04-05-2012, 06:47 AM
How accurate is this survey anyway??
The Straits Times
May 4, 2012
Why S'poreans don't splurge with profits
They prefer to save or reinvest their returns on investment: Economists
By Yasmine Yahya
IN MANY developed countries, investors splurge during the good times and tighten their belts when their investments are doing poorly.
Not so much in Singapore, it seems.
A Singaporean probably will not forgo a holiday abroad even if his investments are doing poorly.
And he is unlikely to spend lavishly on a big-ticket item even if he has just made a killing on the property or stock market.
A study by the Monetary Authority of Singapore (MAS) that was published in its macroeconomic review on Monday, found that as asset prices rise and fall, Singaporeans' short-term consumption levels tend to remain the same.
So even if property or share prices make a big jump, consumers here would not necessarily spend more within the following month or quarter, and vice versa.
In contrast, asset prices and consumption are notably co-related in other developed markets such as the United States, Britain and Australia, the MAS said.
Economists have found that in these markets, where people tend to spend a significant portion of their incomes and save less, investors tend to feel wealthier when the value of their investments rise, and thus consume more.
But unlike investors in those countries, most Singaporeans prefer to save or reinvest their returns instead of splurging immediately, said ANZ economist Vincent Conti. 'One effect of higher asset prices is that people start to think, 'Maybe I should reinvest my profits now since the returns are so high, and maybe in future, I would be able to consume even more,'' he said.
The flip side also holds true - no matter how poorly the stock or property market may be performing, it does not affect Singaporeans' spending decisions, especially when it comes to things that they are passionate about, such as travelling.
ASA Holidays marketing head Eileen Oh said: 'Travelling is in the blood of Singaporeans. Whether or not the stock or property market is doing well, they would still travel. It's just a matter of how far they go.'
For example, in 2008 when the stock market crashed, regional destinations such as Hong Kong, Thailand, Japan, South Korea, China and Australia were very popular, Ms Oh said. As the market recovered in the next couple of years, ASA customers chose longer trips to destinations farther away, such as Europe, the US and Turkey.
Fluctuations in asset prices also have little effect on the sale of high-end luxury goods, which tend to be purchased by people who are very rich anyway.
Mr Karsono Kwee, executive chairman of Eurokars Group, a firm that sells high-end cars under marques such as Porsche, Rolls-Royce, Volvo, Saab and Mini, said the health of the economy does affect his business, but not significantly.
'Our revenues still grew in 2007 and 2008 during the financial crisis, but at a slower pace. It doesn't matter if the stock or property market is doing well or not. Our sales go up whenever we launch new products,' he said.
The one thing that Singaporeans do seem to let themselves splurge on when their investments do well, is a nice meal.
Hotelier and restaurateur Loh Lik Peng who runs six restaurants in Singapore said revenues at his eateries are co-related to the stock market's performance.
'It was very evident during the financial crisis in 2008. Whenever the stock market had a good day, there would be more people at the restaurants and our revenues would go up,' he said.
The same pattern can still be seen today, he added. Whenever the stock market rises, his restaurants are more well-patronised, especially those in the Central Business District. These include Jing at One Fullerton, where an average meal costs over $100 a person.
yasminey@sph.com.sg
The Straits Times
May 4, 2012
Why S'poreans don't splurge with profits
They prefer to save or reinvest their returns on investment: Economists
By Yasmine Yahya
IN MANY developed countries, investors splurge during the good times and tighten their belts when their investments are doing poorly.
Not so much in Singapore, it seems.
A Singaporean probably will not forgo a holiday abroad even if his investments are doing poorly.
And he is unlikely to spend lavishly on a big-ticket item even if he has just made a killing on the property or stock market.
A study by the Monetary Authority of Singapore (MAS) that was published in its macroeconomic review on Monday, found that as asset prices rise and fall, Singaporeans' short-term consumption levels tend to remain the same.
So even if property or share prices make a big jump, consumers here would not necessarily spend more within the following month or quarter, and vice versa.
In contrast, asset prices and consumption are notably co-related in other developed markets such as the United States, Britain and Australia, the MAS said.
Economists have found that in these markets, where people tend to spend a significant portion of their incomes and save less, investors tend to feel wealthier when the value of their investments rise, and thus consume more.
But unlike investors in those countries, most Singaporeans prefer to save or reinvest their returns instead of splurging immediately, said ANZ economist Vincent Conti. 'One effect of higher asset prices is that people start to think, 'Maybe I should reinvest my profits now since the returns are so high, and maybe in future, I would be able to consume even more,'' he said.
The flip side also holds true - no matter how poorly the stock or property market may be performing, it does not affect Singaporeans' spending decisions, especially when it comes to things that they are passionate about, such as travelling.
ASA Holidays marketing head Eileen Oh said: 'Travelling is in the blood of Singaporeans. Whether or not the stock or property market is doing well, they would still travel. It's just a matter of how far they go.'
For example, in 2008 when the stock market crashed, regional destinations such as Hong Kong, Thailand, Japan, South Korea, China and Australia were very popular, Ms Oh said. As the market recovered in the next couple of years, ASA customers chose longer trips to destinations farther away, such as Europe, the US and Turkey.
Fluctuations in asset prices also have little effect on the sale of high-end luxury goods, which tend to be purchased by people who are very rich anyway.
Mr Karsono Kwee, executive chairman of Eurokars Group, a firm that sells high-end cars under marques such as Porsche, Rolls-Royce, Volvo, Saab and Mini, said the health of the economy does affect his business, but not significantly.
'Our revenues still grew in 2007 and 2008 during the financial crisis, but at a slower pace. It doesn't matter if the stock or property market is doing well or not. Our sales go up whenever we launch new products,' he said.
The one thing that Singaporeans do seem to let themselves splurge on when their investments do well, is a nice meal.
Hotelier and restaurateur Loh Lik Peng who runs six restaurants in Singapore said revenues at his eateries are co-related to the stock market's performance.
'It was very evident during the financial crisis in 2008. Whenever the stock market had a good day, there would be more people at the restaurants and our revenues would go up,' he said.
The same pattern can still be seen today, he added. Whenever the stock market rises, his restaurants are more well-patronised, especially those in the Central Business District. These include Jing at One Fullerton, where an average meal costs over $100 a person.
yasminey@sph.com.sg