Asians want to bet more on property

[awaw]

Asians want to bet more on property

Barclays Wealth survey says more individuals in Asian and emerging markets would like to up property allocation, reports GENEVIEVE CUA


MASS affluent and high net worth individuals in Singapore would like to invest more into property, a survey by Barclays Wealth has found. But those surveyed also indicate that in a time of increased economic volatility they would like to raise their allocations into cash, and take on more risk.

That may not be as contradictory as it sounds, says Didier von Daeniken, Barclays Wealth Asia-Pacific chief executive. 'There might not necessarily be a long term change in people's willingness to bear risk, although there is clearly a temporary reduction in risk-taking due to less optimistic investment prospects.'

Barclays has just published the latest in its series of 'Wealth Insights' publications, this time looking into behavioural finance aspects of clients' attitudes. The survey has found that on property, more individuals in the Asian and emerging markets say they would like to invest more, compared to those in the UK, Germany and Spain.

The survey, done together with the Economic Intelligence, was conducted between March and April this year. Sentiment here on property, however, has dampened markedly this year, alongside a bleaker economic outlook. Roughly 2,300 investors were polled, with investable assets of between £pounds;500,000 and over £pounds;30 million.

On property, 57 per cent of those in China indicated they want to raise allocations, compared to 48 per cent of clients in India and 45 per cent of Singaporeans.

Greg Davies, Barclays Wealth head of behavioural finance, says a drop in property prices may not dampen desire by very much. 'Our economic research people tend to feel that perhaps the lower availability and depth of (alternatives) is one reason for the property focus in Asia.'

On volatility, he says: 'Data seems to suggest that Asian investors treat volatility more opportunistically, rather than cautiously.' This may be partly because investors see the current downturn as a 'dip' in an upward trend for Asia and the emerging markets.
'In these markets up to last October, the recent trend has been very strongly positive, and individuals are very strongly influenced by trends. In mature markets, data extends much further back and they see this as a cyclical dowturn rather than a dip in an uptrend.'

Another factor that may favour risk taking is that many in Asia are entrepreneurial, first or second generation wealth owners. 'Even with the recent and fairly strong drop in Asian markets, many people are so much wealthier than they have been in recent memory...This inclines people towards a more opportunistic way of thinking.'

Age appears to play a part in the desire to allocate to cash. Younger respondents under 50 are more likely to move to cash in a market upheaval, than those over 50. Younger respondents were also more likely to trade more frequently. This is likely to reflect the fact that older investors have more experience of previous cycles and may be less nervous in the face of volatility.

In terms of monitoring their portfolios, 71 per cent of the individuals monitor their overall portfolio at least monthly, and 41 per cent monitor either weekly or daily. In the study, Mr Davies says that the frequency of monitoring a portfolio is linked to an investor's level of composure. Those with lower levels of composure are likely to watch their investments more closely.

Those who monitor more tend to focus on relative benchmarks rather than absolute ones. Individuals' perception of their own skills, and the extent to which they think their skills contribute to success instead of luck, also play a part. Wealthy investors who attribute success to their skills are more likely to monitor and take risks.

The study also looked into clients' sources of advice. It found that those with assets greater than £pounds;30 million are more likely to seek advice from a business adviser. Those with between £pounds;500,000 and £pounds;1 million in assets, however, look to the media. This suggests that as individuals gain wealth, they are more likely to rely on professional advice.

In terms of gender differences, women tend to be more likely to turn to family and friends, and men seem more likely to turn to the media. This is partly borne out in the Singapore portion of the survey, which found that 47 per cent of women cite family and friends as information sources. Among men, 38 per cent cite their peer group.

In addition, more than 70 per cent of men in Singapore believe that increasing the value of their portfolios is the most important outcome in wealth creation and protection. The majority of women (65 per cent), on the other hand, see regular income as the most desirable outcome.

Globally men displayed higher levels of confidence than women on a broad range of issues, including domestic equities, tax, bonds and private equities. While the Barclays survey did not look into performance, academic studies have found that women's portfolios tend to do better, as they are less likely to trade.

Mr Davies says Barclays is in the process of fine-tuning a risk profiler for Asian clients. 'We believe that most assessments that banks use is not good, not behaviourally or statistically robust, and ask the wrong questions. We'd like to make a distinction between long-run and short-run financial objectives. We need to understand clients' composure level, the degree to which they are comfortable with taking risk in the financial market context.'
     

