Bangkok--16 Oct--Aziam Burson Marsteller
ING Investor Dashboard Sentiment Index for Thailand stays at same level in Q3 09 despite 24 % increase in SET in Q3 09 and anticipation of second stimulus package
Key Highlights of the Quarterly ING Investor Dashboard Survey
Thai investor sentiment index remains at same level of 113 for Q3 2009, likely due to political issues, modest impact of stimulus measures and ongoing contraction in GDP
Asia anticipates a global recovery as the Pan-Asia Index increases 8% to 143 for Q3 2009 from 132 for Q2 2009, the highest since the Index was launched in Q3 2007, and all markets except Thailand and Japan show strong optimism
Despite Thailand lagging behind in the “neutral” territory, Thai investors perceive some improvement in the overall economic situation and return on investment in Q3 2009
Most Thai investors believe that a recovery in exports and government spending will be key drivers for local economic recovery
The proportion of Thais investing in funds and/or equities increased to 37% in Q3 2009 compared to 32% in Q2 2009. This level is still significantly lower than the 58% figure in Q1 2009
Thai investors remain relatively bullish about gains in the local stock and property markets in Q4 2009
ING, the global financial services group, today released data from its quarterly ING Investor Dashboard Survey, which shows Thai investor sentiment remaining at the same level of 113 in the current Q3 2009 quarter compared to Q2 2009. Despite the rise of the local stock market in Q3 2009, Thailand remains in the “neutral” territory while most Asian markets have entered the “optimistic” or “very optimistic” categories.
The overall pan-Asia (ex-Japan) ING Investor Dashboard Sentiment Index increased to 143 for Q3 2009 from 132 for Q2 2009 and 86 for Q3 2008, as the Asian economies recover and investors’ outlook on the global economy improves. The survey results reflect the highest investor sentiment score since the Index was introduced in Q3 2007. The Index moved higher in the “optimistic” category.
Now published for over two years, the ING Investor Dashboard is the first quarterly survey in the Asia Pacific region to provide a pan-Asia (ex-Japan) investor sentiment index. Conducted quarterly across 13 markets* in Asia Pacific, it provides market insights on investor attitudes and outlook and allows each market to be benchmarked and tracked against the overall investor sentiment across Asia using the pan-Asia Index.
Thai investors see modest improvement in local economic situation and return on investment despite political concerns
Investor sentiment in Thailand remains neutral as domestic political issues continue to be a source of uncertainty for Thai investors. 58% of Thai investors say the current political environment has had a negative impact on their investment or wealth accumulation plan. Moving forward, about half (49%) of the Thai investors are unsure if the political environment will improve in the next quarter.
Despite concerns about the political environment, Thai investors are seeing modest improvement in the economy from the government’s recent US$ 12 billion stimulus package as well as slight improvement on their return on investment. 43% of investors also see recovery in exports and 29% see government spending as the key drivers for economic recovery in Thailand. More Thai investors are also expecting the U.S. economy to improve in Q4 09, a sign that they may expect exports to pick up in the near-term.
Commenting on the results, Mr. Tor Indhavivadhana, Senior Vice President, Mutual Fund & Investment Consulting Department, ING Funds (Thailand) Limited said, “While the local stock market reported very strong gains in Q3 2009 and overall returns on aggregate investments were positive, political instability and the relatively modest uptick in GDP anticipated from the second round of the government’s stimulus package continue to weigh on investor sentiment.”
Thai investors are relatively bullish about further gains in the local stock and property markets in Q4 2009
The proportion of Thais investing in funds and/or equities increased to 37% in Q3 2009 compared to 32% in Q2 2009. This level is still significantly lower than the 58% figure in Q1 2009 as profit taking occurred following the dramatic upturn in the SET in Q3 2009.Thai investors continue to be fairly optimistic about the local stock markets and expect it to rise by an average of 7.2% in Q4 2009. Many are also currently invested in the growth sectors including the financial services (44%), energy (33%), and technology (17%) sectors. They also remain bullish about the local property market and expect residential real estate prices to further increase in Q4 2009 by an average of 4.8%.
“While we remain cautious about the pace of recovery for the U.S., it will come out of a technical recession by the end of the year and we do expect better returns from the export-related and commodities-related sectors as the global economy gradually starts to pick up in Q4 and the first half of 2010,” commented Mr. Indhavivadhana.
Thai investors perceive stable inflation and interest rates and favour a conservative investment approach
Unlike the rest of Asia, Thai investors do not see inflation and rising interest rates as potential medium-term risks. More than half of Thai investors (55%) do not expect inflation to increase in 2010, and 58% also do not expect interest rates to rise in 2010.
