Investor confidence in Singapore fell on concern about the global economy, the debt crisis in Europe and escalating debt debate in the U.S., according to a JP Morgan Asset Management survey.
The Singapore Investor Confidence Index Poll, designed to reflect the outlook and behavior of experienced investors, fell to 121 in the first half of 2011 from 134 in the second half of last year, according to a statement handed out in Singapore today. A number topping 100 on the index ranging from 0 to 200 indicates a positive outlook.
“This survey shows a dip in investor confidence, yet they have been investing more in equities this year,” said Geoff Lewis, the Hong Kong-based head of investment services at JP Morgan Asset Management. “The one takeaway I would like to leave is that this is not the time for Singapore investors to run away from the markets.”
Singapore’s economy shrank an annualized 7.8 percent in the second quarter from the previous three months, the first decline in three quarters, as manufacturing slumped, adding to evidence the slowdowns in Europe and the U.S. are curbing growth in Asia. The Government of Singapore Investment Corp., the nation’s sovereign wealth fund, said yesterday the investment environment is still challenging because of the uncertain recovery in developed economies and inflation pressure in emerging markets.
More Pare Investments
Of the 502 investors who participated in the survey, 46 percent plan to invest more in next 6 months, compared with 60 percent in the previous survey, according to the statement. Of the investors, who all have more than 5 years of continuous investment experience and a minimum annual personal income of S$60,000, 12 percent will pare down investment, compared with 6 percent in the last poll done at the end of 2010.
The decline in confidence is mainly the result of macroeconomic events such as the Arab Spring, the U.S. and European sovereign debt crisis and the Japan earthquake and tsunami, said Brian Tan, the head of sales for JP Morgan Asset Management’s retail business in Singapore.
Almost half of the survey’s respondents said they will not change their investment strategy while 18 percent will be more conservative, compared with 10 percent in the December survey.
“We see a drop-off in terms of clients wanting to make concentrated bets in certain areas, whether it’s an asset class or a country,” Tan said.
Fewer expect inflation to rise, with 38 percent anticipating faster price increases, compared with 86 percent previously.
Consumer prices in Singapore rose 5.2 percent last month, the fastest pace since January, as food and housing costs increased. Inflation may climb 4 percent to 5 percent this year, higher than a previous forecast of 3 percent to 4 percent, central bank Managing Director Ravi Menon said July 21.
The city-state, which uses the exchange rate to manage inflation, said in April it would allow further currency appreciation, the third monetary tightening in a year. The Singapore dollar has gained more than 13 percent against the U.S. currency in the past year.
The nation’s Straits Times Index gained 7.4 percent in a year as of yesterday, lagging behind the MSCI AC Asia Pacific Index, which rose 18 percent in the same period.