Confidence among Singapore retail investors has "declined sharply" from six months ago amid share market turbulence and a slower economy, a new survey has found.
Of those who were surveyed, 85 per cent said they planned to stay invested but only 36 per cent believed the Straits Times Index (STI) would rise in the first half of this year, down from 53 per cent in a similar poll six months ago.
Only 28 per cent expect the Singapore economy to pick up, compared with 42 per cent previously, according to the poll commissioned early last month by investment bank JP Morgan.
But Singapore remains the preferred avenue of investment, with 56 per cent saying they would consider investing here over the next six months.
JP Morgan surveyed 500 Singapore-based investors aged between 25 and 60, with annual incomes of at least $60,000, and at least five years of investing experience.
JP Morgan chief Asia market strategist Tai Hui, speaking at a briefing on Tuesday, said challenges remain for the local economy and markets.
"Bank lending is still slowing down, and the net interest margin is not going to be widening anytime soon, so that's going to put some pressure on banks."
Singapore, an "important" commodities hub, would also be hit by low oil prices, which may recover to between US$50 and US$60, but only later this year or next year, he added.
Singapore is also part of emerging markets and if global investors' views on this segment continue to be cautious, "capital flow will be slow to come by", he said.
Mr Hui said the Singapore market offers a relatively high dividend yield, which would lure investors.
"We can't predict with any degree of confidence where stock price will go in the short term... but companies don't swing their dividend payout that much in the short term."
He said he expects global growth to be 2.5 per cent to 3 per cent this year as domestic consumption in the United States and Europe is picking up while US firms had "repaired their balance sheets".
Chinese growth, which might decelerate to between 6 per cent and 6.5 per cent, would still be "respectable", he added.