What 2015 taught us about investing

Keep a diverse, balanced investment portfolio

Ms Yeoh is not concerned that Asean markets might falter next year because they have strong fundamentals, lower valuation, high savings rates, low equity exposure and strong domestic demand.
Ms Yeoh is not concerned that Asean markets might falter next year because they have strong fundamentals, lower valuation, high savings rates, low equity exposure and strong domestic demand.ST PHOTO: ALICIA CHAN

YEOH CHOO GUAN

UBS head of equities for Singapore and head of Asean client trading & execution

Q What were the best and worst things that happened to you (financially) this year?

A To set the stage for my personal investment decisions in 2015, I would like to go back in time to the 2007/2008 global financial crisis. Both the Chinese and United States governments were determined to head off financial calamity by injecting liquidity into the system.

This action created ample liquidity, which fuelled rallies in different asset classes in the last seven years. Rallies were most pronounced in commodities and real estate. Seeing this liquidity tsunami, I invested in real estate in Singapore and Hong Kong during that period.

INVESTORS' CHOICE

Singapore as an Asean hub for the region will continue to be the location of choice for investors.

MS YEOH CHOO GUAN

The best financial decision this year was when I started to de-gear and crystallise my gains from these real estate investments. Timing is important, especially selling.

My worst investment this year was investing in Chinese brokers. I took the view that higher volumes in China equity markets will translate to better returns from the Chinese brokers. However, my investment is down on average 13 per cent. China is still an emerging market and, with it, there would be associated risks.

Q How has 2015 been for your industry?

A It was challenging for the investment banking industry.

The industry faced headwinds in the form of demand for stronger risk management, improved regulatory compliance, new advances in technology and evolution of products and services. Some banks trimmed workforces due to restructuring or higher capital requirements.

Our industry is very competitive as Singapore runs on a global platform and we have to be on a par with or ahead of global standards. To survive means staying nimble. Fortunately, we have a government which is proactive in doing many things right to keep Singapore relevant on many fronts.

At UBS, we have been supportive of the Finance Ministry's initiative to develop the Singapore core of local leaders in this industry and as head of equities for UBS, I am happy to say UBS has been able to sustain our financial and regulatory performance despite it being a year of volatility.

Q How do you see 2016 panning out?

A I believe current liquidity contraction will continue, especially with interest rates heading up in the US.

Although there are market concerns that Asean markets might falter, I am not bearish due to strong fundamentals, lower valuation, high savings rates of 30 to 47 per cent, low equity exposure and strong domestic demand in this region.

Singapore as an Asean hub for the region will continue to be the location of choice for investors.

With regard to Singapore, the first six months of 2016 will be more challenging with weaker backward-looking data versus the second half. Our UBS view is a preference for defensive stocks in the transport sector. We also like some of the property stocks as we believe bearish news has been priced in.

Q What is one piece of financial advice you would give to retail investors, looking ahead in 2016?

A Watch your cash flow and do not be caught by being over-leveraged. This global liquidity tsunami which started out in 2008/2009 is slowly drying up.

Diversify your investments and have a balanced investment portfolio.

A version of this article appeared in the print edition of The Sunday Times on December 27, 2015, with the headline 'Keep a diverse, balanced investment portfolio'. Print Edition | Subscribe