GLOBAL INVESTORS BEHAVIOR
Financial sectors across Asian and other developed countries are facing a volatile owing to last two monthsâ€™ recession. So much so that investor behavior has gone through a sea of change across all countries.
Indian investors redeemed after markets fell, Chinese when markets were up, Koreans went easy during volatility Japanese have said sayonara to mutual funds.
Just take India and China when it comes to investments both countries are poles apart. When the markets were collapsing here, large scale redemptions were seen in mutual funds.
Whereas, in China, investors were redeeming when the markets were going up in the early part of this year, said Francois Petit-Jean from BNP Paribas Asset Management.
Investment behavior of investors varies a lot across Asian economies.
The size of the Indian mutual fund industry is about Rs 250,000 crore. Whereas, the MF market in China is actually about 20% smaller than this.
It is quite a paradox in China. Redemptions were up at about 30% before the markets collapsed in China. And this was despite the positive signs there as the markets had appreciated by about 45% over a year.
Though, the market in Korea also went southward in May-June, investors there actually made fresh investment. A lot of â€˜structuralâ€™ products were sold which are steady in nature. The redemption pressure was quite low in Korea compared to India and China and only 5% of redemptions were from equities. The Korean investors rely more on safer bets and, being a highly developing country, investors have faith in strong fundamentals of the economy.
The mutual fund market in this highly advanced country is virtually non-existent. Investors prefer to part their money in post office savings and surplus savings are invested in bonds considered safer as compared to equity markets.
In this volatile phase seen across the Asian countries, positive markets are for fixed income products, retirement benefit funds and the funds for children benefit.
In India the markets for debt funds and other long-terms plans would work till the market is stabilized. The inflationary pressure will continue to be a cause of concern and especially, countryâ€™s cost of importing oil.