Asian investor sentiment hits new low

ING Investment ManagementÆs survey of investor sentiment in Asia shows Taiwan leading the bears in this region.
Not surprisingly, investor sentiment in Asia has weakened sharply, according to the results of the latest quarterly ING survey that measures the sentiment and behaviour of mass affluent investors around the region.

The ING Investor Dashboard pan-Asia ex-Japan sentiment was at 86 in the third quarter of 2008, its lowest level since the survey was launched in October 2007. ThatÆs a 21% fall compared to the previous quarter and a 39% fall year-on-year.

Sentiment for Taiwan and Malaysia was the lowest in Asia. Taiwan led the decline in investor sentiment, and was joined by other US-dependent markets such as China, Hong Kong, Korea, and Singapore.

ôInflation is easing as an issue at the moment for investors as commodity and food prices have come down recently and are putting less pressure on local economies and investors,ö says Alan Harden, CEO of ING Investment Management in Asia-Pacific. ôWhile the Asian economies continue to remain strong, the financial crisis in the US and Europe will continue to have a major impact on Asian investors and we expect that investor sentiment in the region will continue to slowly decline as we move into 2009 and investors try to take stock of the global developments.ö

The ING index is based on the analysis of a quarterly survey commissioned by ING and carried out by research firm TNS. The term ædashboardÆ refers to the graphics first used to present the results when the survey was launched, using the control panels of an automobile.

The survey tracks changes in investment sentiment and behaviour across 13 Asian markets, namely Australia, China, Hong Kong, India, Japan, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand. This makes it the first survey to poll investor sentiment across all 13 markets. While the survey covers all those markets, the pan-Asia sentiment index excludes Japan, Australia, and New Zealand.

This latest survey was conducted among 1,313 mass affluent investors in the region, aged 30 years and above, with disposable assets or investments of at least $100,000 with the exception of Indonesia and the Philippines. In Indonesia, respondents had disposable assets or investments of at least $56,000, and in the Philippines, respondents with a monthly income of at least Ps250,000 ($5,500) were allowed to take part.

More investors say that the economy (58% of the respondents) and their personal financial status (40% of the respondents) deteriorated in the third quarter.

The global financial crisis, slowdown in the US economy and inflation remain key concerns for Asian investors moving into the fourth quarter. Around 78% of the respondents say they have been impacted by the subprime crisis in the third quarter and around 73% say they will continue to be affected.

Investors have a higher preference for lower-risk investments given the current market volatility. Around 48% of the respondents view low-risk investments as favourable compared to 30% for medium-risk investments and 24% for high-risk investments. Investors are also continuing to hold on to cash while moving away from investments in local stocks and global resources.
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