You may be feeling the 2015 hangover still, but the investment market is not all bleak this year. Sure, there are markets that you should approach with caution, but there are also markets that offer great opportunities.<\/p>\n
![\"Danny](\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2016\/01\/danny-chang-YouTube.jpg\")
<\/a>Danny Chang, head of managed investments and products management, Wealth Management at Standard Chartered Bank Malaysia<\/p><\/div>\n
Danny Chang, head of managed investments and products management, Wealth Management at Standard Chartered Bank Malaysia<\/strong>, warns against participation in equity markets in Asia, except for Japan, adding that the recommended allocation for Malaysian\/Asian equities should just be 15%.<\/p>\n \u201cAssuming a moderate risk tolerance investor with RM100,000, the suggested allocation is RM15,000 locally and RM85,000 overseas,\u201d says Chang.<\/p>\n He also reassures investors of this action even with the present foreign exchange pressures that remains an on-going concern for local investors.<\/p>\n \u201cThough the sliding Ringgit remains one of the biggest concerns among investors, the downward pressure on the Ringgit is expected to ease and bottom out against regional peers by second half of 2016,\u201d he adds.<\/p>\n However, Tan Keah Huat, executive director of Apex Investment Services Berhad<\/strong>, a Chartered Member of Financial Planning Association of Malaysia (FPAM) cautions that the foreign exchange pressure will still likely result in weakness in earnings growth, capping the upside for the market for this year.<\/p>\n He expects that the returns on investment for local listed companies may be capped as these companies are expected to experience earnings pressure this year.\u00a0 So whatever upside we may see locally will be limited in any case.Looks like no matter how we look at it, our earnings will be challenged this year. It\u2019s just about how we make the best of it. Don\u2019t worry though, It\u2019s not all doom and gloom!<\/p>\n Chang believes that the present overall sentiment towards the Ringgit is excessively negative. While we will still struggle with it, the extent of it is overstated and a financial crisis-like situation is unlikely.<\/p>\n Linnet Lee, CEO of FPAM<\/strong>, forecasts a generally weaker environment for investors but not due to global markets. Instead she sees that the rising local costs will pressure many investors. She foresees that those who were on the borderline of just having a bit more money to be utilised for investment will instead have to reduce their overall investment allocation as they struggle to meet their rising costs.<\/p>\n \u201cWith the cost of goods and services increasing by about 10% to 20% for many daily essentials, the rising cost may eat into investment funds, and investors will likely scale back on their investments to meet their increased monthly expenses,\u201d says Lee.<\/p>\n Investment this year should take on the double Ds \u2013 diversify and defend. The age-old adage of not putting all your eggs in one basket has never rang truer in this economy.<\/p>\n \u201cIn this time of market uncertainty, it pays to review your asset allocation to ensure that you\u2019re well diversified in terms of asset classes, currencies and geography,\u201d Yap Ming Hui, independent financial advisor from Whitman Independent Advisors<\/strong> reminds investors.<\/p>\n Yap Ming Hui, independent financial advisor from Whitman Independent Advisors<\/p><\/div>\n With a balanced portfolio that suits your risk appetite and investment time horizon, one can explore moderate risk investment opportunities. Some of the investment instruments that Yap identifies are the Real Estate Investment Trusts (REITs), diversified unit trust funds or dividend paying shares.<\/p>\n Tan agrees and suggests mixed asset funds that emphasises on defensive stocks to be ideal for this year.<\/p>\n Both diversification and defence seem to be the way to go for investors but of course, how your investment portfolio is balanced depends a lot on your risk appetite and investment objective.<\/p>\n A lot of us may think that we don\u2019t have the funds to adequately diversify but in reality diversification does not always equate to high capital. The simplest and most affordable form of diversification is to go through professional investment managers via a unit trust fund. With as little as RM1,000<\/a>, you can gain access to various unit trust funds, which also offer the flexibility to enter and withdraw whenever you wish.<\/p>\n \u201cFor beginners, stay broad and consider global balanced funds that invest in both global stocks and bonds, or global equities, but still within your risk tolerance.\u201d Chang says about these investment staples for a new investment portfolio.<\/p>\n For high net worth investors with a bigger risk appetite, Tan suggests private mandates as they would allow the fund manager to focus on fewer stocks but with catalysts and greater upside potential. Stock selection is paramount to get good returns, but volatility must be expected with such strategy.<\/p>\n \u201cWe believe there are ample opportunities for bottom-up stock-picks in 2016. This strategy worked well for our high net worth investors last year and we believe this year could offer similar opportunities,\u201d Tan adds.<\/p>\n Going back to basics, Yap reminds all investors, especially those who just started out in their investment to always avoid investing in products they do not understand.<\/p>\n \u201cWith the challenging market conditions, avoid leveraging products that could hit you like a double whammy in tough market conditions. Examples of leveraging products are borrowing against property<\/a> or bonds to invest in shares or margin financing,\u201d Yap says, adding that it\u2019s important to ensure a balanced portfolio that does not overexpose into selected asset classes to reduce risk. Leveraging exposes you to risks in financing your loan as well as the market risk of your investment. In these market conditions, it\u2019s best to minimise your risk wherever you can.<\/p>\n Linnet Lee, CEO of FPAM Image from sme.org.my<\/p><\/div>\n The same sentiment is also echoed by Lee from FPAM. She emphasises that investors should look at rebalancing their portfolios now. A balanced investment portfolio should be based on the investor\u2019s risk appetite, purpose of investment and duration of investment.<\/p>\n \u201cA well-balanced portfolio crafted based on the above criteria is a systematic way of making investment profits,\u201d says Lee.<\/p>\n Furthermore, the changing market values can inevitably cause the portfolio’s allocation to drift from its original plan, which is why periodic reviews are extremely important. Rebalance your holdings as often as needed to keep it consistent with your goals and bear in mind the investment costs<\/a> that could bite into you returns. If you haven\u2019t done it recently, now\u2019s a good time to do it!<\/p>\n Chang advises that to minimise risk, diversified global or Asian equities should be considered first before investing directly into a single country equities fund or single sector fund, such as technology stocks fund.<\/p>\n Investors should also approach funds that have significant exposure to commodities like gold and oil, as they may underperform. In view of the sliding Ringgit, Tan urges investors to be careful with investments in regional funds using depreciated Ringgit. As we\u2019ve yet to see the Ringgit bottom out, any earnings on their funds may be eroded when translated to Ringgit at a later stage if the currency appreciates.<\/p>\n It is undeniable that investment is no longer just an option but a need for Malaysians who would like to achieve their financial goals and ultimately, financial freedom.<\/p>\n According to Yap, his firm has seen more people recognising the importance of investing their money and have started to delve into investment at an earlier age. However, he reiterates that without sufficient knowledge and experience, investment results can be uncertain and frustrating.<\/p>\n<\/span>2. In light of these, what are some of the investment products to go for this year?<\/strong><\/span><\/h2>\n
<\/a><\/span>3. How about investments to avoid?<\/strong><\/span><\/h2>\n
<\/a><\/span>4. What is the investment trend moving forward?<\/strong><\/span><\/h2>\n