Hong Kong: Affluent investors in Asia are confident their economies will remain robust despite a weak US economy, but are less confident about the outlook for financial markets than three months ago, a survey by ING Asia/Pacific Ltd shows.
“In terms of economies, Asia can decouple to some extent from (a global economic slowdown). But Asian stock markets have already retracted so they are not decoupling. They react instantly to changes in risk appetite around the world,” Nick Toovey, Asia-Pacific head of equity at ING Investment Management, said Reuters as the survey was released on Tuesday.
Investors in Asia’s emerging economic powerhouses India and China, however, were slightly more bullish than three months ago, viewing that recent market corrections provided buying opportunities, the ING survey added.
Even though Japan was not included in the sentiment index score, the survey found Japanese investors even more pessimistic than six months ago, expressing concerns about their domestic economy
The asset manager is overweight on India and favours the country’s financial sector because it gives exposure to the domestic economy. It has downgraded China to underweight from overweight, but still likes Hong Kong equities with China exposure.
The quarterly ING Dashboard Sentiment Index for Asia fell to 125 in the first quarter, from 135 in the fourth quarter and 141 in the third quarter. The decline in sentiment reflects concerns that the US subprime crisis, global credit crunch and a possible US recession would continue to impact financial markets.
Investor sentiment, however, improved in Malaysia as well as Taiwan, where it was helped by the prospect of political change ahead of Nationalist Party candidate Ma Ying-jeou’s victory in presidential elections late last month.
The survey also polled investors in Japan, Australia and New Zealand, but those markets were not included in the sentiment index score.
Japanese, who have been the most pessimistic investors in the region since ING launched its Asia-Pacific survey six months ago, were even more pessimistic this time, expressing concerns about their domestic economy.
The survey, taken in March and covering 13 markets, polled 1,308 investors aged at least 30 and with at least $100,000 (Rs40 lakh) in assets that could be invested.
Singapore, Hong Kong and South Korea saw the sharpest falls in confidence from three months ago as those markets are far more sensitive to a downturn in the US than India and China, ING said.
Toovey believes the US is already in recession, and expects Europe to slow, but says investors will start to get back into US equities later this year. “Wise investors would do it in stages,” he said.
“The United States could see zero growth for all of 2008, but we are more positive about growth in 2009.” ING does not see any Asian economies following the US into recession, arguing that domestic demand should be strong enough to offset an export slowdown.
The asset manager is staying away from Asian export-related stocks and favours investment in physical property and commodities as a way to hedge against rising inflation across the region.