Vietnamese investors changing strategies to combat inflation

Around 80 per cent of local investors are more actively managing their wealth and making changes to their investment strategies, according to Standard Chartered’s latest Wealth Expectancy Report.

According to the report, published in December, Vietnamese investors cited inflation (36 per cent), the threat of recession (21 per cent) and an uncertain global economy (18 per cent) as their top concerns. Rising inflation (34 per cent), a recession (27 per cent) and an uncertain global economy (22 per cent) are key worries for investors internationally too.

In the past year, local investors have made changes to their finances, such as making new decisions around their portfolios (26 per cent) and spending less (25 per cent), which will prompt shifts in major asset classes.

To outpace inflation, 61 per cent of global investors are looking to reduce their cash holdings, compared to 62 per cent in Vietnam. Standard Chartered predicts that global cash allocations will fall from 26 per cent in 2022 to 15 per cent in 2023.

The Standard Chartered report examined the shifts in funding decisions for more than 15,000 emerging affluent and high-net-worth investors across 14 markets.

Marc Van de Walle, global Head of Wealth Management at Standard Chartered said, “Investors face a complex reality, with inflation, the threat of recession, and an uncertain global economy ranking as their top concerns. Our research reveals that they are making changes to their portfolio allocations in response to these challenges, but it is important that they make decisions aligned with their objectives and the external environment."

Vietnamese investors changing strategies to combat inflation.
Vietnamese investors changing strategies to combat inflation.

“We believe that diversified portfolios with multi-asset income generation strategies provide some of the best opportunities today. This combined with personalised advice can help investors ride out the current market conditions and achieve their long-term goals," he added.

Financiers are reconsidering their holdings of equities as market volatility increases, although this asset class will remain an integral part of portfolios. Of those currently invested in equities, there is an indication that the allocation of equities in Vietnamese portfolios will fall from 10.9 per cent to 7.5 per cent in the next year.

Gold continues to be of high interest for Vietnamese investors, with 57 per cent saying they have acted as a result of inflation; in addition, there is interest in value stocks at 49 per cent and bonds at 44 per cent.

Sustainable funding will continue to receive interest and capital, even though greenwashing concerns persist. Some 52 per cent of global investors expect to increase such investments in 2023 with 54 per cent in Vietnam doing the same.

The research reveals that 73 per cent of local investors still believe that digital assets are an important part of any investment portfolio, despite multiple setbacks in the market this year. The survey was conducted before the FTX crash and events of the past few weeks may dampen the sentiment.

Currently, 66 per cent of global investors hold digital assets, compared to 80 per cent in Vietnam. Looking ahead, 74 per cent of local ones surveyed plan to increase their activities in digital assets in the coming year. This is in part because 41 per cent consider them to be a good way to diversify their portfolio and 33 per cent said they have seen people make significant returns off digital assets.

While 62 per cent of global investors polled were primarily managing their own finances, with some variation across markets, 33 per cent in Vietnam use professional wealth managers. On average, across the 14 markets, 63 per cent of investors aged 18-35 are more likely to use a professional compared with 39 per cent in the 55+ bracket.

On average, investors taking advantage of professional advice were more likely to have diversified portfolios and more holdings in sustainable funding.

Harmander Mahal, Standard Chartered's Head of Consumer, Private and Business Banking for Vietnam and Asia Cluster Markets said investors in Vietnam are becoming more sophisticated.

"As the market matures, investors will increasingly turn to professionally managed products and demand for more diverse product range would increase," he said. "The recent developments in the private corporate bonds space, together with the current volatility in the capital market and rising inflation, is fast-tracking the shift to professionally managed investments in Vietnam.”

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