JF Asset Management launches Hong Kong's first investor confidence index

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Sep 28, 2006

Hong Kong, 28 September 2006: JF Asset Management (JFAM) today announced the launch of the first JF Investor Confidence Index (JFICI) in Hong Kong, which will be published on a quarterly basis. 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 currently hold a cautiously optimistic view towards their local stock market.

In its initial survey, the JF Investor Confidence Index recorded 125 with the neutral level at 100, indicating that Hong Kong investors have a bullish view towards the Hong Kong market. High net-worth investors (those with liquid assets more than HKD500,000), mutual fund investors (those who have invested in funds in the past 12 months), and aggressive investors, tend to agree to a more optimistic outlook.

Mr Ken Tam, Chief Executive of JF Funds commented, “In general, investors are positive towards the economy. The highest sub-index score was for an increase in the Hang Seng Index, followed by a better Hong Kong investment environment and an appreciation in their investment portfolio. However, 65% of them seem to have adopted a ‘wait-and-see’ attitude and claimed they will maintain the same investment amount in the coming 6 months. Their cautious outlook may have been due to their concerns over further commodity price increases (which have since decreased) outweighing their expectation of income gains and employment opportunities.”

The JF Investor Confidence Index score is derived from asking survey respondents six questions to clarify the confidence of investors about (Q1) the Hang Seng Index, (Q2) HK economic environment, (Q3) HK investment environment and sentiment, (Q4) global economic environment, (Q5) the possibility of personal asset appreciation, and (Q6) the possibility of increasing their investment. 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.

Despite their cautiously optimistic sentiment, 55% of investors intend to take a conservative stance over the next six months, while only 45% see themselves as becoming more aggressive. In terms of market preference, 78% of conservative investors prefer to concentrate their investment in Hong Kong, while only 57% of aggressive investors prefer to do so.

Professor Raymond So, Associate Professor of the Department of Finance, The Chinese University of Hong Kong commented, “The conservative investor may, indeed, be taking too much risk. Long-term empirical evidence shows that international diversification can help improve returns and reduce volatility of an investors’ portfolio. While conservative investors may think they are prudent by investing only in the market that they are most familiar with, they may be accepting an inferior risk return relationship. They should think about investing overseas too.”

The survey also indicates that one third of survey respondents had invested in overseas markets in the past 6 months. In terms of their market preferences, Mainland China (37%), emerging markets (24%) and Europe (20%) are their preferred overseas markets.

Market Insights Group, 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 August 2006.

JPMorgan Asset Management has been monitoring retail investor sentiment closely within the major markets of Europe for some time by conducting an Investor Confidence Survey. This first began in London in the early 1990’s with the publication of a UK Investor Confidence Index. In Asia, a similar Investor Confidence Index has been launched by the firm in Japan and Taiwan and has been well received.

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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$898 billion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 30 June 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$26 billion (30 June 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.