One would expect the Japanese to be among the most upbeat investors these days, given the expansionist plans of new prime minister Shinzo Abe. But it appears that is not the case; they are in fact the least optimistic in Asia Pacific, according to a recent Franklin Templeton Investments survey.
Nearly 80% of Asian investors polled believe they can achieve their financial goals in 2013. Indian investors, at 97%, were the most optimistic, while Japanese investors scored the lowest in the region, 54%.
Japanese pessimism is doubtless rooted in a long-standing domestic environment of stagnant, if not flat, growth, meagre returns and many false dawns. Along with the Japanese, Australian investors had the most conservative expectations of returns.
Asia-Pacific investors generally expect higher returns from investments in their own region of 11% in 2013 than the 8% expected last year.
Yet this optimism does not mean they will throw caution to the wind. Over half of those polled plan to adopt a more conservative investment strategy in 2013, with Korean, Malaysian and Indian investors most likely to adopt a cautious approach. Hong Kong was the only market where most investors (51%) intended to adopt a more aggressive approach than in 2012.
The general caution among Asian investors seems to be due to current economic uncertainty. Almost half or 47% of Asian investors cite the global economic climate as a major obstacle to investing this year. The eurozone debt crisis and inflation were also factors holding back Asian investors.
Home bias remains strong, but more diversification is likely in time. Asia-Pacific investors allocate over two-thirds of their investments to their home country, although this percentage is expected to decline over the next 10 years as more is allocated, mainly to emerging markets.
Australia and China keep the highest percentage of their investments in-country, while investors in Hong Kong keep the lowest percentage of their portfolios in their home country.
As for asset classes, Asian investors expect stocks, property and precious metals to be the best performers this year and over the next 10 years.
Over 65% of the respondents polled were confident that their home stock markets in 2013 will outperform last year, with Indian investors the most optimistic. Koreans, on the other hand, were the least upbeat on this front, with just under half or 49% expecting that their market will rise this year.
Yet despite the generally positive outlook on equities, nearly 60% of Asian investors believe they can achieve their long-term investment goals without investing in stocks.
The survey, commissioned by Franklin Templeton Investments, was conducted by ORC International, an independent market research company. It was carried out between 14 and 25 January across a sample of 4,004 investors in Asia Pacific. It is part of a larger global survey covering 19 countries.
The poll was conducted in 19 Asia-Pacific countries, including Australia, China, Hong Kong, India, Japan, Korea, Malaysia and Singapore.
The respondents were at least 25 years old and have a minimum level of investable assets as defined by each country as well as owned investments outside of real estate.