ING research study reveals robust investor sentiment across Asia

According to the ING Investor Sentiment Tracking Study launched today, investor sentiment remains robust in most Asian countries despite fears in the U.S. that the subprime crisis will spread to the wider global economy. 

This is the first of a quarterly survey by ING Asia Pacific to track and anticipate changes in market sentiment and investment attitude across 13 Asia-Pacific markets.  Research firm TNS conducted the study during July and August 2007 through both online and face-to-face interviews with 1,308 mass affluent investors  in Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand. 

Investor Confidence Highest in China and India

Investors in Asia, with the exception of those in Japan, are generally positive about the investment environment in the near future.  Among the 13 surveyed markets, investors in the two “hottest” Asian economies, India and China, are the most bullish. Over 70% of the respondents in both markets believe that the economic situation in their home country will improve in the next three months.  They are followed by Malaysia (60%) and the Philippines (56%). The majority of investors in Hong Kong (55%) and Singapore (55%) are slightly more conservative but also believe it will improve.  With only 26% of respondents believing that their economy will improve over the next three months, Japanese investors are the most pessimistic in the region, possibly reflecting the country’s political changes. 

The survey findings suggest a possible correlation between investors’ level of sophistication and their confidence in the market.  While investors in more mature economies such as Australia, Hong Kong, Japan and Singapore are seen to be more conservative in their outlooks; those in India and China, on the contrary, are extremely optimistic possibly due to their short investing history.

“China and India are where you should be invested for the future, a strategy we’ve adopted for our business too.  Although both markets will experience further development, we believe that a long term commitment to these two countries will provide tremendous return for the growth of investments and for our business in the region,” said Chris Ryan, Regional CEO for ING Investment Management Asia Pacific. 

Investors Put Money into Stock Market as Bull Run Continues

Investors, mostly those from countries where stock trading is a popular investment tool, believe that the stock market will rise in the next three months.  29% of the respondents also claimed that they will invest more in local stocks in the next quarter. 

Given the bull market in China, it is not surprising that investors there are the most positive. In China, 31% of the respondents believe that the domestic market “will rise considerably” in the next three months.  This figure is only 18% in Korea, 16% in Hong Kong, 15% in Singapore and 14% in India. 

Less Return on Investment Expected in the Next Three Months

Most investors across Asia believed that the investment climate would continue to be positive, although they did not expect their return on investments to be as strong as the previous six months. Investors in China, India and Philippines were the exception believing that the return on their investments will be just as strong in the next three months.

“Given the already good performance seen in the last three months, investors in more established markets don’t expect the same magnitude of increase in the near future. However, investors in thriving economies still remain very optimistic,” commented Mr. Ryan.

Asian Investors Prefer Local Stocks

Local stocks emerged as the most popular choice of investment in Asia with over half of the surveyed countries, namely Japan, Hong Kong, Singapore, Korea, China, Taiwan and Thailand, selecting this asset class as their preferred investment tool.  The second most popular investment in most of Asia is property, with Australia, New Zealand, Indonesia and India, choosing property as the most preferred investment vehicle. Cash is the preferred investment tool in Malaysia and the Philippines. While mutual fund and unit-linked investments are commonly used by Asian investors, their popularity still lags behind the historical favourites of stocks and real estate.  
           
IPO Frenzy Continues in Hong Kong and China

The IPO market in Hong Kong remains buoyant as nearly 90% of surveyed investors claimed that they will apply for an IPO in next three months, while China comes in second at 66%, followed by Singapore at 57%.  Despite the popularity of IPO investments in Hong Kong, only 34% of respondents reported using overdrafts and loans for IPO financing.  

China: The Market of Choice for Property Investments

Across the 13 countries, respondents who said they will consider investing in properties are most interested in China, followed by Australasia and Vietnam. 
The survey revealed that most property investments take place in the home or a neighbouring country.  Notable exceptions include Korea, where investors favour properties in China, Australasia and Vietnam.

“The ING Investor Sentiment Study is the first study of its kind: not only does it regularly track investor sentiment in Asia; but it is also the most far-reaching one geographically as it surveys 13 markets in Asia, enabling comparison between countries that was previously not possible,” concluded Mr. Ryan.