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INDEPENDENT ADVISORS | Staff Reporter, Singapore
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Investment professionals in Asia-Pac cautiously optimistic on economic growth in 2014

Optimism in Singapore almost doubled.

Investment professionals worldwide report greater optimism over economic prospects for the coming year, although those in Asia Pacific (APAC) tend to be more cautious, according to the CFA Institute 2014 Global Market Sentiment Survey (GMSS).

The 2014 findings, drawn from 6,561 members surveyed worldwide, show that 63 percent expect the global economy to expand, up from 40 percent in last year's survey.

Most optimistic are members in the United Kingdom (78 percent) and Brazil (74 percent), while those in Hong Kong and mainland China are the least (54 percent and 48 percent respectively). In Singapore, optimism has almost doubled with 59 percent predicting an expansion, up from 32 percent a year ago.

Like their peers in other regions, APAC members do not rate the integrity of global markets in the past year (2013) highly, although respondents are more likely to think it will improve (32 percent), compared to their peers in Europe, the Middle East and Africa (EMEA - 27 percent) and in the Americas (AMER - 23 percent).

"The number of our members who expect the global economy to expand has nearly doubled in the last two years. However, this is no time for those in finance to become complacent," says John Rogers, CFA, president and CEO of CFA Institute.

"The survey reflects that investor trust has been eroded and in order for the financial industry to be an extraordinary force for good, we must embrace ethical behaviour at all levels.

As markets rebound, we are working to ensure that attention does not shift away from meaningful reforms that might restore investor trust and strengthen the financial system's ability to resist shocks in the future."

Respondents in Singapore and Switzerland are the most critical about the lack of ethical culture within financial firms, with 63 percent in the former and 71 percent in the latter naming it as the top factor contributing to the current lack of trust in the finance industry. Globally, just over half (54 percent) of respondents indicate so.

Singapore also leads the world's major markets in calling for top management and executives to establish and encourage better culture within the firm. Almost half (49 percent) of respondents here say that is the most needed action to help improve investor trust and confidence. Globally, 40 percent echo this view.

Members in Singapore are also among the most concerned about market fraud and feel that this issue will worsen going ahead. Almost three in 10 (30 percent) respondents here see market fraud as the most serious ethical issue facing both local as well as global markets in the coming year.

This is almost three times higher than last year, when only 11 percent cited this as the most serious ethical issue locally, while 15 percent felt it was the dominant problem for global markets. Worldwide, mis-selling (25 percent) ranked as the top ethical issue locally, with market fraud a close second (24 percent).

In rating investment opportunities, respondents worldwide expect equities to perform best, singling out the US and mainland China markets as the top two choices (26 percent and 10 percent, respectively). Just over half (52 percent) in Asia-Pacific anticipate a real estate bubble, with concerns within the region strongest in mainland China (77 percent), Hong Kong (68 percent) and Singapore (59 percent).

"Like their peers worldwide, investment professionals in Singapore are more confident about the global economic outlook for 2014.

However, market fraud has emerged as a particular ethical issue here, possibly because the survey was conducted in October, near the height of concern over irregularities in some local listed counters," says Daryl Liew, chair of the advocacy committee and board member of CFA Society Singapore (CFAS).

"The strong call for greater ethical culture within firms suggests that the investment community here recognises a need for and also demand higher standards in ethical behaviour and integrity, as Singapore emerges rapidly as a top investment and wealth management centre in the world.

This is in line with what CFA Society Singapore and CFA Institute have been advocating, which is to create an environment where investors' interests come first, markets function at their best and economies grow."  

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