Latest Index shows Hong Kong Investors are Bearish

Apr 07, 2009

  • The Index is designed to reflect local investor sentiment towards the Hong Kong market over the next 6 months, the latest findings confirm that Hong Kong investors are bearish.

Hong Kong, 7 April 2009:  J.P. Morgan Asset Management (JPMAM) today announced the results of its eleventh 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, and the latest findings confirm that Hong Kong investors are bearish.

The J.P. Morgan Investor Confidence Index dropped to 95 against a neutral level of 100 in the latest survey, a slight decrease of 3 points from the fourth quarter of 2008.  The March index shows that the slight rebound of confidence in December 2008 has been undermined again by the weakening global economy.  The sub-indices presenting the Hong Kong investment environment and atmosphere, global economic environment and appreciation of investment portfolio reached their lowest level since the launch of the survey.

Mr. Terry Pan, Head of Retail Business said, “During the past three months, investors have not seen any concrete results from the rescue plans that were implemented in the US and Europe, and the problem of toxic assets is far from being resolved.  As well as the global economy, the Hong Kong economy is also facing problems with rising unemployment the biggest worry.  All of this makes investors extremely cautious about their investments.  In the last quarter, 23% indicated that they were likely to increase their investment but only 18% said the same this quarter.”

“Only 31% of survey respondents expect the Hang Seng Index (HSI) to exceed 14,000 points by the end of September, while 39% anticipate the market will move sideways between 12,001 and 14,000 points.  Market sentiment has been largely influenced by news of stimulus plans and corporate earnings in the first quarter of 2009.  The economic stimulus plans from the US and China, and the increased earnings of some H-share companies have, to some extent, offset the gloomy news in the market.  However, the performance of the HSI may stay short-term news-driven for some time.”

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 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 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.

58% of survey respondents this quarter indicated a preference for conservative investment strategies, which is similar to the 61% observed last quarter.  Both aggressive (88% for Mar 09 and 83% for Dec 08) and conservative investors (87% for Mar 09 and 94% for Dec 08) continue to show a preference for concentrating their investment in Hong Kong market.  Both should be cautious that their portfolios may become vulnerable to the volatility in the Hong Kong market.

The survey also shows that 38% of survey respondents have invested in overseas markets over the past six months.  In terms of market preferences, Mainland China (68% for Mar 09 vs. 68% for Dec 08), USA (35% for Mar 09 vs. 28% for Dec 08), Emerging markets (30% for Mar 09 vs. 25% for Dec 08) were their preferred overseas markets. 

Grace Tam, Vice President of Investment Services added, “Faced with the uncertainties of the global economy, local investors tend to invest in markets in which they have the most confidence, and that’s China.  Moreover, while developed countries such as the USA and the UK are expected to have negative GDP growth, China is still eyeing positive growth of 8% this year.  China is likely to lead the world economy out of recession.”

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 511 retail investors (N = 511) 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 completed at the end of March 2009.

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 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
Issued by JPMorgan Funds (Asia) Limited

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Notes to Editors

J.P. Morgan Asset Management (“JPMAM”) is the brand name of J.P. Morgan Chase & Co’s asset management companies.

J.P. Morgan Asset Management 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 J.P. Morgan Chase & Co. as at 31 December 2008) and offices in 40 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 about 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$74.6 billion (31 December 2008) 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, 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.

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