HONG KONG: J.P. Morgan Investor Confidence Index shows investor optimism returning in 1Q12
Apr 16, 2012
Hong Kong, 16 April 2012: J.P. Morgan Asset Management (JPMAM) today announced the results of its 23rd quarterly survey conducted for the J.P. Morgan Investor Confidence Index (JPMICI) 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 investor confidence has picked up significantly from the December 2011 level of 105 to 118 in March 2012, driven by investors' increasingly optimistic outlook towards both the local and global economic environments.
After four consecutive quarterly declines, the JPMICI has moved upwards, rising to the June 2011 level. All the sub-indices have increased, with the Global Economic Environment Sub-Index increasing the most to show a positive outlook at 110 (up 21 points from 89 in December 2011, which suggested a negative outlook). Investors are also increasingly optimistic about the local economic environment: the Hang Seng Sub-Index rose to 131 (up 14 points from 117), the Hong Kong Investment Environment & Atmosphere Sub-Index up 15 points to 119 (from 104) and the Hong Kong Economic Environment Sub-Index up 11 points to 117 (from 106). Investors’ positive outlook has also contributed to increases in the Appreciation of Investment Portfolio Sub-Index and Increase in Investment Sub-Index, which stand at 122 and 111 respectively.
Ms Catherine Mow, Head of J.P. Morgan Investment Centre, said "Investor confidence has been boosted by improvements in both local and global markets, with 52% of respondents citing the global market rally since the beginning of 2012 as having affected their investment strategy, and another 39% of respondents saying that the European debt crisis reaching a turning point has impacted theirs. The pick-up in the Hong Kong property market is also cited by 38% of respondents as having an impact on their investment strategy."
"Improved investor sentiment and an optimistic outlook towards the local market were also observed with 84% of investors stating that they prefer to invest in Hong Kong over the next six months. Almost half of the respondents (48%) expect the Hang Seng Index to trade between 22,001 and 26,000 by the end of September 2012, although more than half (56%) expect a bumpy ride with many fluctuations during this time. A more positive 15% see a bull market (up from 8% in the last quarter)."
While about one third of respondents expect to see better employment opportunities and their income levels to increase in the next six months, 46% of working respondents indicated that their salary has increased this year compared to 2011. One quarter of these workers expressed that they are likely to increase their investments in 2012. This corresponds with the rise in the Increase in Investment Sub-Index.
Nevertheless, the European debt crisis (cited by 65% of investors), property (61%) and stock market (60%) bubbles bursting in Hong Kong remain the biggest concerns in 2012. This echoes the study findings that Europe is perceived by 78% of respondents as the highest risk market in 2012, followed by the United States (68%). On the other hand, 87% of investors see China as the market with the highest potential for growth, followed by India (66%).
Speaking about the Greater China market outlook, Mr Emerson Yip, Investment Manager with the Greater China Team, noted that, "Europe remains an overhang on the market but the liquidity support has proven to be an effective short-term buffer even as the leaders work towards a more stable, long-term solution. Against this backdrop and the improving U.S. economy, we see many optimistic signals in the Greater China region, including solid consumption figures and urban employment growth in China. As most of the distressing news about a tense global economy or hard landing in China has already been priced into equity valuations and driven them down to near-historic lows, we see a good entry point for investors."
"We currently see a soft landing for China as inflation is easing and credit conditions have also started to ease. GDP growth has been strong despite local tightening and a slowing external environment. The banking system is thus far very healthy despite tightening and direct property exposure is manageable as well. As China’s monetary policy and property tightening policy are finally at an inflection point and more evidence of a soft landing becomes clear, we expect to see stronger performance from China’s stock markets. While there is short-term earnings pressure due to slowdown in the Chinese economy in 4Q2011, strong medium-term prospects remain unchanged."
"The Hong Kong market was one of the top performers in Asia this year, powered by a strong upward move in property stocks. With mixed earnings results thus far and a more muted outlook by corporates, the market may face some headwinds. However, the overall liquidity backdrop remains supportive for the market to move higher. We have been adding positions to consumption and cyclicals."
"With lessened political risks after the presidential election, the Taiwan market should continue to rebound from a very poor 2011. Looking ahead, the market is best summarized by two main trends – exporting mobility devices and importing Chinese tourists and capital – and hence we continue to maintain a strong focus on technology and consumption sectors."
"We are positioning our Greater China portfolios away from defensive sectors and towards cyclical growth sectors. Most importantly, we are focusing on investing in the long-term growth driver, domestic consumption. Our principal overweights include Chinese financials, Chinese property, Chinese consumption, Macau gaming and Taiwanese upstream technology. On the other hand, Hong Kong and Taiwan banks, telecommunications and utilities, and Taiwanese 'old economy' technology look less favorable."
The J.P. Morgan 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 atmosphere, (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 J.P. Morgan 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.
Cimigo, an independent market research company, was commissioned to conduct the survey on behalf of J.P. Morgan Asset Management. The survey was developed by interviewing a random sampling of 507 retail investors (N = 507) aged between 30 and 60 who have at least 5 years of continuous investment experience with liquid assets in excess of HKD100,000. The survey was conducted during March 2012.
J.P. Morgan 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 Taiwan, Korea, India and Singapore, 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
Harriet Ngan, Internal & Media Communications
Telephone: (852) 2800 2776
Issued by JPMorgan Funds (Asia) Limited
Notes to Editors
J.P. Morgan Asset Management ("JPMAM") is the brand name of J.P. Morgan Chase & Co’s asset management companies, including JPMorgan Funds (Asia) Limited.
J.P. Morgan Asset Management is a global asset management leader providing world-class investment solutions to clients. With over US$1.3 trillion in assets under management (the Asset Management client funds of J.P. Morgan Chase & Co. as at 31 March 2011) and offices in 41 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.
Commitment to Hong Kong
JPMAM's investment management business in Asia has remained headquartered in Hong Kong for more than three decades and today has over 500 employees based in this location. JPMAM and its investment arm - JF Asset Management - are one of the largest local investment managers in Hong Kong with over US$72 billion (31 December 2011) of funds managed across the Asia Pacific region.
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, Global Multi Asset Group and Global Fixed Income Groups, forms the core of JPMAM’s investment management operations. In addition to the knowledge and experience of our individual investment professionals, the stability of the team has enabled JPMAM to develop strong relationships with local clients.