Market watchers say greater need for investor self-education in 2010
By Desmond Wong
SINGAPORE: Market watchers said that due diligence and the need for self-education are the biggest lessons of 2009 that investors should take into the year ahead.
Citing moves like the Singapore Exchange’s corporate governance proposals, they said there is more information than ever out there and investors should take the time to understand it before wading in.
In a market facing corporate scandals and mistrust over complex financial instruments, investors have had to learn some hard lessons.
But as bodies like the SGX push for greater transparency, market players said investors will do well to take advantage of the greater amount of information that is available to them.
James Sim, president and chairman, Financial Planning Association of Singapore, said: “I think it’s a positive move towards market-based regulations.
“With the introduction of transparency in corporate governance for stock exchange listed firms, what the investors see is what they get, and this is a positive thing in that they now have greater protection and confidence in what they are buying.”
But even as the market place becomes more transparent, observers said investors should take the time to carefully assess information on companies and investment products on their own.
They added that investors should also educate themselves in risk management and corporate due diligence. They noted that many investors have yet to understand these basics, potentially putting their investments at risk.
Christopher Tan, treasurer, SIAS, said: “To me, the willingness to take risk is really the last part. You may be very willing to take risks but if you have no need to, and you can’t, then you really shouldn’t. But I think what we’re lacking here is that when investors go in to invest, they don’t consider that. They just think of the returns that they want and they go in.”
Mr Sim added: “When you do not understand the fundamentals and when there is any trouble in the market, you won’t know how to react. You tend to react irrationally and that’s the reason why you could lose more than you can afford.”
All in all, market watchers said that 2010 will be a more challenging year for investors as economies pull themselves out of the recession. And they stressed it is more important than ever for investors to do their own independent research if they want to make it through the year. - CNA/vm
Source : Channel NewsAsia - 24 December 2009
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