asset class has yielded returns of just. Recent volatility across global stock markets and falling profits – and dividends – also means returns are far from stable. Other savings options such as one-year cash , with accounts paying an average 0.68% compared to 0.84% a year ago. “The results of the survey in the UK are representative of a number of missed opportunities,” concluded David.
The same rings true for other markets too. In Hong Kong the survey found most people investing their money in the stock market. A city founded on investment and finance, the culture in the Asian enclave is a speculative one with the ease of opening brokerage accounts contributing to the 67% invested in stocks, shares and bonds and 25% in foreign exchange products.
With demand for property from overseas investors high, in particular from mainland China, many Hong Kong people have been pushed out of the local property market. Only 12% of people have invested in property at home, and just 7% in property abroad, finding the financial markets a more accessible place to put their money. Hong Kong is also behind the curve if compared globally: in the United Arab Emirates 13% invest in overseas property, whilst in Singapore, Hong Kong’s main regional rival, 8% do.
Commenting on these results, Jonathan Gordon, Director at IP Global, said: “Although many Hong Kong citizens are experienced investors, there is still a lot of room for overseas property to expand its popularity as an asset class, especially as we enter a period of volatility across global markets.
“Our daily conversations suggest to us that ongoing market volatility, a desire to diversify beyond Hong Kong real estate and greater comparative value elsewhere will push more people to think about buying property abroad,” said Jonathan.
Property was most popular as an asset class in the UAE, with 42% of people invested in the local market, and 13% invested in property overseas – also the highest proportion in the markets polled. Stocks, shares and bonds are not excluded though, with 30% of people in the UAE holding these assets too.
Similar to Hong Kong, in Singapore the majority holding investment assets do so in stocks, shares or bonds at 49%. Property comes in second at 26%, significantly higher than Hong Kong where it is relatively less affordable.
Of the markets surveyed, Singapore has the second-highest number of people investing in property abroad, which Alex Bellingham, Director, IP Global, attributes to better buying power due to the currency play. “Real estate has traditionally been the favoured investment asset choice among Singaporeans. The rising value of the Singapore Dollar – which has strengthened against the Australian Dollar, British Pound and the Japanese Yen over the past 12 months – has opened up new opportunities for Singaporean investors in these countries,” said Alex.
The value of currency is significant in South Africa too, where a weak Rand in recent years has contributed to the fact that only 3% of people are invested in property abroad, with 28% invested in property in their home country, and 25% in stocks, shares or bonds.
“South Africans, over all other markets taking part in the survey, are most concerned about costs and currency fluctuations due to South Africa’s volatile economic climate,” explained George Radford, Director and Head of Africa at IP Global. “However it’s in times of uncertainty that we notice more and more people investing in stable asset classes such as property. Many of our clients are liquidating their share and local property portfolios in favour of investing in property offshore – ensuring they have fixed assets, in addition to the fact that they are not solely Rand-asset based,” George said.