The survey showed that out of 510 retail investors, 43% had a better market outlook for 2015, with only 15% feeling negative.
“Confidence in the local, Chinese and global economic outlook is expected to catch up with this positive sentiment,” said Karen Cheng, vice president of private bank distribution.
About 28% of investors are considering overweighting equities this quarter, with emerging markets being the most appealing. At the same time, 43% said they are interested in income investing this year.
The slowdown in China growth and the anticipated rise in US interest rates were cited as the key concerns.
In regards to emerging markets, Grace Tam, global market strategist, said the decline in oil prices will be net positive for oil EM importers, benefitting India and Indonesia in reducing their total import bills and hence reducing current account deficits, or boosting surpluses.
Tam expects US equities to remain well supported in 2015.
“Despite the dollar strength, the strong performance in 2014 reflected solid economic growth and consistent corporate earnings growth, which we expect to continue in 2015,” Tam said.
Stock Connect boosts confidence
The introduction of the Shanghai-HK Stock Connect scheme, is one of the factors contributing to the positive outlook. Nearly 69% of the respondents said the Stock Connect has increased their confidence in Mainland China’s financial markets.
While 57% are optimistic on A-shares in the first quarter, only 35% show an interest in investing in this market.
The reasons for low interest include lack of familiarity with the A-share market, a perception of greater risk and perceived lower flexibility given that day trading is prohibited.
“Further understanding is required to help lift A-share interest higher amongst Hong Kong investors,” Cheng said.
Sluggish HK market?
The J.P. Morgan Investor Confidence Index (JPMICI) in Hong Kong, which is designed to reflect local investor sentiment toward the Hong Kong market over the next six months, shows stable investor confidence, the fund house said.
The latest quarterly results saw the index relatively stable, with an index rating falling slightly by 2 points to 117.
However, coming to local markets, more investors see a sluggish trend in equities.
Only 40% of investors believe that the Hang Seng Index will be trading above 24,000 points in the next six months, compared to 85% in the last survey conducted for the quarter ended in September 2014.
Furthermore, 50% of investors believe that a sluggish Hong Kong stock market will be a key risk during the first quarter, up from 41% last quarter.
Cheng said the fund house believes this slip in confidence will be short-lived because other investor responses appear positive.
According to the survey, 70% of investors expect their salaries to increase this year, whilst four in 10 are expecting an increase in their bonuses.
“This will help to drive a more aggressive investment strategy in the near term, as mentioned by 27% of investors,” Cheng added.