For Immediate Release August 26, 2014
  • Review portfolio less frequently and invest in fewer financial products than Asian peers
  • Only 8 percent use financial planners versus 25 percent Asian average, 50 percent in U.S.
  • Low financial literacy, low online usage leave most reliant on family and friends' advice

KUALA LUMPUR- Malaysia investors are among Asia's most vulnerable in terms of their investment experience and the advice they draw on, according to the latest Manulife Investor Sentiment Index* for the second quarter of 2014.

According to the survey's findings, Malaysia investors have less investment experience given their lower investment ownership rates and the fact that they review their portfolios less frequently and lack asset diversification, compared to other Asian markets.

On average, they own only two to three investment products, compared to five products on average for the other Asia investors surveyed. Malaysia investors review their portfolios less frequently than other investors in Asia, with only seven percent reviewing them once per month compared to 20 percent region-wide, and only 15 percent reviewing them at least once every three months compared to 39 percent on average, according to the second quarter figures.

Few use external expertise, most heed family and friends
Malaysia investors also show little inclination to address their shortage of experience by reference to more qualified sources of investment advice. Only eight percent of Malaysia investors use financial planners, against an Asian average of 25 percent and a US average of 50 percent. Neither are Malaysia investors taking advantage of online sources of investment information and advice. Only nine percent rely on or refer to digital sources for financial planning, the lowest level in the survey, and well below the regional average of 31 percent. Instead of using expert or online input to guide their investment decisions, Malaysia investors appear to rely overwhelmingly on family and friends, with 73 percent citing this as their source of investment advice, one of the highest levels in the region, compared to 44 percent in Hong Kong, 39 percent in Singapore, or 25 percent in Japan.

"Investors need to be prudent in their decisions, and to heed the wisdom of others, but this is not what we are seeing in Malaysia," observed Mark O'Dell Group CEO, Manulife Holdings. "Malaysia investors seem not only to be most content to draw only on each other's advice and experience, but also fail to draw on more up-to-date and better qualified sources of investment insights when these are available. We can see the consequences in their relatively small average number of investment holdings, and in their infrequent portfolio reviews. These are habits that could easily be changed, but until they are, Malaysia investors remain vulnerable and highly exposed to market shifts and poor investment choices."

Financial literacy low; however, self-confidence high
Malaysia investors also exhibit a relatively low level of financial literacy. Only two percent of Malaysia investors answered all five questions taken from an international financial literacy benchmark quiz correctly, compared to 20 percent of Singapore investors and 11 percent of all investors surveyed1. Moreover, Malaysia investors exhibit overconfidence in their own financial literacy, with one-in-five thinking their financial literacy is high. They also appear confident about their financial planning abilities, with 72 percent of the two thirds who do not seek advice from industry staff saying they don't seek professional advice simply because they 'do not need it'.

However, their apparent self-confidence may not be as sure as it seems. The survey shows that of the two thirds of that don't seek professional advice, only 27 percent feel they can manage their own investments, compared to an average of 36 percent in China, 41 percent in Indonesia, and, 53 percent in the Philippines. They also seem to show some recognition of the limits of their financial knowledge, with nearly 70 percent saying they need more education on retirement planning.

"The views and habits of Malaysia investors, and their choices of both investment products and sources of investment advice, may be considered contradictory or puzzling - but luckily, improvements are readily made," added O'Dell. "Investors can easily increase their use of financial planners and online investment resources. They can also take the basic prudential step of diversifying their portfolios and reviewing them more often. All these options are simple common sense, but can deliver better performance straight away if implemented correctly."

Sentiment down on geopolitical developments, other factors
The research was drawn from the Manulife Investor Sentiment Index* survey for Malaysia in the second quarter of 2014. Investor sentiment was weaker at +48 (down 10 from the first quarter), but in line with Malaysia investor sentiment throughout 2013 and still one of the most optimistic of all surveyed markets. The Asia average during the second quarter was +24, unchanged on the quarter.

"A decline in fixed income sentiment was the key factor that drove overall investor sentiment lower in Malaysia," said Jason Chong, Chief Investment Officer for Manulife Asset Management Services Berhad. "Generally, the asset class is being undermined by anticipation of rising interest rates. This has led investors to reduce their exposure to fixed income in favor of equities, which are widely expected to benefit from the ongoing global economic recovery."

"While concerns of rising interest rates have been discounted by the market to some extent, the outlook for bonds is more likely to be driven by the quantum and speed of future rate increases," explained Chong. "That being said, we still see opportunities to generate recurring income on corporate credit issuances of generally short duration. Thus, we believe that careful selection of investments based on in-depth credit research is the key to generating positive returns in this environment."

For more findings and related information from the Manulife Investor Sentiment Index in Asia, please visit www.manulife-asia.com.

*About Manulife Investor Sentiment Index in Asia
Manulife's Investor Sentiment Index in Asia is a quarterly, proprietary survey measuring and tracking investors' views across eight markets in the region on their attitudes towards key asset classes and related issues. The Index is calculated as a net score (% of "Very good time" and "Good time" minus % of "Bad time" and "Very bad time") for each asset class. The overall index is calculated as an average of the index figures of asset classes. A positive number means a positive sentiment, zero means a neutral sentiment, and a negative number means negative sentiment.

The Manulife ISI is based on 500 online interviews in each market of Hong Kong, China, Taiwan, Japan, and Singapore; in Malaysia, Indonesia and the Philippines it is conducted face-to-face. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.

The Manulife ISI is a long-established research series in North America. The Manulife ISI has been measuring investor sentiment in Canada for the past 15 years, and extended this to its John Hancock operation in the U.S. in 2011. Asset classes taken into Manulife ISI Asia calculations are stocks/equities, real estate (primary residence and other investment properties), mutual funds/unit trusts, fixed income investment and cash.

About Manulife
Manulife is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Clients look to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife and its subsidiaries were approximately C$637.3 billion (US$596.9 billion) as at June 30, 2014. Our group of companies operates as Manulife in Canada and Asia and primarily as John Hancock in the United States.

Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife can be found at manulife.com.

About Manulife Asset Management
Manulife Asset Management is the global asset management arm of Manulife, providing comprehensive asset management solutions for institutional investors and investment funds in key markets around the world. This investment expertise extends across a broad range of public and private asset classes, as well as asset allocation solutions. As at June 30, 2014, assets under management for Manulife Asset Management were approximately C$300 billion (US$281 billion).

Manulife Asset Management's public markets units have investment expertise across a broad range of asset classes including public equity and fixed income, and asset allocation strategies. Offices with full investment capabilities are located in the United States, Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, and the Philippines. In addition, Manulife Asset Management has a joint venture asset management business in China, Manulife TEDA. The public markets units of Manulife Asset Management also provide investment management services to affiliates' retail clients through product offerings of Manulife and John Hancock. John Hancock Asset Management and Declaration Management and Research are units of Manulife Asset Management.

Additional information about Manulife Asset Management may be found at ManulifeAM.com.

Media Contact:
Yi Ling, Yip
Tel: (603) 2719-9228
Ext: 541
yiling_yip@manulife.com

1 The test - adapted from the Investor Education Foundation Financial Literacy Test, United States Financial Industry Regulatory Authority (www.usfinancialcapability.org/quiz.php) - was administered as part of Manulife's Investor Sentiment Index in Q1, 2014.

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