Key Highlights of the Quarterly ING Investor Dashboard Survey
Thailand Investor Sentiment Index drops 6% to 127 for Q2 2010 from 135 for Q1 2010; remaining in optimistic territory and registering an 115% increase from the financial crisis low of 59 for Q4 2008
Investor sentiment in Thailand, looking forward to the next quarter, shows signs of recovery as improvements in Thai economic situation, return on investment and personal and household financial situations are expected
Eurozone debt crisis does little to sway confidence with 57% of Thailand investors experiencing a positive effect on their investment strategy signalling perceived immunity from the crisis
Concerns on inflation and interest rate hikes in Thailand increase slightly
Thailand investors increasingly confident in making their own investment decisions
ING, the global financial services group, today released data from its quarterly ING Investor Dashboard Survey showing a slight drop of 6% in investor sentiment in Thailand as investors weigh in signs of a slowdown in the U.S. economy and domestic geopolitical tensions. The overall Thailand ING Investor Dashboard Sentiment Index remains in the optimistic territory, falling to 127 for Q2 2010 from 135 for Q1 2010.
The overall pan-Asia (ex-Japan) ING Investor Dashboard Sentiment Index falls to 136 for Q2 2010 from 145 for Q1 2010. Despite the drop, investor confidence continues to remain in the optimistic territory for the fifth consecutive quarter and the Index registers an 86% increase from the financial crisis low of 73 for Q4 2008.
Thailand investors’ sentiment buoyed by anticipated improvements in Q3 2010
Mr Tor Indhavivadhana, Head of Sales and Distribution at ING Funds Thailand commented, “A number of survey indicators forecast an improvement from Q2 2010 to Q3 2010, including responses to personal and household financial situation, return on investment and economic situation. There is a sense of growing confidence among Thailand investors towards the domestic economy entering arecovery, linked with their own personal circumstances”.
Mr Indhavivadhana added, “Despite the local equity market being characterized by high volatility and low inflows into equity funds, our survey still highlights cautious optimism in the second quarter of 2010. The optimism is underpinned by growth in many parts of the emerging world remaining very robust, thus providing support to developed world exports.”
Looking forward into the third quarter of 2010, 59% of Thailand respondents believe the SET Index will rise over the coming quarter at an average of 9.5%. Siripun Sutharoj, Head of Equities at ING Funds Thailand remarked, “The Thai equity markets are showing sound positive fundamentals in improving economic growth, loose monetary policy, strong earnings growth and sound corporate balance sheets. We see value in the banking and property sectors, which are taking advantage of recovering economic fundamentals. We are also seeing upward earnings revisions in certain sub-sectors like coal mining and food and beverages. We expect the SET Index to be in the range of 850 — 880 by the end of 2010.”
Asia investors cautious of economic developments in the U.S. and China; Eurozone debt crisis adds to investors’ growing concerns about the economy
More broadly, Asia investors remain cautious of economic developments in the U.S. and China, particularly as the two markets continue to be seen as the top dual-drivers of the global economy by 75% and 65% of Asia investors (ex-Japan) respectively.
Along with signs of a slowdown in the U.S. economy, more Asia investors — including those in Thailand — have indicated that the U.S. economy has had a negative impact on their investment decisions, and an increasing number of investors expect the U.S. economy to have a negative impact on their investment decisions in the next quarter.
The survey also shows that 48% of Asia investors (ex-Japan) think that China’s economy may be overheating, out of which 26% are worried that it would affect their investment decisions.
The Eurozone crisis also weighs on investors, with 60% of Asia investors (ex-Japan) expecting the crisis to impact economic growth in Asia and 92% expecting the crisis to impact global economic growth. 45% of Asia investors (ex-Japan) also believe that the Eurozone debt crisis will cause an economic slowdown in China in the second half of 2010.
“There will be some impact on the Asian markets as the fiscal stimulus in the U.S. begins to wear off, and the European debt crisis calls into question the impact on Asian exports as the Euro weakens and austerity measures curb overall economic activity in the Eurozone. However, with a hard landing unlikely to happen in China, sound economic fundamentals in Asia and strong global financial liquidity, we continue to expect the Asia markets to outpace the developed economies,” commented Mr. Bailey, Regional General Manager, ING Investment Management, Asia Pacific.
In contrast, 57% of Thailand investors surveyed believe the European debt crisis had positively impacted their investment strategy, whilst only 16% had been negatively impacted by the same crisis. Mr Indhavivadhana, remarked “Thailand investors have likely felt somewhat immune to the European debt crisis because of their resistance to invest overseas, particularly in European debt. Yet, crises do present opportunities for investors to buy into markets at lower prices. Whilst a Greek default would have a large negative market impact, a successful turnaround of their government finances would be applauded by the market.”
Asia investors remain risk averse and continue to hold on to cash, property, equity and gold
Fewer Asia investors, particularly in China, Hong Kong, and Singapore, saw an increase in the return on their investments in this quarter compared to Q1, 2010. However, among Thailand investors, this figure remained flat in Q2 2010.
Looking ahead, the survey resulted highlighted that, given normal market conditions, 73% of Thailand investors expect a return on their investment of greater than 10% and that 32% of respondents were totally confident to make their own investment choice. “Investment return expectations do not meet the reality of investor behaviour” said Mr Indhavivadhana. “According to internal ING data the typical Thailand investor weights an approximate average of 65% of their portfolio in cash and bonds. Investors will need to take a higher level of investment risk if they want to be rewarded with double digit returns.”
Given the current outlook on the economy and financial markets, investor appetite remains risk averse and investors continue to favour a more balanced or conservative investment strategy focused on capital preservation over an aggressive strategy that focuses on capital appreciation — with 81% of Asia investors (ex-Japan) focused on medium to longer term capital preservation.
Asia investors continue to hold on to cash/deposits, property, equities, gold and mutual funds as safe havens.
In contrast, only 68% of Thailand investors report that they are focused on medium to long term investment strategies, and there is a very slight increase (up from 30% in Q1 2010 to 32% in Q2 2010) in investors who favour a more aggressive short-term strategy.
The survey highlighted that the top three investment preferences among Thailand investors are cash (67%), gold (66%) and bonds (41%), demonstrating the mismatch between investors’ investment return expectations and the assets they are actually investing in. Therefore, improving financial literacy is essential to ensure this mismatch is reduced. Mr Indhavivadhana commented, “Investment fundamentals need to be clearly understood, so where investors equate greater investment risk with potentially greater investment rewards. With cash rates so low, investors need to consider alternative investments, but they need to have appropriate financial skills, knowledge and information to make an informed decision”
Mr Indhavivadhana added, “If money is important to investors — and we know it is — taking some time to determine their individual investment risk profile will help them make better decisions about continuing to build their financial future. Understanding one’s risk profile sets the foundation to assist with the formulation of an investment strategy.”
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.