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.
Among the respondents 29 per cent said they had invested in an overseas market in the past six months. Mainland China, Europe and Asia are their favourite overseas markets but further investment in these markets for the next three months was less likely.
The JF investor confidence index is derived from asking six questions.
They included comments on the Hang Seng Index, Hong Kong's economic environment, Hong Kong's investment and sentiment, the global economic environment, the possibility of personal asset appreciation and the possibility of increasing their investment.
The survey was conducted by Cimigo, an independent market research company, on behalf of JF Asset Management.
The JF index and all indices classify investment confidence on a scale from 0 to 200. A number greater than 100 means a positive outlook. This is the fourth quarterly report for Hong Kong since it was first established in September 2006.