[Kubes.SG]

So Asian's want to bet more on property.  Sort of fits with the research recently released...

Young punters more likely to get caught in market bubbles

Floyd Norris | July 5, 2008

It has long been widely believed - at least among some experienced investors - that it is the inexperienced ones who are most likely to get swept into the euphoria of a bubble and to buy when prices are the most absurd.

Charles MacKay, in his book, Extraordinary Popular Delusions and the Madness of Crowds, said that "even chimney-sweeps and old clotheswomen dabbled in tulips" as what might have been history's most famous bubble grew in the Netherlands early in the 17th century.

Joseph Kennedy, the speculator who became the first chairman of the Securities and Exchange Commission, famously claimed that he sold before the 1929 crash after a shoeshine boy tried to give him share tips.

In 1999, The Metropolitan Diary column of The New York Times reported on the surprising sight of a group of construction workers ignoring, rather than whistling at, a beautiful woman as she walked past. They were discussing their internet shares.

Such stories are anecdotes, which prove little. But now two finance professors have looked at the performance of mutual fund managers during the technology share bubble and found that it was indeed the younger and less experienced managers - generally those under 35 or 40 years old - who leaped onto the internet bandwagon with the most enthusiasm, and then suffered the biggest losses.

The authors, Robin Greenwood of Harvard and Stefan Nagel of Stanford, found that in 1997 - before the bubble really got going - younger, and presumably less experienced, mutual fund managers tended to be a little less invested in technology shares than their older colleagues. "But leading up to the peak in March 2000, younger managers strongly increase their holdings of technology stocks relative to their style benchmarks, while older managers do not."

That strategy worked well for the fund groups that employed the young managers. Money poured into the funds that were investing in tech shares. When the bubble burst, their performance worsened, even though young managers were also quicker to sell tech shares after the decline began. But investors did not withdraw nearly as much money from the badly performing funds as they had thrown in when the results looked good.

One reason the study is interesting is that it focuses on experience, rather than other attributes of investors who fell for the bubble. It is reasonable to suspect that neither Kennedy's shoeshine boy nor MacKay's chimney-sweeps were well-educated or particularly intelligent, but few people got jobs as fund managers without university degrees and some indication of intelligence.

"It seems like age and experience do have a role," said Nagel. The effect of a lack of experience, he added, "might even be stronger for people with less formal training in investing". The evident explanation for this, the professors conclude, is that "the trend-chasing behaviour of young managers reflects their attempts to learn and extrapolate from the little data they have experienced in their careers".

Inexperienced youths were far from the only ones who extrapolated from recent data to find theories of a new economy believable. Alan Greenspan was 74 and had been chairman of the Federal Reserve board for 12 years when, on April 5, 2000, he pointed to profit forecasts by Wall Street analysts as a reason to expect the tech boom to continue.

Greenwood said he suspects that a lack of experience played a role in the housing bubble as well. He said he and Nagel may look for evidence that younger people - many of whom would normally be renters - were more likely to buy homes in bubble markets after prices had soared. That thesis would gain support if it could be shown that fewer young people bought in those markets before prices soared and that the expansion of home-buying by the young did not take place in markets where home prices never rose as they did in the most extreme markets, such as Silicon Valley and Boston, where the two professors live.

The professors say their thesis helps to explain why sharemarket bubbles are relatively uncommon. "Once investors have experienced a bubble and subsequent crash, they are less willing to participate the next time through," they write. If that lesson spills over into housing, it could be a long time before we see a housing price expansion of the magnitude that took place in the middle years of this decade.

The New York Times

[boo hoo]

Things are going to get bad... really bad.  The property markets in Autralia, Japan, Europe and US are going down the toilet.... banks are reducing financing in thee countries, and its going to hurt. Especially after the huge run up in prices over the pat few years

Singapore, of course, is different because of the remaking, the hubbing etc

[Bad?]

US July factory orders stronger than expected

WASHINGTON - New orders at US factories jumped by a bigger-than-expected 1.3 per cent in July, helped by a rise in transportation orders, a Commerce Department report showed on Wednesday.

Economists polled by Reuters were expecting factory orders to gain 1 per cent in the month. June's increase was revised up to a 2.1 per cent gain from 1.7 per cent. Factory orders have risen for five months in a row.

