Wednesday, August 20, 2008

Insurers cutting back on stocks, moving into bonds

Insurance companies are investing in bonds and cut equities exposure. Though I want to take a contrarian view but I think I am taking a cautious view for now on all assets class. Will stick to my strategy that I publish beginning of this month -- do nothing until global market stabilizes.

(Business Times)"Overall, our allocation for the fixed income market will likely increase as we expect rates for the short to medium term to steepen, along with the expectations of higher domestic interest rates," said Kurnia Insurans Bhd's chief investment officer Pankaj Kumar.

Currently, slightly more than half of Kurnia's portfolio is in fixed income, about a quarter in cash, 12 per cent in equities and another eight per cent in real estate investment trusts.

Allianz Malaysia Bhd also follows the same strategy after reducing its position in "risky assets" to preserve capital.

As it stands, Allianz's exposure to equities is below five per cent and the balance is in fixed income. "For the second half of 2008, we will continue to accumulate fixed income at attractive yields," he said.

Although bonds are becoming more attractive, Prudential Fund Management Bhd chief investment officer Yoon Mun Thim cautions that the market is still divided over an interest rate hike.

Nonetheless, there could be a buying opportunity in the stock market over the next six months, Kurnia's Pankaj said.

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