J.P. Morgan Asset Management has announced that the JP Morgan Investor Confidence Index (JPMICI) in Hong Kong, which reflects local investor sentiment towards the Hong Kong market over the next six months, had declined to a three-year low, at 103 in June from the March level of 118.
Catherine Mow, head of J.P. Morgan investment centre, commented, “The latest findings reflect the ongoing uncertainty and concerns in both the local and, especially, the wider global markets. With the Greek election in mid-June being too close to call, 51% of polled investors cited a possible Euro collapse with Greece leaving the Euro, and 44% mentioned the ongoing European debt crisis as key factors impacting their investment strategies. The European debt crisis continues to be seen as the biggest ongoing risk in 2012, (cited by 70% of respondents) and Europe is still clearly perceived as the market with the highest risk in 2012 (cited by 84%). Global inflation is another continuing key concern, and is mentioned by 57% of investors.”
Closer to home, confidence is still influenced by worries over the Hong Kong property and stock market bubbles bursting (67% and 66%, respectively, name these as the biggest risks for the remainder of 2012), with nearly as many (61%) concerned over rising commodity prices (food and rent being the main drivers). A potential slowdown in both Hong Kong and Mainland China growth has meanwhile impacted one third of investors’ investment strategies.
“This softening in optimism compared to last quarter’s improvement is further reflected in their outlook on the Hong Kong stock market. Over half of the investors polled (56%) foresee a fluctuating bull and bear Hang Seng Index, while 83% of respondents expect the Hang Seng Index to trade below 20,000 at the end of 2012.”
“With this ongoing uncertainty, investors are more cautious and conservative with respect to their investment allocation. Nearly one in five (18%) are overweighting cash in their investment portfolios in the next six months. Amongst those who would overweight or stay neutral on their fixed income investment, 83% prefer government bonds, followed by 40% in Asian bonds and 35% in high yield corporate bonds,” according to Ms Mow.