Transportation orders jumped 3.2 per cent in July after a 1.8 per cent drop a month earlier. When transportation orders were stripped out, factory orders still rose 1 per cent, reflecting gains in orders for metals, machinery, and non-durable goods.

Durable goods orders rose 1.3 per cent, as expected. June's rise in durables orders was revised up to 1.4 per cent.

[Bad?]

Property buyers defy Hungry Ghost taboo at auction market

August sales of $22.75m beat June's $11.35m, the next highest this year

TYPICALLY a taboo time for property purchases, this year's Hungry Ghost Festival bucked the trend and worked up an appetite among buyers in the auction market.

The festival fell in August, which registered the highest sale value for auctions so far this year. According to Colliers International, 12 properties and sites out of 66 put up for auction were sold, fetching $22.75 million.

This surpassed the next-highest auction sale value of $11.35 million in June this year and the $9.56 million recorded during the Hungry Ghost Festival last year.

It 'confirms that buyers will defy traditional taboos and will commit to a purchase so long as the price and location - among other factors - are right,' said Colliers deputy managing director (agency and business services) and auctioneer Grace Ng.

[Bad?]

"Oil prices extend decline

NEW YORK (CNNMoney.com) -- Oil prices extended their decline Wednesday as the dollar strengthened against major currencies and traders waited for Gustav damage reports.

Crude futures for October delivery were down $1.80 to $107.91 a barrel.

On Tuesday, oil prices fell $5.75 a barrel to settle $109.71, which was the lowest closing price for oil in nearly 5 months, according to the U.S. Energy Information Administration.

Oil prices have fallen sharply from the record high price of $147.27 a barrel, set July 11, as a sagging U.S. economy has cut into energy demand."

The profit margins of businesses (for non-oil related companies) will rise as oil prices drops through the floor.

[leverage]

1. on US figures is not bad at all. but DOW doesn't seem too impressed
2. on auction figures is a meaningless statistic, showing pretty much nothing
3. is bad. oil merely came down from insane levels to stupid levels. The falling global demand is worrisome.

[Not really]

1. on US figures is not bad at all. but DOW doesn't seem too impressed
2. on auction figures is a meaningless statistic, showing pretty much nothing
3. is bad. oil merely came down from insane levels to stupid levels. The falling global demand is worrisome.

1. The Dow is not that low giving all the "world is going to end tomorrow" talk for the last year   
    or so.
2. It's positive that people are coming out to buy..
3. With petrol coming down, I think I will spend the savings on more good food and so on.. The
    chain effect will be felt very soon. Even the price of rice is falling.

[STI Down]

The STI went down by 3% today (80 points), ASX went down by 80 points as well and the Dow is now down another 100 points. Oil has gone down 25% but its too little too late spur the economy as more people are losing their jobs, hence, less money to spend on other items.

I love bad news as I am a shorter of stocks in property (Capitaland, CDL, Allgreen, Centro, REITs), banks (Lehman, Merill, Citibank, Barclays, SocGen, RBS, NAB, etc.) and insurance companies (AIG, RSA, etc). Stock prices crawl slowly upwards but when any hint of bad news, they fall down fast and big...

[You are not new]

The STI went down by 3% today (80 points), ASX went down by 80 points as well and the Dow is now down another 100 points. Oil has gone down 25% but its too little too late spur the economy as more people are losing their jobs, hence, less money to spend on other items.

I love bad news as I am a shorter of stocks in property (Capitaland, CDL, Allgreen, Centro, REITs), banks (Lehman, Merill, Citibank, Barclays, SocGen, RBS, NAB, etc.) and insurance companies (AIG, RSA, etc). Stock prices crawl slowly upwards but when any hint of bad news, they fall down fast and big...

to the stock game.. Next week or tomorrow, the mood will change and people will talk different. It's a new global capitalistic order. As long as the cash flow, we are in business. I mean, if the Middle Eastern countries made a bunch of oil money, they would then buy up U.S. assets.. even Singapore realizes this..

[BTW]

whatever cash is needed, the Central Banks will print. You can say its a monopolistic business. Be careful when you play a game whose rules the other players can change and you cannot..

[wtfwtf]

what do you mean the Dow is down 100, its down 225 as of now !!!

