Hong Kong investors confident on China

Added 14th July 2015

Hong Kong retail investors continue to show confidence in local and mainland markets despite the recent correction and volatility, according to a J.P. Morgan Asset Management survey.

Hong Kong investors confident on China

The J.P. Morgan Investor Confidence Index in Hong Kong for the June quarter was at 123, up by 12 points over the first quarter. The index reflects retail investors’ sentiment toward the Hong Kong market over the next six months and a number greater than 100 represents a positive outlook.

Mainland China (81%) and Hong Kong (57%) were cited as markets with the highest potential for growth, according to the survey, which was carried out in June.

“The latest findings manifest that the overall investor confidence has been on an upward trend. Obviously, the recent market correction would have impacted on the trajectory, but the index itself is designed to reflect investor’s views on the course of next six months, not just current sentiment,” said Daniel Chui, head of investor communications.

“Once the market is stabilised, we believe investors will regain their confidence,” Chui added.

About 58% of investors have a positive outlook for mainland markets and 53% said good fund returns was the key reason for their interest in investing in China.

Reflecting this optimism, nearly 33% of investors expressed interest in making fund investments in the mainland market through the mutual recognition of funds initiative.

Equity funds appealed to a majority (92%) of respondents followed by bond/currency funds (46%).

Q3 Risks

Uncertainties over China’s economic reforms and the slowdown in GDP growth, along with the Greece debt crisis, were cited as the biggest risks for the third quarter. Given the risks, 67% of investors said volatility in the Hong Kong stock market is likely to affect their investment strategy.

When the key questions surrounding the fate of Greece are resolved, "investors will refocus on the fundamental factors for long-term investment and will look for those markets with the highest potential for growth in 2015,” said Chui.

According to the survey, the launch of Shenzhen-Hong Kong Stock Connect, expected this year, could be a trigger for a short-term market rebound. Moreover, half of investors think the inclusion of A-shares in international indices will enhance their investment interest level.

However, several fund houses have warned that recent government market intervention could negatively impact on any decision to include A-shares in the MSCI emerging market indices.

The survey results are based on responses from 513 retail investors aged between 30 and 60, who have at least five years of continuous investment experience and hold liquid assets of more than HK$100,000 ($12,900).

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