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PR Newswire
09-08-2011, 07:42 AM
The start of the next bear market? 
The Straits Times
Published on Aug 9, 2011
S'pore retail investors make flight to safety
Massive volumes of stocks traded as many prefer cash to equity
By Magdalen Ng
ENGINEER Sun Weixin, 28, was probably typical of thousands of fairly small investors caught up in yesterday's massive sell-off of stocks on the local bourse.
He liquidated his entire portfolio of mainly bank and blue-chip shares yesterday, worth less than $40,000. He suffered a loss but did not want to disclose the amount - but said he felt there is too much uncertainty to stay invested.
'I expect the months ahead to be worse. Rather than see my money stagnate and lose more, I might as well take it out until the charts show something better. There's too little information now, so I will be more conservative at this time.'
Phones were ringing off the hook for remisiers and fund managers yesterday, as retail investors reacted to the downgrade of the United States long-term credit rating and rising fears of a new global recession. Last Friday, credit rating agency Standard & Poor's cut Washington's debt rating from triple-A to AA+.
Grandtag Financial Consultancy chief executive Ben Fok said he received a 10 per cent jump in calls from clients seeking assurance about their investments. However, not many made outright redemptions of their unit trusts. He said: 'We usually advise our clients to continue investing, based on the principle of dollar cost averaging. But we have seen clients holding back in the past two weeks as confidence in the market wanes.'
Massive volumes of stocks were traded on the Singapore Exchange. More than 2.49 billion shares worth nearly $2.82 billion were traded, as investors made a frantic flight to safety.
While the US debt situation is nothing new and a downgrade had been on the cards, it added to an already volatile investment environment, with many preferring to hold cash rather than equity.
Another retail investor, Mr John Oh, 35, sold part of his portfolio even before a US debt ceiling agreement was reached, anticipating the downgrade: 'I chose to sell early because no one knows what will happen. I'm going to observe what happens in the next few days, before deciding when to re-enter the market.'
He sold 40 per cent of his $200,000 portfolio before Aug 2 and made a profit of $20,000.
Remisier Jan Lim at stockbroker Lim & Tan expects some technical rebound, but added this reminds him of the two-day crash in 2008 after the Lehman collapse.
On the other hand, Mr Peter Douglas, principal of local hedge fund GFIA, said that he has yet to observe any panic, because the downgrade was foreseeable: 'In terms of historical impact, the downgrade is more than the Lehman shock, but not in terms of medium-term impact.'
A DBS Vickers spokesman also said that they have not seen panic selling, but have observed that investors are trading with more caution during this period.
One unfazed investor is Mr William Wong, founder of Real Star Premier, which specialises in luxury properties: 'I intend to hold my equities for the long term, at least for two to three years. I think that so long as the fundamentals of the company is strong, it will rebound.'
Said Mr Vasu Menon, OCBC Bank's head of content and research for wealth management for Singapore: 'The sell-off over the past week has been very sharp and appears to indicate somewhat of an overreaction as fear has overtaken markets and blinded investors to the decent corporate fundamentals and valuations.
'Until markets are convinced that a longer-term solution to the US and European debt problems is in sight, volatility will remain a fixture and investors need to stay vigilant and prepared for markets to remain choppy in the coming weeks.'
songyuan@sph.com.sg
The Straits Times
Published on Aug 9, 2011
S'pore retail investors make flight to safety
Massive volumes of stocks traded as many prefer cash to equity
By Magdalen Ng
ENGINEER Sun Weixin, 28, was probably typical of thousands of fairly small investors caught up in yesterday's massive sell-off of stocks on the local bourse.
He liquidated his entire portfolio of mainly bank and blue-chip shares yesterday, worth less than $40,000. He suffered a loss but did not want to disclose the amount - but said he felt there is too much uncertainty to stay invested.
'I expect the months ahead to be worse. Rather than see my money stagnate and lose more, I might as well take it out until the charts show something better. There's too little information now, so I will be more conservative at this time.'
Phones were ringing off the hook for remisiers and fund managers yesterday, as retail investors reacted to the downgrade of the United States long-term credit rating and rising fears of a new global recession. Last Friday, credit rating agency Standard & Poor's cut Washington's debt rating from triple-A to AA+.
Grandtag Financial Consultancy chief executive Ben Fok said he received a 10 per cent jump in calls from clients seeking assurance about their investments. However, not many made outright redemptions of their unit trusts. He said: 'We usually advise our clients to continue investing, based on the principle of dollar cost averaging. But we have seen clients holding back in the past two weeks as confidence in the market wanes.'
Massive volumes of stocks were traded on the Singapore Exchange. More than 2.49 billion shares worth nearly $2.82 billion were traded, as investors made a frantic flight to safety.
While the US debt situation is nothing new and a downgrade had been on the cards, it added to an already volatile investment environment, with many preferring to hold cash rather than equity.
Another retail investor, Mr John Oh, 35, sold part of his portfolio even before a US debt ceiling agreement was reached, anticipating the downgrade: 'I chose to sell early because no one knows what will happen. I'm going to observe what happens in the next few days, before deciding when to re-enter the market.'
He sold 40 per cent of his $200,000 portfolio before Aug 2 and made a profit of $20,000.
Remisier Jan Lim at stockbroker Lim & Tan expects some technical rebound, but added this reminds him of the two-day crash in 2008 after the Lehman collapse.
On the other hand, Mr Peter Douglas, principal of local hedge fund GFIA, said that he has yet to observe any panic, because the downgrade was foreseeable: 'In terms of historical impact, the downgrade is more than the Lehman shock, but not in terms of medium-term impact.'
A DBS Vickers spokesman also said that they have not seen panic selling, but have observed that investors are trading with more caution during this period.
One unfazed investor is Mr William Wong, founder of Real Star Premier, which specialises in luxury properties: 'I intend to hold my equities for the long term, at least for two to three years. I think that so long as the fundamentals of the company is strong, it will rebound.'
Said Mr Vasu Menon, OCBC Bank's head of content and research for wealth management for Singapore: 'The sell-off over the past week has been very sharp and appears to indicate somewhat of an overreaction as fear has overtaken markets and blinded investors to the decent corporate fundamentals and valuations.
'Until markets are convinced that a longer-term solution to the US and European debt problems is in sight, volatility will remain a fixture and investors need to stay vigilant and prepared for markets to remain choppy in the coming weeks.'
songyuan@sph.com.sg
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