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JP Morgan Hong Kong investor confidence index stagnates
The latest quarterly results of the JP Morgan Investor Confidence Index in Hong Kong, between June 7 and June 25, show that investor confidence has stagnated.
The Asset 19 Jul 2017

The latest quarterly results of the JP Morgan Investor Confidence Index in Hong Kong, between June 7 and June 25, show that investor confidence stagnates at 112 in June 2017.

Karina Law, vice president of retail distribution at JPMAM, says, “The rather stagnant sentiment likely reflects the mix of optimism and uncertainty among investors, with many preferring to adopt a wait-and-see attitude. Almost three quarters (73%) of investors indicate that they will not change their investment strategy in the next six months, though more of them show interest in income investments than in the previous quarter (33% vs. 25% in 1Q 2017).”

Investor confidence on the Hang Seng Index inched up 1 point to 120, the highest level since June 2015. Meanwhile, sentiment on Hong Kong’s Economic Environment, Investment Environment & Atmosphere and Value of Investment Portfolio remained in positive territory at levels of 109, 112 and 118 respectively, little changed from 1Q 2017. The rate of decline in confidence towards the Global Economic Environment slowed in 2Q from the fall seen in 1Q, with the level dropping only one point to 103. Sentiment towards the Amount of Investment fell by 3 points in 2Q.

“The rally of the Hang Seng Index in the second quarter seems to have boosted investor confidence. While 62% still see the Hong Kong stock market in a bull-and-bear fight, more investors believe that Hong Kong has entered a bull market phase (16% vs. 6% in 1Q 2017). And 44% of investors expect the Hang Seng Index to trade above 26,000 points in six months’ time, compared with only 3% in the previous quarter. According to investor perceptions, Hong Kong ranks just behind the US in terms of having the highest growth potential in 2017,” says Law.

“At the same time investors are well aware of potential negative market forces, with 58% of investors expecting a potential interest rate increase in Hong Kong to have an impact on their investment strategy. Around 7-in-10 investors believe potential rate hikes (71%) and balance sheet shrinkage (68%) in the US will have a negative impact on global markets,” says Law.

“When asked about retirement, investors who remain in the workforce target retirement at the age of 62.9 on average. The majority (72%) have a savings or investment plan for retirement and on average, started saving for retirement at the age of 38. These working investors expect HK$4.5 million of reserves to be required for retirement, but almost 4 in 10 are not confident of achieving their goal. In fact, the amount of reserves likely to be accumulated by retirement is anticipated to be 25% below target on average.”

“Despite the uncertainties, we encourage investors to stay invested with a diversified approach, especially when interest rates remain low,” says Law. “A disciplined investment approach is very important for achieving different financial goals, including retirement.”

The JPMICI 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 JPMICI. 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 JPMAM. The survey was developed by interviewing a random sampling of 500 retail investors (N = 512) aged between 30 and 60 who have at least 5 years of continuous investment experience with liquid assets in excess of HK$100,000. The survey was conducted during June 2017.

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