Asia Stock Markets

Burnt by the Markets, Investors Wonder What to Do Next

After a week of extreme volatility, investors across the world are left wondering whether there is more selling to come or if now’s the time to find some bargains. With MSCI World Index down 14 percent in just the last two weeks, some investors have decided to throw in the towel and stay on the sidelines for now.

A broker points to a screen showing various share prices at a securities house in Hong Kong on August 9, 2011.
Laurent Fievet | AFP | Getty Images

Sixty-year old Sydney retiree, Garry Grantham is one of them. He says he’s unsure about how much more he can afford to lose.

“Your life revolves around the market, because if the market goes down, your investments go down,” says Grantham. “So, consequently I've pulled the plug and I've gone back to cash.”

That risk-averse mentality is being felt by some mutual funds and money managers in Asia.

Hugh Young, Managing Director at Aberdeen Asset Management in Singapore says the firm has seen some clients pull their money out of its mutual funds.

“We’re in maybe a more fortunate position where we have a solid client base, but even we have seen redemptions in some of our open-ended funds,” Young says. “At times, you are forced-selling yourself, even though you feel there’s good value out there."

A Singapore-based broker, who wanted to remain anonymous, says there’s been quite a bit of panic selling over the past couple of days — mainly in stocks in the Straits Times Index . According to him, roughly 70 percent of his clients were selling and only 30 percent were willing to buy.

But some retail investors are hanging on, despite losses; worried that now might not be the best time to sell.

“I am kicking myself hard for not selling off two weeks ago when the U.S. debt crisis was unresolved,” says Jeremy Fox, who works at the National University of Singapore

Fox says while the origins of the debt crisis make sense, some of the recent volatility has been irrational.

“A Bear would say these are the last gasps of air as the market is sinking underwater. I'm not sure I'm that pessimistic.”

For now, Fox says he will hang on and would, in fact, be buying U.S. stocks if his money wasn’t tied up elsewhere.

“I've lost a bunch, I'm loath to pull the rest out and take the loss. Rather, I'll just sit on it and take the long view.  I'm actually still up quite a bit from my investments following the 2008 crash.”

Richard Yeong, a 30-year old advisory manager for Ernst & Young in Singapore, says he’s also looking to enter the markets and is interested in buying local blue chip stocks such as Singapore Press Holdings and Singapore Exchange , which have been beaten down in recent days.

“I’m watching on the sidelines for now, but I’m looking to buy either today or tomorrow.”