[Kubes.SG]

Straits Times is somewhat confused and frustrated today.

Size up home supply again

September 9, 2008

WHAT a difference a year makes.

Just last year, all official hands were on deck to calm what was seen as an overheating property market.  To help keep soaring home prices in check, the Government released an unprecedented amount of data on the housing market.  It also deviated from usual practice to draw attention, in its quarterly updates, to the huge number of new homes in the supply pipeline.  This figure jumped by more than 10,000 units over the past year to reach almost 70,000 now.  To gauge how enormous this number is, just consider that it is about seven times the average number of new homes bought yearly since 2001.

The supply numbers were meant to reassure potential buyers that there were plenty to go round and they need not rush to buy.  Today, however, the property market is nowhere near as feverish as it was last year.

It is pertinent to ask whether this number is the best measure to guide potential buyers who no longer need assurance that there is enough in the pipeline but are now concerned there might be too many.

Developers have adjusted to the cooling market sentiment by putting off sales. So the Government should also adapt its calculation of supply figures to reflect these new conditions.  It could switch its focus to units already being built and supplement this data with information tailored for a wary market rather than an overexcited one.  The swift change in mood has been striking. Worries over runaway prices and property speculators have given way to a diametrically opposite problem: a protracted slowdown in the property market, sparked by the United States sub-prime mortgage crisis.

Home prices and rents are starting to dip and sales activity has slowed to a crawl. The only speculation taking place these days is about when property prices will crash for real, as no one can agree on whether the slowdown is a blip or the beginning of a downturn.  What is certain, though, is that the massive supply figure, originally meant to restore sanity to a frantic market, is now acting as a drag on already negative sentiment.

Citing these numbers, analysts, including Credit Suisse, DMG & Partners, Barclays and Nomura, have warned of a potential oversupply in coming years. This has formed the basis for their pessimistic outlook on Singapore’s property market.

A more accurate reflection of impending supply is to focus on units that have already begun to be built, as opposed to those still on the drawing board.  Given the construction crunch and the fact that developers are delaying launches due to market gloom, homes that were planned during a more bullish time could now be postponed indefinitely.  This change alone would more than halve the banner supply figure that has etched itself in bearish minds.

According to the latest data released by the Urban Redevelopment Authority (URA) in July, the total supply of homes in the pipeline has jumped to 67,569.  But a closer look at the data shows that construction has started on only 31,176 of these units. 

Another reason to highlight the figures under construction is that they tend to stay more stable from quarter to quarter, unlike the total supply number, which fluctuates according to developers’ reactions to changing sentiment.

In the first quarter this year, the total number of homes expected to be ready next year and in 2010 alone was 30,296. Just three months later, URA revised this figure down by almost a third to 22,206 units, after developers submitted modified completion estimates in the light of delayed projects.  But the number of units actually under construction remained pretty much the same across the two quarters, at about 17,000 homes.

Making the change to focus on units under construction would be far from radical. In fact, before 2006, that was exactly what the URA did.  Apart from this, the URA should also divulge how many units have had their scheduled completion dates pushed back, and to which years.  This would throw light on the extent of delays in project completions, something the overall supply figure alone cannot communicate, and the current data only hint at.  The latest figures, for instance, show about 10,400 homes expected to be completed next year. But three months ago, there were 12,800. Have these missing 1,400 units been pushed back to 2010, finished ahead of schedule this year or taken out of the equation altogether?

The 2010 predictions fare even worse: The forecast for completions that year has been reduced from 17,500 units to 11,800 in just three months. When are these lost units expected to come on the market?  Another useful measure would be to break down expected supply by location, completion year and construction status.

The URA only provides the number of unsold units in each of three broad districts: the core central region, city-fringe areas and suburban locations.  If the URA could give this additional data by postal district, it would reveal valuable information about which areas might be in danger of oversupply. Quarter-on-quarter, it would also show how home supply is adjusting across different areas in reaction to demand.

Property consultancy CB Richard Ellis (CBRE) has already flagged a possible glut in the prime districts and in the East Coast, which have turned into major building sites after developers snapped up land there in the last two years.  The problem is that CBRE’s supply figures do not gel with the URA’s. But unless the Government releases more relevant information - and property developers cooperate to boost transparency - the question of supply overhang will continue to hang over the market for some time.

Straits Times - 9 Sep 2008