With inflation running at nearly twice the average historical rate, one would expect people to be holding as little cash in banks as possible.
Inflation was 4.6 per cent last year, while banks typically pay less than 1 per cent in interest for their savings accounts. This means cash in savings accounts is actually losing its value.
But a new survey by Franklin Templeton Investments has found that four in 10 people in Singapore, or 46 per cent, prefer to leave their funds in a bank account, whether fixed deposit or savings.
Franklin Templeton's director of retail fund distribution in South-east Asia, Mr William Tan, said that one possible explanation is that people still remain loss-averse and prefer not to put their money in the stock market. This could be connected to bad experiences in the past or "poor existing returns".
The Franklin Templeton Global Investor Sentiment Survey also showed that even though Singapore's stock market is not as exciting as other regional markets, the majority of Singaporean investors are upbeat about the local market.
The survey found that more than half of the Singapore investors interviewed, or 57 per cent of 500 people, are very optimistic or optimistic about the stock market in Singapore.
They expect the local bourse's performance this year to be similar to last year's.
Last year, Singapore stocks ended mostly higher, with the benchmark Straits Times Index up 20 per cent - its best performance in the last three years.
Said Mr Tan: "In our survey, the top two areas that would perform best for equity and fixed income are Asia and Singapore."
While investors may come across as conservative by keeping their money in Singapore, Mr Tan said it is due to a "home bias". "This tends to be very strong among investors, which makes them prefer more home-country investments.
"That leads to investors' portfolios being very much focused on a single country, and I'm not sure that is truly being conservative."
The annual survey, commissioned by Franklin Templeton Investments, was conducted online from Jan 14 to Jan 25. The respondents are 25 years old and older, with a minimum level of investable assets of $50,000, as well as owned investments excluding real estate. They had average investable assets of $376,000.
But it is quite a different story for fund managers, who continue to favour equities as the main asset class for investing this year.
HSBC's latest fund managers' survey found that 57 per cent of global fund managers favour equities, but this is a drop from 75 per cent three months ago.
In emerging markets, which constitute markets such as India and China, equities take the top spot, as over half of the fund managers surveyed hold positive views of them.
Emerging markets have performed poorly compared with their developed market counterparts.
The MSCI Emerging Markets Index was up 0.24 per cent at Friday's close, while the US S&P 500 Index was up 0.4 per cent.
Still, HSBC Singapore's head of retail banking and wealth management, Mr Paul Arrowsmith, said that "emerging markets will continue to provide long-term growth potentials with their relatively strong fundamentals".
Holding a similar opinion, Mr Tan pointed to the power of urbanisation.
"Urbanisation drives consumerism, which drives demand for commodities. It is a simple but powerful idea," he said.
"Obviously, the emerging markets' urbanisation is happening at a rapid rate - with Brazil, for example, it's at 80 or 90 per cent - and consumerism continues to be very strong.
"With a high urbanisation rate, you have replacement demand and people keep buying new things. With China and India in the early stage of urbanisation, you see a lot of this happening."
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