Investor sentiment in Asia has turned less optimistic in recent months, according to the results of the latest quarterly ING Investment Management region-wide survey.

The ING Investor Dashboard pan-Asia ex-Japan sentiment index fell to 125 in the first quarter of 2008 from 135 in the fourth quarter of last year. Despite the overall decline, ING Investment Management considers an index level of 125 is still positive.

The survey results underscore û despite the debate about whether Asia is decoupling from the US û that the region is not insulated from global market uncertainty. The subprime crisis and credit crunch remain key areas of concern. The survey also shows that investors in Asia are generally adopting a wait-and-see attitude and are riding out the current market uncertainty. They remain focused on investing in Asia, but are considering lower risk investments such as cash or deposits and inflation hedging instruments such as gold.

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

First launched in October 2007, 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. The ING index was 141 at its debut in the third quarter of 2007.

This latest survey was conducted in March among 1,308 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 ($6,000) were allowed to take part.

The ING index for most Asian markets fell in the first quarter, with more developed markets like Hong Kong, Singapore and Korea suffering the biggest drop in sentiment.

Fast-growing markets like China and India reflected the highest levels of investor optimism. Investors in Malaysia and Taiwan were also relatively upbeat.

A total of 73% of the respondents said the subprime crisis will impact their investment decisions in the second quarter of 2008. Among the developed markets, 93% of respondents in Singapore, 90% in Hong Kong and 86% in Korea confirmed this.

ôIt is not surprising to find that investor sentiment has fallen in Asia over the last two quarters. The reality is that markets around the world are linked and Asia is therefore not spared the effects of the credit crunch and a slowdown in the US economy,ö says Eddy Belmans, regional general manager for North Asia at ING Investment Management.

More developed markets such as Hong Kong and Singapore are more affected by the volatility of the global markets because investors there are more actively invested in global equity funds, In contrast, investors in markets such as China and India û which have a younger investor base that tend to be more positive û appear more optimistic because their economies are less dependent on global market demand and they have high GDP growths.

The outlook on the economies in Asia, return on investment, and the state of the respondentsÆ personal financial situation for the second quarter of 2008 are more positive compared to sentiment in the first quarter. This reflects a belief among respondents that economic growth in the region wonÆt slow significantly and that the worst may be over.

Mike Ferrer, regional general manager for South Asia at ING Investment Management, says it may be premature to anticipate that the worst has passed. However, he acknowledges that despite global financial market volatility, AsiaÆs economies will likely remain robust.

ôInter-regional trade and domestic demand will help drive economic growth in Asia and we expect that economies will remain resilient. GDP growth here will likely be impacted marginally,ö Ferrer says.

ING Investment Management expects a 2008 GDP growth rate of between 3-9% across Asia.

The cautious stance taken by the surveyÆs respondents include investing closer to home, and expectations of continuing to divert more funds away from the US and into this region.

ôAsia will continue to provide attractive investment opportunities, particularly in the domestic and more defensive sectors,ö Ferrer says. ôAmid the volatility, what investors need to remember is to focus on a longer term investment horizon and ensure that their investment portfolios are properly diversified.ö