Singapore investor sentiment rebounds 5% to 147

ING survey shows Singapore investors expect the property market to fall following “cooling” measures by the government.

ING, the global financial services group, on Tuesday released data from its quarterly ING Investor Dashboard Survey showing an increase in sentiment in Singapore of 5% to 147 for Q3 2010 from 140 for Q2 2010 despite continued signs of a slowdown in the U.S. economy, uncertainty of the Eurozone debt crisis, and threats of a global “currency war”.

The overall pan-Asia (ex-Japan) ING Investor Dashboard Sentiment Index increases 7% to 146 for Q3 2010 from 136 for Q2 2010. Investor confidence continued to remain in the optimistic territory for the sixth consecutive quarter and the Index registers a 100% increase from the financial crisis low of 73 for Q4 2008, according to an ING report.

Singapore investor sentiment driven by improved return on investments and personal financial situation; Southeast Asia emerging markets stand out as “super performers”
Investor sentiment in Singapore ranks 5th position in Asia (ex-Japan) in Q3 2010, behind India, the Philippines, Thailand and Hong Kong. Sentiment in Singapore is led by more investors believing their return on investments and personal financial situation improved in the past three months, and with more investors expecting these factors will continue to improve in the next three months.

Investor sentiment in Hong Kong, China and Thailand show the largest quarter-on-quarter increases in Q3 2010. The investor sentiment index in China increases 13% to 143 for Q3 2010 from 127 for Q2 2010 and ranks 7th amongst the Asia markets (ex-Japan). India continues to be most optimistic in the region while Southeast Asia (SEA) emerging markets outperform the region with the SEA Emerging Market Index score at 149 for Q3 2010.
Commenting on the market index scores, Mr. Tim Condon, Head of Research & Chief Economist, Asia, ING Commercial Banking, said, “Investor confidence in Asia has bounced back from Q2 2010 despite worries about a hard landing in the U.S. as concerns about the Eurozone debt crisis from the previous quarter have dissipated slightly. A rush of money is also coming into the emerging markets in Asia from investors seeking more attractive yields and this has helped to drive positive sentiment. In Singapore, the most salient point for investor confidence is the buoyancy of the local housing market and some of that buoyancy was removed with several rounds of cooling measures being implemented.”

“Southeast Asia emerging markets have outperformed the region largely because markets such as Thailand, Indonesia, the Philippines and Malaysia are less integrated with China as compared to North Asia, and coming out of the financial crisis, their good economic fundamentals have insulated them from overheating concerns about China‟s economy, making them “super performers‟ in the region,” he added.

Singapore investors appear more concerned about the slowdown in U.S. economic growth; Asia investors appear confident a double-dip recession is unlikely as it “decouples” from global markets
Singapore investors buck the regional trend and appear more concerned about a slowdown in the U.S. economy and its impact on investments. They also appear more concerned about the local economy. On the other hand, Asia investors (ex-Japan) appear more positive about their local economies despite remaining cautious of economic recovery in the U.S.

The Eurozone debt crisis remains a key investor concern but fears of the impact of the Eurozone debt crisis on investments are seen to abate for Singapore investors.

As the global “currency war” plays out, more investors in Singapore and Asia (ex-Japan) anticipate a further depreciation of the U.S. dollar against other currencies, as well as an appreciation of the Renminbi (RMB) against the U.S. dollar.

“The global currency war is a major macro risk that investors have to watch for in 2011. The market is looking to the U.S. Federal Reserve to implement more quantitative easing measures or unconventional measures to target the consumer price index in November. This will lead to continued low interest rates and a weak U.S dollar, and while it will be positive for Asian financial assets, it will create asset price overheating and place greater pressure on emerging market currencies in Asia to appreciate. Until the global economy recovers and rebalances, Asia will have to deal with balancing rising inflation or an appreciating currency,” commented Mr. Condon.

Singapore investor outlook strengthens and risk appetite improves but outlook on the property market softens with recent cooling measures
Singapore investors‟ outlook on the stock market strengthens for Q4 2010 while the outlook on the property market softens following several rounds of cooling measures introduced by the government in 2010. Overall investment risk appetite also improves.

“The stock market continues to perform well with the banking and property sectors doing well. While Singapore’s economy continues to grow strongly with our GDP forecast for 2010 remaining at 13%, a main concern is asset price overheating in the market and there might be a need for a fourth round of measures to curb the property market to keep asset price inflation in check”, commented Mr. Condon.

Singapore investors look to invest in equity, gold, property and bonds/fixed-income securities to take advantage of low interest rates
Asia investors (ex-Japan) investors continue to hold on to cash/deposits, property, equity, gold and mutual funds for investments, while Singapore investors are looking to invest in equity, gold, property and bonds/fixed-income securities in Q4 2010 to take advantage of the current low interest rate environment in Singapore.

Currently, of those invested in equities, 58% are invested in Financial Services, 53% in Construction & Real Estate and 48% in Information & Telecommunications.