Confidence levels among retail investors hit 3-year low: Survey

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Latest findings show the JP Morgan Confidence Index dropped sharply in December 2015 to 101, compared to 116 six months ago.

SINGAPORE: Retail investors’ confidence in the local stock market and economy in the next six months declined sharply in December 2015, to the lowest level since June 2012.

The JP Morgan Investor Confidence Index – a half-yearly survey of investor sentiment by JP Morgan Asset Management – dropped 15 points to 101 in December. The index stood at 116 six months ago.

An index level of 100 is neutral, while 200 is extremely optimistic and 0 is extremely pessimistic.

Said Mr Brian Tan, JP Morgan Asset Management’s Head of Fund Sales: “The latest survey results are hardly surprising and are a reflection of a tough fourth quarter for investors that has certainly carried on into the start of 2016. With weak oil and commodity prices coupled with policy divergence finally underway, we expect to see more volatility ahead.”

He noted that despite lower confidence levels, the survey also showed that investors recognise the need to stay invested.

About 36 per cent of investors expected the STI to rise in the first half of this year – down from 53 per cent six months ago, while 31 per cent thought the STI would decline. As for local economic conditions, 28 per cent expected an improved environment, while 39 per cent predicted conditions would worsen.

However, despite the loss in confidence, 85 per cent of investors surveyed said they plan to stay invested and not try to time the market.

Looking ahead, JP Morgan predicts further headwinds for the local stock market, citing slower economic growth and weakness in the offshore and marine sector due to low oil prices. For investors to turn optimistic, the Chinese economy had to first stabilise, it added.

“The Singapore stock market could still go through a rather challenging time in 2016, because if you think about the economics of Singapore, if you look at for example the global economy, clearly that is still a bit of a headwind for the Singapore economy, which is very open,” said Mr Tai Hui, chief market strategist Asia at JP Morgan Asset Management. “If you think about the local real estate, that is still going through consolidation and correction. The bank loan growth is still also coming under a bit of pressure.”

The survey was commissioned by JP Morgan Asset Management and conducted by TNS, an independent research company. This is the 11th time the survey has been conducted.

Picture Source: File photo of the skyline of Singapore’s financial district. (AFP/Simin Wang)
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