By Laurel Teo, Director of Society Advocacy Engagement at CFA Institute
I still remember the first time I saw light passing through a prism. When our teacher beamed an innocuous ray of white light at a palm-sized pyramid of clear glass, the rainbow that burst through the other side was nothing short of a miracle — the sight itself, and also how it struck dumb an entire class of restless 12-year-olds (albeit for only a minute or so).
That sweeping fan of colours came to mind these past few weeks as our team tried a little experiment in Asia Pacific.
In the past years that we have conducted the annual Global Market Sentiment Survey (GMSS), the data collected has been analysed and interpreted largely by CFA Institute staff. The resultant effort is a macro take, exactly as the title indicates — a measurement of sentiments globally, with some comparison among major economies and across three broad swathes of regions (Americas; Europe, the Middle East, and Africa; and Asia Pacific). The end product? A fairly standard report issued, with varying degrees of survey detail on each region, depending on where the report was released.
This year, we decided to try something different. We enlisted the help of CFA Institute members, the local experts, in five major markets: Australia, China, India, Hong Kong, and Singapore. Separately in each market, we got together with a team of CFA member society leaders and advocacy volunteers and asked them: How compelling are the findings to your investment community? What stands out for you? Tell us why you think your local members voted this way.
The result was startlingly colourful, to say the least.
Australia declared mis-selling by financial advisers the priority focus. In the survey, almost half (48%) of Australian respondents regarded mis-selling as the most serious ethical issue for 2014, more so than in the previous year (about a third, or 36%). This was unlike elsewhere in Asia Pacific where market fraud was the top concern, and also against the global trend where mis-selling has retreated as the top ethical concern locally (25%, down from 29% in the 2013 survey).
It turns out that with a change in regime recently, the new government in Australia is considering rolling back some key reforms intended to address mis-selling. Evidently, investment professionals in Australia are worried that things will only get worse. CFA Institute members in Australia (Sydney, Melbourne, and Perth) have already communicated that concern with key stakeholders including regulators. What the GMSS findings demonstrate would help to strengthen their case. Using that data to zoom in and focus on the messaging of deepening concern over mis-selling — to a wider audience through local media —also helps our volunteers in Australia to advocate a core issue that is meaningful to their market.
In mainland China, local CFA Institute members felt that what the domestic audience would find interesting is how GMSS shows them what the rest of the world thinks of the Chinese economy and its impact on other markets, and also how China itself (through the survey respondents) thinks of the global economy and financial regulatory and market integrity issues.
In Hong Kong, the market that was the most pessimistic about its own local economic outlook (although fairly optimistic about the global market), CFA Institute advocacy volunteers said that was a prime indicator of a looming crisis in confidence. In recent years the local market has been beset by concerns over losing its competitive edge, and dissatisfied with a perceived lack of clarity on Hong Kong’s future direction. This plays perfectly into what the local society has been advocating: a bolder plan and decisive industry reforms to help Hong Kong capture more growth opportunities in the region.
In Singapore, concerns over market fraud stood out — probably because the survey was conducted at a time when specific high-profile controversies were taking place in the local market, leading to trading halts of a few counters on the Singapore Exchange. Singapore was also particularly concerned about the lack of ethical culture within firms affecting investor trust in the industry. That is likely a reflection of Singapore’s growing ambitions in the investment and wealth management space, said local CFA Institute members. What this means also is that our work in promoting standards and ethical conduct becomes all the more relevant.
In India, what our SFMI team thought was interesting — that an overwhelming 78% cited political instability as the biggest risk to the local market — was dismissed as a non-issue by local CFA Institute members. That’s obvious, they said, since everyone in India knows there’s a general election next year. What they found more intriguing was the fact that Indian respondents felt that the recovery in Europe would have a much greater impact on the domestic economy than the recovery in China.
So we had one survey, but at least five different stories and interpretations from a single region. The rich diversity of local colours that emerged was exciting to behold. But more importantly, they helped to make GMSS more relevant and meaningful to investment professionals in these key markets, and ultimately, to strengthen investor-focused advocacy causes. All we had to do was to look at GMSS through their lens.