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JF Investor Confidence Index shows cautious optimism from investors

Apr 02, 2007

Hong Kong, 2 April 2007: JF Asset Management (JFAM) today announced the results of its third quarterly survey conducted for the JF Investor Confidence Index (JFICI) in Hong Kong. The Index is designed to reflect local investor sentiment towards the Hong Kong stock market over the next 6 months. The latest finding shows that Hong Kong investors remain cautiously optimistic about their local stock market despite the major global market corrections after Chinese New Year.

In the latest survey, the JF Investor Confidence Index recorded 128 with the neutral level at 100, a slight drop from 134 in the last quarter. This figure suggests that Hong Kong investors are a little concerned at the mixed US economic data which can clearly have a ripple effect on global markets. As a result, they are turning slightly more conservative compared to 3 months ago, although they remain confident over a positive market performance for the 6 months ahead. In particular, aggressive investors are naturally more confident of continued growth after the healthy period of consolidation in the first quarter of 2007.

Mr. Terry Pan, Head of Retail Business, commented, “The latest JF Investor Confidence Index and its sub-indices indicate that Hong Kong investors are expressing some mixed feelings. Backing a positive view is the strong economic backdrop in China and Hong Kong, and a generous fiscal policy to start off the Chief Executive’s new term, so Hong Kong investors remain confident towards the Hang Seng Index, the local economy and its investment environment. Yet, the unclear US outlook is affecting their expectations for global stock markets, producing a more negative feeling. The net effect is some cautious optimism on their personal investment portfolios.”

The JF Investor Confidence Index score is derived by asking survey respondents six questions to clarify the confidence of investors about (Q1) the Hang Seng Index, (Q2) the HK economic environment, (Q3) the HK investment environment and sentiment, (Q4) the global economic environment, (Q5) the possibility of personal asset appreciation, and (Q6) the possibility of increasing their investments. These 6 questions form the sub-indices of the JF Investor Confidence Index. The Index and all sub-indices have a range between 0 and 200. A number greater than 100 represents a positive outlook and vice versa.

In a reflection of the cautious sentiment, 51% of the investors polled this quarter intend to take an aggressive stance over the next six months, compared to 59% in the last survey. In terms of market preference, only 64% of aggressive investors prefer to concentrate their equity investments in Hong Kong, down from 71% higher than in December 2006. This nevertheless still indicates a majority of aggressive investors continue to expect the Hong Kong stock market to rise in 2007.

Mr. Geoff Lewis, Head of Investment Services, concurred, “The Hong Kong and China markets are still regarded by local investors as likely to outperform in 2007, as are Europe and US. They may appear attractive in comparison with emerging markets in other regions that have enjoyed a more extended rise over the past three years. The US market in particular may need a period of consolidation but in the medium to long-term will continue to show signs of expansion.”

The survey also indicates that 33% of survey respondents had invested in overseas markets in the past 6 months. In terms of their market preferences, Mainland China (67% vs 54%), Europe (28% vs 27%), India (24% vs 18%) and the US (30% vs 21%) are their preferred overseas markets. Of these preferred markets, Mainland China again enjoyed the biggest increase of 13% in its participation rate. Conversely, investors are less inclined to increase their exposure to Asia (24% vs 30%) and Emerging Markets (21% vs. 25%) at this juncture.

Cimigo, an independent market research company, was commissioned to conduct the survey on behalf of JF Asset Management. The survey was developed by interviewing a random sampling of 500 retail investors (N = 500) aged between 21 and 59 who have liquid assets in excess of HKD100,000. The survey was completed in March 2007.

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For further information please contact
Daniel Chui, Head of Investor Communications
Telephone: (852) 2800 2874
Email: daniel.wc.chui@jfam.com
Issued by JF Asset Management Limited

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Notes to Editors

JF Asset Management (“JFAM”) forms a key part of JPMorgan Asset Management Holdings Inc. and is the descriptive name used for our asset management businesses in Asia ex-Japan. The brand name “JPMorgan Asset Management” covers the asset management activities of JPMorgan Chase & Co. globally.

JPMorgan Asset Management is part of J.P. Morgan Chase & Co. and is a global asset management leader providing world-class investment solutions to clients. With US$1,013 billion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 31 December 2006) and offices in 40 locations around the world, JPMorgan Asset Management offers global coverage with a strong local market presence, and leadership
positions in most asset classes.

Commitment to Hong Kong
JFAM’s fund management business has remained headquartered in Hong Kong throughout the past three decades and today has nearly 300 employees based in this location. Since its formation, JFAM has established itself as one of the largest local portfolio managers in Hong Kong with over US$34billion (31 December 2006) of funds managed locally.

As part of a major global investment group, we are committed to providing specialist teams with the resources needed to deliver successful products and performance to our clients. The Hong Kong-based Pacific Regional Group, together with the local presence of the Global Portfolios Group, form the core of JFAM’s investment management operations. In addition to the knowledge and experience of our individual investment professionals, the stability of the team has enabled JFAM to develop strong relationships with local clients.

The opinions expressed in this document are those held by the author at the date of publication.  The reviews expressed herein are not to be taken as an advice or recommendation to support an investment decision.  The information included in this document has been taken from source considered as reliable; JPMorgan Asset Management cannot however guarantee its accuracy.