Investors stay upbeat about stock market

Investors remain bullish in their prospects for the stock market, a recent survey by a fund management company has found.

The sentiment was boosted by events in May, according to local investment fund house JF Funds. This included mainland investors being allowed to invest in Hong Kong listed equities, strong economic growth being recorded in Hong Kong and on the mainland and the anticipation of next year's Beijing Olympics.

In their JF investor confidence index, this optimism was reflected by a score of 129 against an average level of 100 for the second quarter of 2007, and a slight increase from 128 in the previous quarter. The survey in June interviewed 500 retail investors aged between 21 and 59, with liquid assets in excess of HK$100,000.

Despite the optimism among respondents, JF Asset Management predicted there would be another technical correction during the summer that would probably be deeper and longer than the one in late February. 'It is encouraging to see that this quarter investors' confidence towards the Hang Seng Index, the local economy, the local and global investment environment and the value of the portfolios all recorded modest increases,' said Terry Pan, JF Asset Management's head of retail.

The firm said that although a steady growth in inflation had resulted in a benign environment for stocks, investors should reduce nominal expected returns to realistic levels. It is unlikely there will be further rises in the value of investors' portfolios in the next quarter and the growth might be hampered by a possible recession in the US.

The survey showed 72 per cent of aggressive investors and 83 per cent of conservative investors preferred to invest in Hong Kong. This suggested more aggressive investors had maintained a positive view towards the local stock market.