The J P Morgan Asset Managament-Valuenotes Investment Confidence Index, which will be published on a quarterly basis, captures the confidence of retail investors.
JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) today announced the launch of the first Investment Confidence Index in India in association with ValueNotes. The J.P. Morgan Asset Management – ValueNotes Investment Confidence Index (ICI), which will be published on a quarterly basis, captures the confidence of retail investors, corporate investors and financial advisors on the Indian economic and investment environment. The findings of the inaugural survey show that the Indian financial community currently holds a cautiously optimistic view towards their local market.
ValueNotes, an independent market research company, was commissioned by J.P. Morgan Asset Management to conduct the survey. The ICI was developed by interviewing a random sample of retail investors (with a wallet size in excess of Rs 200,000), corporate investors and financial advisors. The survey took place in July 2009 in eight cities across India: Delhi/NCR, Mumbai, Kolkata, Chennai, Ahmedabad, Bengaluru, Hyderabad and Pune.
The key objective of the ICI is to quantify confidence in the investment environment among investors and advisors. The survey also attempts to study investment behaviour and sentiment based on key factors such as the improvement in the Indian and global economic environment, general investment atmosphere, expectation of growth in investment portfolios and others. Going forward, the ICI will map and analyse the short term and long term changes in investment behaviour and outlook every quarter, from an investor and distributor standpoint.
The J.P. Morgan Asset Management – Valuenotes Investment Confidence Index score is derived from responses to the following questions posed to all target segments:
1)The likelihood of the Indian economic situation improving from current levels in the next six months.
2)The likelihood of an improvement in the general investment market environment and atmosphere from current levels in the coming six months.
3)The possibility of the global economic environment improving from current levels in the coming six months.
4)The likelihood of the BSE Sensex increasing in the next six months.
5)The prospect of your / your clients’ investment portfolio appreciating in the coming six months.
6)Expected increase or decrease in the amount of investment and/or increase in mutual fund inflows in the coming six months.
Responses to these 6 questions also form the basis for arriving at the Retail Investor Confidence Index, Corporate Confidence Index and the Advisor Confidence Index which are sub-indices of the Investment Confidence Index. At any given point, the indices can move from ‘0’ to ‘200’, with ‘0’ depicting the most negative outlook; ‘200’ depicting full and absolute confidence and ‘100’ showing a neutral position.
Krishnamurthy Vijayan, Executive Chairman of J.P. Morgan Asset Management said, “We are extremely proud to present the J.P. Morgan Asset Management – ValueNotes Investment Confidence Index to the Indian investment community. Investment sentiment has always been a key focus in our business strategy across the globe. We have been monitoring retail investor sentiment closely within the major markets of Europe and Asia for some time by conducting investor confidence surveys since the early 1990s. The inaugural investor confidence index was launched in the UK, followed by Germany, France and other European countries. In Asia, a similar Investor Confidence Index has been launched by the firm in markets like Hong Kong, Japan and Taiwan and has been well received.”
Arun Jethmalani, Managing Director, ValueNotes commented, “The Indian economic prospects drive confidence across the board. A Government with a strong majority was viewed as the most positive economic signal. The Investment Confidence Index at the end of July 2009 stands at 135.9, arrived by taking an average of the Investor Confidence Index (highest at 138.3), Corporate Confidence Index (136.0) and the Advisor Confidence Index (133.5). A deeper study of the indices throws up a recurring theme across all three categories – consistently high levels of optimism on an improvement in the Indian economic situation. This is contrasted by a marked pessimism or significantly lower confidence on a global economic recovery.”
Key findings:
The recent election results have influenced investment confidence favourably, as investors and advisors alike have voted for a government mandated with a strong majority as the single most positive signal for the Indian economy today.
•48% of retail investors expect their income will increase and they will make additional investments over the next six months.
•Retail investors are more confident about making additional investments (136.4) than their advisors (132.1) expect them to.
•Advisors are significantly more optimistic about portfolio appreciation (146.8) than their retail clients (138.2).
•Among cities – Retail and IFA confidence in Chennai is the highest at 160.2 and 147.3 respectively. In contrast, retail confidence in Hyderabad is lowest at 98.1 and IFA confidence is the lowest in Kolkata at 125.7.
•Retail investor confidence declines as age increases, with the age group 22 to 25 most confident (142.7) and investors aged 55 to 60 the least confident (131.3).
•By occupational status, the salaried employees from the private sector have the maximum confidence at 140.8.
•Retail investor responses indicate that investments in stocks and mutual funds increase with an increase in wallet size. While 37% of retail investors with wallet size between Rs 2 and 5 lakhs invested in stocks and mutual funds over the past 12 months, the figure increased to 79% for investors with wallet size Rs 50 lakhs and above.
•Both investors and advisors expect Sensex to be at 16,000 – 17,000 levels by December 2009. 76% of retail and 88% of advisors expect Sensex to rise from current (survey) levels.
•70% of corporates expect improvement in profits and employment opportunities.
•Half the corporates surveyed believe that the Indian rupee is likely to appreciate in the next six months while 76% of respondents expect interest rates to move upwards.
•36% of corporate respondents expect RBI to intervene in the medium term to reduce liquidity in 6-12 months while 44% believe that the NPAs can be expected to increase.
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