Bangkok--21 Oct--Aziam Burson Marsteller
ING Investor Dashboard Survey for Thailand shows investors are confident of economic growth despite continued slowdown in U.S. economic recovery and currency war threats
Key Highlights of the Quarterly ING Investor Dashboard Survey
Thailand Investor Sentiment Index rises 21% to 154 for Q3 2010 from 127 for Q2 2010; remaining in optimistic territory and registering a 161% increase from the financial crisis low of 59 for Q4 2008
Pan-Asia Index increases 7% to 146 for Q3 2010 from 136 for Q2 2010; the Index moves higher in optimistic territory and registers a 100% increase from the financial crisis low of 73 for Q4 2008
Thailand investors shows signs of continued optimism in Q4 2010
Asia investors (ex-Japan) show confidence that Asian markets are decoupling from the global markets; investors are optimistic about the local economy despite remaining cautious of economic recovery in the U.S.
More Asia investors expect the U.S. dollar to continue depreciating against other currencies with 36% in Q3 2010 indicating it will depreciate compared to 21% in Q2 2010
Risk appetite improves as return on investments increase in Q3 2010 and more Thailand investors favour high risk investments
ING, the global financial services group, today released data from its quarterly ING Investor Dashboard Survey showing a dramatic increase of 21% in investor sentiment in Thailand as investors remain confident of economic growth despite continued signs of a slowdown in U.S. economy and threats of a global “currency war”.
The overall Thailand ING Investor Dashboard Sentiment Index remains in the optimistic territory for the sixth consecutive quarter and reaches a new record high, increasing to 154 for Q3 2010 from 127 for Q2 2010.
The overall pan-Asia (ex-Japan) ING Investor Dashboard Sentiment Index increases to 146 for Q3 2010 from 136 for Q2 2010. Investor confidence continues to remain in the optimistic territory for the sixth consecutive quarter and the Index registers a 100% increase from the financial crisis low of 73 for Q4 2008.
Pan-Asia Index (Fig. 1)
Asia investor sentiment driven by confidence in China, Hong Kong and Thailand
Investor sentiment in Hong Kong, China and Thailand show the largest quarter-on-quarter increases in Q3 2010. The investor sentiment index in Hong Kong increases the most with a 22% surge to 151 for Q3 2010 from 124 for Q2 2010, shifting its position ahead of China at 143 for Q3 2010, for the first time since Q2 2008. Thailand’s 21% increase in investor sentiment is the largest among the SEA emerging markets. (Please refer to the Appendix for the market index scores and ranking.)
Commenting on the market Index scores, Mr. Pranay Gupta, Chief Investment Officer, ING Investment Management Asia/Pacific said, “U.S. data continues to point toward a slowdown in economic growth, and expectations of further quantitative easing in the U.S. is putting pressure on currency appreciation in the export markets in Asia. The emerging markets in Asia are resisting this appreciation as much as possible. This has helped to keep interest rates low and drive positive consumer sentiment in Asia. A rush of money is also coming into the emerging markets in Asia from investors seeking yield and higher returns, boosting the stock markets in the region and keeping investment sentiment buoyant.”
“In China and Hong Kong, the easing of investor concerns of over-tightening measures in China as well as the relaxation of restrictions in opening Renminbi accounts in Hong Kong have also helped to boost investor sentiment in the last quarter,” he added.
Asia investors appear confident a double-dip recession is unlikely in Asia as it “decouples” from the global markets
Asia investors (ex-Japan) are positive about their local economies despite remaining cautious of economic recovery in the U.S. and more investors anticipating further depreciation of the U.S. dollar.
Thailand investors’ sentiment rises significantly
The survey shows that investor sentiment in Thailand increased dramatically across key indicators as follows:
Mr Tor Indhavivadhana, Head of Sales and Distribution at ING Funds Thailand commented, “The results show a marked improvement over Q2 2010, when investors were cautiously optimistic. It is clear that the recovery in exports, the recent rally in the SET Index and the calmer political environment has helped to uplift investor sentiment in the third quarter”.
Mr Matthew Williams, Head of Strategic Marketing at ING Funds Thailand added, “The recovery in Thailand’s GDP over the second quarter as well as an increase of the full year’s forecast to 7.5% has improved investor sentiment. Also, the SET Index increased 22% during the third quarter, so it is evident that there is a high degree of correlation between the recent strength of the local stock market and investor sentiment. We would reasonably expect sentiment to continue rising whilst stock markets are performing”.
Effect of the U.S. economy on investment decisions
Fifty-four percent of Thailand respondents believe that the U.S. economy had a positive impact on their investment decisions in Q3 2010, whilst 51% believe it will have a positive impact on their investment decisions in Q4 2010.
Commenting on the effect of Western markets on investor sentiment in Thailand, Mr Indhavivadhana, said “There will always be a U.S. effect on investment decisions. Thailand investors’ sentiment towards investing in global equities will largely be driven by growth trends in major developed countries. We remain of the view that a double dip recession in the U.S. and Europe will be avoided because monetary conditions remain very easy and the corporate sector is improving. However, it does seem likely that structural problems in major industrial countries will be in for a rough ride for some time and hence that is why we favour emerging markets”.
Mr Williams added, “The key for Thailand investors will be to focus on assets that offer a decent income return and those assets where capital growth potential is less constrained or more assured. Our view is that emerging market debt and equities represents the best opportunity for investors right now”.
Investor outlook strengthens and risk appetite improves, signalling confidence in the Asia financial markets
Return on investments in Q3 2010 increased significantly over Q2 2010 for Asia investors (ex-Japan), buoying sentiment across the region.
“Investors will need to watch how the global economies play out in the next six to 12 months. If the U.S. consumer does not recover, asset prices in the U.S. will not recover and the U.S. will likely continue with quantitative easing through a loose monetary policy. This will lead to greater pressure on emerging market currencies in Asia to appreciate and interest rates will likely rise in the region, leading to a dampening of asset prices, financial markets and investor sentiment. Other risks to watch for include a resurgence of Euro instability as the PIIGS crisis continues to play out and an increase in commodity prices,” commented Mr. Gupta.
In spite of optimism, Thailand investors continue to shy away from growth assets
Looking forward to Q4 2010, 70% of Thailand respondents feel that the SET Index will increase by an average of 9.6%. Despite this optimism for the local stock market, data reflecting Q3 2010 investments shows that investors still tend to consider the safe havens as their preferred investments, with more investing in gold (66%) and cash / deposits (59%) than local stocks (32%).
Further, 96% of Thailand investors expect a return of greater than 4% on their investments and the mean expected return on investment is 11.35%.
Mr Indhavivadhana commented that, “Investors are riding high on recent investment returns, which perhaps has them looking too optimistically to the future. Yet there is a mismatch between the expectations of investors and their investment behaviour, given their continued high levels of allocation to cash and deposits”.
Mr Williams concluded by adding, “The continued conservatism of Thailand investors across diverse income and net worth segments indicate that they are not necessarily trying to get rich. They are afraid of being poor and in their minds, the risk of capital loss outweighs the risk of capital growth, hence the high allocation to cash and deposits. Yet, the greater risk that investors face is that they do not allocate enough to growth assets and are therefore left with a shortfall of capital in retirement. It is incumbent on the financial services industry to help equip investors with the right tools to ensure that they understand their investment risk profile and so to create enough wealth for their retirement years”.
For an introduction of the ING Investor Dashboard Sentiment Index and latest detailed (high-resolution) data charts, please visit http://www.ing.asia/investor_dashboard.