Investors are opting to keep more cash on the sidelines amid a still-volatile global macro environment, according to data from Moomoo Singapore.
More than 80% of users polled by the digitalised brokerage said they intend to allocate more cash to their investment portfolios - even while they remain invested in the stock market.
This will allow them to access investment opportunities more quickly in the event of a downturn, according to the majority of 300 respondents polled by Moomoo Singapore.
A series of continued interest rate hikes by the US Federal Reserve and concerns over corporate earnings have sparked fears of a looming recession, rattling investors who are still uncertain if the worst of 2022’s bear market is behind them.
Against this backdrop, some market pros are urging investors to keep more cash on the sidelines.
“With the higher-for-longer interest rate environment, holding onto cash has been a strategic move by many investors. With the risk-free rate significantly higher compared to pre-pandemic years, investors holding onto their cash are able to yield attractive rates while waiting for a possible downturn in the market,” Gavin Chia, CEO of Moomoo Singapore, says.
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“With a possible looming recession, investors with cash can quickly deploy this cash into equities should a downturn in the market occur,” he adds.
One way investors can stockpile cash is by squirreling excess money in a bank savings account. However, a common argument against is the erosion of one’s purchasing power in the face of inflation.
The Monetary Authority of Singapore (MAS) projects core inflation to be around 4%, while the average fixed deposit interest rate lingers at approximately 3.38%. In such a volatile environment, investors are in dire need of a reliable yet flexible investment avenue that provides a decent return for their cash reserves.
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“With the global geopolitical tensions and wars raging on, the market is volatile. Investors in general are looking for a decent return to ‘park’ their cash,” says Chia.
He highlights the importance of diversifying one’s investment portfolio, such as investing in Money Market Funds (MMFs). These have gained popularity as they offer a viable and attractive alternative for short-term saving. MMFs enable investors to potentially increase their interest earnings, aligning with their strategic investment needs.
This is where Moomoo Singapore's T+0 SGD Money Market Fund (MMF) — which it introduced in November in collaboration with Fullerton Fund Management — becomes particularly relevant. The T+0 SGD MMF, also known as the Fullerton SGD Liquidity Fund, is a groundbreaking product offering unprecedented flexibility and liquidity. This fund invests in high-quality Singapore government-related bills and bank deposits, ensuring safety and reliability. The same-day settlement feature of this fund is a game-changer, offering investors much greater liquidity than standard cash management funds.
“This is an important consideration for investors with intraday liquidity requirements while simultaneously addressing their need for enhanced returns on their cash assets. For retail investors who trade actively, intraday liquidity is needed to meet time-sensitive settlement windows,” explains Chia.
He notes that the T+0 SGD MMF has no fixed holding tenures and limitations on liquidity, unlike other popular cash instruments such as fixed deposits.
"If an investor needs cash urgently, breaking the tenure of a fixed deposit can result in lower or nil returns," explains Chia. In contrast, the T+0 SGD MMF provides the flexibility to redeem holdings fully, ensuring that investors' capital remains quickly accessible, subject to dealing deadlines and daily redemption limits at the fund level. This flexibility is a significant boon for those looking for both security and liquidity in their investments.
Looking forward to the first half of 2024, the investment landscape appears rife with challenges and opportunities. The strategic advantage of Moomoo Singapore's MMF lies in its ability to offer high liquidity, which is crucial for investors aiming to capitalise on the fluctuating market conditions. By maintaining a liquid asset base, investors can swiftly manoeuvre market uncertainties, seizing investment opportunities as they arise.
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“The T+0 SGD MMF is more than just an investment product; it is a symbol of Moomoo Singapore's commitment to providing flexible, profitable, and secure investment options for its customers. Whether you are a growth-driven retail investor, a high-net-worth individual, or a business professional seeking enhanced returns on cash assets, Moomoo Singapore's MMF offers a unique opportunity to maximise investment potential for all investors in a dynamic and challenging economic environment,” Chia adds.
Moomoo Singapore users are no strangers to MMFs. During the third quarter ended September, assets under management in the wealth management segment grew sixfold y-o-y, as more clients turned to the competitive returns of MMFs.
Changing the investment landscape
Moomoo Singapore has been at the forefront of revolutionising the investment landscape in Singapore since its establishment in 2021.
“In just shortly over two years since its launch in Singapore, Moomoo Singapore has swiftly risen to become a leader among digital investment platforms, claiming the top spot in both accumulated download count and daily active users (DAUs), according to open data reports,” Chia notes.
Today, the MAS-licensed platform has more than 850,000 users in Singapore, or one in four Singapore residents aged between 20 and 70. Investors can trade several investment products, including stocks, fractional shares, options and funds, on the Moomoo platform.
For the 500 Moomoo Singapore users aged between 50 and 70, nearly half expect investment income to form up to 30% of their future retirement nest.
Stocks remain the largest component of one’s investment portfolio, particularly as one inches closer to retirement, according to the same poll, which showed that stocks formed at least 80% of the group’s portfolio.
This is in line with the findings from the Singapore Financial Resilience Report, which showed that while the majority of investors in Singapore possess at least basic knowledge of stocks, they claim to have no knowledge of other products, such as options and warrants, futures, forex and more.
“Investor education is one of Moomoo Singapore’s key pillars. We will continue to roll out educational materials to help our users better understand the wealth of options available to them in their investing journey. Likewise, we will continue to help them understand the importance of holding cash, particularly in such uncertain times,” Chia says.
Among the wealth of tools available on the Moomoo platform, Moomoo Singapore is offering complimentary Level 2 data for Singapore and US-listed stocks for a year, as well as Level 1 data for stocks listed on the Hong Kong Stock Exchange.
Market data, also called an order book, provides investors with key insights regarding the bid scope and price levels of quotes submitted to an exchange. This data is a critical component for many trading strategies.
While Level 1 data provides traders with basic quote data, Level 2 data shows what is called the "order book" for an asset, or the list of orders that are placed for buying and selling a particular asset over time.
