Singapore's finance professionals pin market volatility on sentiment

Three-quarters indicated recession as a top concern.

More than half (53%) of financial professionals in Singapore believe that the initial volatility brought about by the pandemic was spurred more by sentiment rather than fundamentals, according to a survey by Natixis Investment Managers.

Globally, 51% held the same opinion.

Financial professionals in the Lion City also expect a year-end decline of 12.5% for S&P 500 and 10.4% for MSCI, with their return expectations closely resembling the downturns seen in 2018 than in 2008. They also expect a double-digit plunge in stock performance in the country this year.

Three quarters (75%) expressed fears about a recession as a top concern, followed by market volatility (73%) and geopolitical events (32%). In a shift from previous surveys, one-fifths (21%) also indicated concern about low yields, and 27% also cited liquidity issues.

In addition, 74% believe that the prolonged bull market had made investors complacent about risk, and 51% said that their clients are resisting portfolio rebalancing as long as the markets are up.

Moreover, more than half (51%) think that individual investors were unprepared for a market downturn, 61% suspect investors forgot that the longevity of the bull market was unprecedented, and 69% think that individual investors struggle to understand their own risk tolerance.

Photo courtesy of Pexels.com.

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