Sharp fall in retail investors' confidence in Singapore stock market and economy: JP Morgan survey

An office worker at Raffles Place.
An office worker at Raffles Place. ST PHOTO: LIM YAOHUI

SINGAPORE - Singapore retail investors' confidence in the local stock market and economy for the next six months has declined sharply, with the JP Morgan Investor Confidence Index dropping 15 points to 101 in December 2015, its lowest level since June 2012.

The latest half-yearly survey of investor sentiment by JP Morgan Asset Management (JPMAM) shows that more investors are expecting Singapore's economic and investment outlook to deteriorate compared to June 2015 when the index stood at 116. An index level of 100 is neutral, while 200 is extremely optimistic and zero is extremely pessimistic.

Despite the more bearish sentiment, a majority of investors, 85 per cent, indicated that they plan to stay invested and only a minority plan to cut their investments.

Only 36 per cent of respondents believe Singapore's benchmark Straits Times Index (STI) will rise in the first half of 2016, down from 53 per cent six months ago. Those who thought the STI would likely decline jumped to 31 per cent from 17 per cent in the June survey.

Fewer respondents, only 28 per cent against 42 per cent previously, are economic conditions to improve. Reflecting the rising pessimism, the number of respondents sensing a weaker economic environment rose to 39 per cent from 22 per cent in June.

There was more gloom over employment opportunities in the next six months. Thirty two per cent of respondents thought it extremely unlikely that there will be better employment opportunities compared with 21 per cent in the June survey last year.

Despite the weaker investment outlook, investors' risk profile and investment strategy have remained fairly consistent over the past few years, JP Morgan said in a statement. However, more investors are aiming for capital preservation - a 6 percentage point increase to 46 per cent compared with six months prior, it said.

Almost half oof respondents say their main objective for investing was to grow their capital while 24 per cent wanted to generate a stable income stream. Among the latter group, 40 per cent expect a 6 per cent yield or more, a 10 percentage point-increase over the June survey.

High dividend stocks remain the top product respondents would invest to generate a stable income.

The poll, conducted from December 3 to 16 last year, is part of a biannual poll that JPMAM has conducted since December 2010. It surveys 500 investors on their confidence and outlook for the next six months.