Retiree learns the hard way that diversification must match one's risk appetite

The Singaporean was led into investing in markets he did not understand

- Angela Tan Senior Business Correspondent

When Matthew met his relationship manager in early 2020, he thought he was being prudent in seeking financial advice from an expert.

The Singaporean retiree had parked most of his spare cash in local blue-chip stocks and selected Singapore-listed real estate investment trusts (S-Reits). But his relationship manager had other ideas.

Matthew recounted how he was told to diversify and that his portfolio was overly concentrated in Singapore, as the relationship manager went through presentation slides, valuations and projections on emerging opportunities in China.

The relationship manager argued that to exclude China from his portfolio would be missing out on the growth of the world's most populous country. China's sheer size alone — accounting for a fifth of the world's population and gross domestic product — made it hard to ignore.

China's equity market, led by billionaire Jack Ma's Alibaba, was generating impressive returns, the relationship manager had continued, sharing research reports pushing the stock.

The logic was convincing. Matthew agreed to put some money into funds that track China's technology and consumer sectors, as well as those which gave him exposure to other markets like China, Japan and the United States.

"Aiyah. You know the rest of the story," Matthew tells The Sunday Times. "Everything came crashing after Beijing quashed Ant Group's IPO (initial public offering) out of the blue in November 2020. The upheaval in China's tech sector went on to hit Alibaba, Tencent, Meituan and Didi."

These stocks are of leading Chinese tech firms involved in e-commerce, social media, food delivery and ride-hailing. Ant is the fintech affiliate of Alibaba.