Given they expect stable inflation, more investors are taking a conservative investment strategy with a longer investment horizon and emphasis on capital preservation, with 37% considering a conservative approach, up from 29% in Q2 2009. Thai investors also intend to continue holding low risk investments such as cash and gold in Q4 2009.
Cash and gold remained popular with Thai investors in Q3 2009. Thai investors allocated the same amount of their capital in cash (48%) and gold (12%) in Q3 2009 as they did in Q2 2009. Going forward, they intend to hold more cash in Q4 2009 (63% of investment allocation), while investing about the same amount in gold (13%).
According to Mr. Indhavivadhana, “Investors remain fundamentally conservative and are heavily weighted in low risk gold and cash deposits. While we don’t see inflation and rising interest rates as major concerns in the near-term, inflation may become one of the biggest medium-term risks globally in the second half of next year as U.S. and global consumption picks up and commodity prices start to increase. We advise investors to move away from cash and gold and take a medium to longer term view and invest in real assets such as equity and property to hedge against longer term expectation of inflation.”
Asian investors appear confident of global recovery
Optimism across Asia remains buoyant among investors in most markets, particularly the export-oriented markets, indicating they are confident that the global economy is on the road to recovery. More investors in the export-oriented markets, including Hong Kong, Singapore, Korea and Taiwan, witnessed a strong improvement in their economic situation and further anticipate that local and U.S. economies will continue to improve in Q4 2009; indicating Asian investors are now anticipating and are poised for recovery in the G-7 economies.
Commenting on the survey results, Mr. Nicholas Toovey, Regional Head of Equity, ING Investment Management Asia/Pacific said, “Many of the Asian markets continue to see an improvement in the local economies and the financial markets for 2009, and investors have been generally upbeat as a result. Asian investors are now anticipating and are poised for recovery in the G7 countries, which we expect will happen in the first half of 2010. A strong indication of this is the high optimism and confidence level within the export-driven markets.”
Looking ahead, a majority of Asian investors are optimistic that the worst is over for the U.S., with 61% of Asian investors (ex-Japan) expecting the U.S. economy to pull out of a recession within a year from now. Currently, Thai investors are also fairly optimism about global recovery, with 58% expecting the U.S. economy to pull out of a recession within a year.
The surge in optimism in Asia’s high growth markets slows
Investor sentiment in China and India continues to be the highest in the region, but sentiment in China remains relatively flat with a 2.5% increase. Sentiment in India meanwhile showed a slight decrease of 8% as investors came off the euphoric highs of Q2 2009 following the election victory of the pro-reform Congress party in the country. (Refer to fig. 2).
Despite the slowing growth in optimism, China investors remain very optimistic about the local economic situation, with 93% expecting China to meet or exceed its GDP target of 8% for 2009. 62% of Asian investors (ex-Japan) also have faith that China can lead the rest of the world into recovery.
While India continues to be the most optimistic in the region, India investors appear to have become slightly more cautious, with only 47% expecting India to meet or exceed its GDP target of 7% for 2009, and with fewer investors being optimistic about the local economy in Q4 2009.
“It is important to note that investor sentiment in China and India was among the first to rebound in Asia and surged significantly in the past quarters; and it is likely India is simply shifting back from its post-election excitement phase. Investor sentiment in China and India remains very high and both markets remain resilient due to strong domestic consumption. To drive sentiment to the next level, the G7 economies will first need to rebound for external demand to grow in both markets,” commented Mr. Toovey.
Asian investors’ bullish about stocks
Asian investors continue to be very bullish on the local stock markets with many currently invested in sectors poised to benefit from a recovery in the global economy, and including the technology, commodities, energy and financial services sectors.
“The markets are fully valued at the moment but investors should stay invested. There are opportunities for investors to take profit if they are overweight in the market, but investors who are currently underweight should consider taking the opportunity to invest when there are dips in the coming quarter. We recommend investors continue to look at growth sectors such as the technology and commodities sectors which will perform relatively well as the G7 economies recover,” added Mr. Toovey.
Inflation a medium-term concern as the expectation of global recovery increases
Currently, 55% of Asian investors (ex-Japan) expect inflation to rise in Q4 2009 while 71% expect inflation to rise in 2010. 43% of Asian investors also expect domestic interest rates to rise in Q4 2009.
“We don’t see inflation and rising interest rates as major concerns in the near-term as Asian economies still have the capacity to grow without inflationary pressure and as such, we do not expect a tightening of monetary policies in most markets. Inflation may become a bigger concern in the longer term as the global economy recovers and commodity prices start to rise. Investors should therefore take a medium to longer term view and diversify away from cash while investing in real assets to hedge against inflation,” concluded Mr. Toovey.
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.