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JF Investor Confidence Index Shows Confidence Levels Reaching Highest Point in 15 Months

Oct 16, 2007

Hong Kong, 16 October 2007: JF Asset Management (JFAM) today announced the results of its fifth 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 market over the next 6 months. The latest findings show that the confidence level of Hong Kong investors is almost at the point it was in December 2006 – its highest since JF introduced the Index. In addition, investors are now inclined to invest further in the local and mainland markets than any time in the preceding 15 months.

In the latest survey, the JF Investor Confidence Index recorded 134 against a neutral level of 100, rising 5 points from 129 in the second quarter of 2007. This indicates that Hong Kong investors are very positive about the Mainland and Hong Kong’s fiscal and economic policies and have confidence in the sustainable economic growth in China and Hong Kong in the near future.

Mr Terry Pan, Head of Retail Business said, “The Index shows that although local investors are quite optimistic about the investment environment, they feel most confident about the performance of the Hang Seng Index over the next 6 months. This sub-index alone rose an impressive 12 points this quarter compared to the last quarter in June 2007. The results indicate that Hong Kong investors are now more bullish and expect to benefit from further investment opportunities in the longer term.”

“Chances of the Hang Seng Index hitting new highs under a strong liquidity-driven environment cannot be underestimated.” said Mr Pan while sharing his views on the Hong Kong market. “Economic growth and corporate earnings are also supportive to share prices although valuations are not cheap. As always, share prices tend to overshoot on the upside into a liquidity-driven rally.”

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 subindices have a range between 0 and 200. A number greater than 100 represents a positive outlook and vice versa.

46% of the investors polled this quarter intend to take an aggressive stance over the next six months, which is lower than the 52% in the last survey. In terms of market preference, 70% of aggressive investors and 74% of conservative investors prefer to concentrate their equity investments in Hong Kong, similar to the results observed in the previous quarter. The similarity between conservative and aggressive investors with regard to market preference and investment approach suggests the possibility of over-exposure to a single stock market among the conservative investors. In particular, this survey tells us that 32% of these investors with a positive outlook for the Hong Kong stock market are not ready to increase their investment amounts because of being fully invested in the market already.

Mr Geoff Lewis, Head of Investment Services added, “Strong economic growth in China and Hong Kong has maintained the momentum of the Hong Kong stock market, and the recent launch of QDII products in the mainland China has provided further fuel for the rally.” Mr Lewis went on to say, “Much attention is still being given to the US sub-prime mortgage crisis and unstable US economic data. However, the Hang Seng Index has delivered the verdict of local Hong Kong investors on these external worries. The level of the index speaks for itself.”

The survey also indicates that 36% of survey respondents had invested in overseas markets over the past 6 months. In terms of their market preferences, Mainland China (81% for Sept 07 vs. 69% for Jul 07), Europe (32% for Sept 07 vs. 28% for Jul 07) and US (22% for Sept 07 vs. 20% for Jul 07) were their preferred overseas markets.

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 60 who have liquid assets in excess of HKD100,000. The survey was completed in September 2007.

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 by local investors.

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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$1.1 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 30 June 2007) 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 more than 450 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$36 billion (30 June 2007) 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, forms 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.