Asian entrepreneurs more bullish on alternatives than global peers

A new survey shows that Asia-based entrepreneurs have a more positive outlook than those in other regions for alternative assets such as gold and property.

In keeping with a trend for Asian investors -- both institutional and individual -- to allocate more capital to alternative assets, entrepreneurs in the region are more bullish than those in other regions on such investments.

According to survey findings published yesterday by US-based trade body the Entrepreneurs’ Organization and Standard Chartered Private Bank, entrepreneurs globally are largely neutral on alternative asset performance. That was demonstrated by a global score of 5.70 in the survey (the scores are set between 1 and 10, with 1 being the least and 10 the most bullish).

Asian entrepreneurs were a little more positive on alternatives, with a score of 6.64. They are also more bullish on gold, with two-thirds predicting the price will rise in the next 12 months, while 58% of their global peers feel the same.

Their optimism appears well placed, with the emergence yesterday of news that China will ease gold trading rules. The news helped push gold futures above $1,200 yesterday for the first time in nearly two weeks, and follows predictions by the World Gold Council that Chinese demand for the metal could double by 2020.

Meanwhile, Asian entrepreneurs' predictions on residential property are far more optimistic than the global averages, with 77% saying residential property values will increase during the next 12 months, and 28% predicting a significant increase. Only 11% of Asian entrepreneurs are forecasting a decrease in the price of residential property. Yet less than half of entrepreneurs globally (46%) say residential prices will rise, and just 8% forecast a significant rise.

Moreover, 57% of Asian entrepreneurs believe commercial property values will increase during the next 12 months and 24% predict a significant increase, with 18% forecasting a price decline. That compares to around a quarter (23%) of entrepreneurs globally predicting a rise in commercial property values, and only 5% a significant rise.

However, recent news from China, for instance, on the property market was rather less positive than for gold. The authorities have reportedly told lenders to undertake a new round of stress tests for the impact of a fall in houses prices of up to 50%, and to stop mortgage loans to people buying their third homes in certain cities.

Still, the survey found that, globally, real estate is the most popular investment among entrepreneurs for the coming year, but not via equities. Over the coming 12 months, entrepreneurs globally intend to invest in the following alternative asset classes: residential property (36%), commercial property (27%), private equity (23%), precious metals (15%) and property stocks (12%).

With regard to industry sector outlooks, Asian entrepreneurs believe ‘education and training’ is the industry most poised for growth, with 41% of respondents believing the sector will experience high growth. Following closely are the biotechnology (39%), environmental (35%) and health and medical (35%) sectors.

Every other region rated biotechnology as the sector most poised for growth, with 42% (the highest number) of global respondents voting for that sector, followed by health and medical services (37%).

Some 120 of the survey respondents were based in Asia and 67 in Australia out of the total 1,477 respondents globally.

The report is part of the Global Economic Indicator research programme conducted by the Entrepreneurs’ Organization (EO) in partnership with Standard Chartered Private Bank. The programme began in May and comprises a five-year series of quarterly surveys of EO members.

All EO members have founded a business grossing more than $1 million in annual revenue. They average $18.4 million in revenue per year, and the average age of entrepreneurs surveyed is 40. This initial research surveyed some 7,300 entrepreneurs in 42 countries, achieving a response rate of 20%.

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