Hong Kong: Affluent investors in Asia are much less confident about the outlook for financial markets than three months ago, notably in China, where they are concerned about inflation and the effects of a weak US economy, a survey by ING Asia/Pacific shows.
Investors in Southeast Asia were most pessimistic due to political challenges, record oil prices and recent cuts in oil subsidies.
In China, sentiment dropped sharply, to “neutral” from “optimistic”, for the first time since the quarterly survey was launched in the third quarter of 2007.
In developed markets like Hong Kong, investors appeared confident that markets would rebound in the third quarter but across the region, investors expect inflation to keep rising and 57% of respondents were considering reallocating their portfolios, or investing more, to hedge against inflation.
The quarterly ING Dashboard Sentiment Index for Asia fell 13% to 109 in the second quarter, from 125 in the first quarter, declining for a third consecutive quarter and reflecting concern about the global economic slowdown.
Investor sentiment scores can range from 0, least optimistic, to 200, most optimistic. A sentiment score above 120 is considered “optimistic”, while a reading between 80 and 120 is “neutral” and anything below is “pessimistic”.
Sentiments drop in China, India
China’s score fell to 117 from 136 in the first quarter, following a sharp fall in the country’s equity markets this year. China’s economy is set for 10% growth this year, analysts say, but that is slower than in previous years and 46% of survey respondents there said the economic situation had deteriorated from the first quarter.
Sentiment also dipped in India, Asia’s other economic powerhouse, although only slightly and with a reading of 163, down from 168 in the first quarter, Indian investors remain upbeat.
The survey, taken in June and covering 13 markets, polled 1,313 investors aged at least 30 and with at least $100,000 in assets that could be invested.
Hong Kong investors more upbeat
After India, investors in Hong Kong were most upbeat but only because they believed a 20% plunge in Hong Kong’s stock market in the first half was overdone and the market was poised to rebound. 63% of Hong Kong respondents said they expected their return on investment would increase in Q3.
A survey of Asian private equity by Asian Venture Capital Journal shows private equity investments in Hong Kong slid 76% in the first half, although funds raised more than doubled.
The Philippines, Mongolia, Pakistan and South Korea attracted the biggest growth in private equity investments. Sentiment in the ING survey on the Philippines and South Korea, however, was neutral.