3rd wave of Investment Confidence Index

3rd wave of Investment Confidence Index – by J.P. Morgan Asset Management in association with ValueNotes

– Mumbai investors expect Sensex to trade between 20,000 and 21,000 in June 2010
– Chennai’s confidence grows, its reputation unblemished

 

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Mumbai, April 2010: JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) in association with ValueNotes today announced findings of the third wave of the Investment Confidence Index (ICI) in India. The J.P. Morgan Asset Management – ValueNotes Investment Confidence Index (ICI), which was launched in August 2009, is published on a quarterly basis. The ICI captures the confidence of retail investors, corporate investors and financial advisors on the Indian economic and investment environment. The findings for this quarters’ survey show that the signs of the economic recovery which resulted in “widepsread optimisim”, recorded and reported in September 2009, has now abated giving way to a sense of measured optimism within the investment community.

 

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 INR 200,000), corporate investors and financial advisors. The survey took place in February 2010 in eight cities across India: Mumbai, Delhi/NCR, Kolkata, Chennai, Ahmedabad, Bengaluru, Pune and Hyderabad.

 

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. Additionally, ICI analyses the short term and long term changes in investment behaviour and outlook every quarter, from an investor and advisor 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:

  • The likelihood of the Indian economic situation improving from current levels in the next six months.
  • The likelihood of an improvement in the general investment market environment and atmosphere from current levels in the coming six months.
  • The possibility of the global economic environment improving from current levels in the coming six months.
  • The likelihood of the BSE Sensex increasing in the next six months.
  • The prospect of your / your clients’ investment portfolio appreciating in the coming six months.
  • 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.

 

Mr. Christopher Spelman, Whole time Director and Chief Executive Officer of J.P. Morgan Asset Management said, “The results of the Third Wave of the investment confidence survey suggest a sense of measured optimism from the financial community. The results indicate that a range of macro economic factors have affected corporates and advisors while retail investors continue to be optimistic. Whilst confidence across all indicators remained positive, the confidence levels were lower than those seen in September 2009.”

 

Mr. Arun Jethmalani, Managing Director, ValueNotes commented, “The ICI decreased 5.2 points to 141.2 in February 2010, driven by concerns that the fallout of the financial crisis is still incomplete. Of the three underlying indices, the Investor Confidence Index is the highest at 147.1. Interestingly, retail investor confidence on the global and domestic economic situation continues to improve supported by a bullish outlook for the BSE Sensex.”

 

Key findings:

  • Investor confidence has recorded the maximum growth, increasing 2 points, while the other two indices have declined. Corporate confidence declined 11.8 points and advisor confidence fell 5.8 points. The Current corporate confidence of 130.7 has hit an all-time low since the ICI launch in July 2009. Among advisors, while banks continue to be the most confident (149.6) their confidence has also fallen 7.9 points, well below the benchmark “150”.
  • Among all cities, retail investor confidence continues to be the highest in Chennai at 166 (2 point increase). IFA confidence is also the highest in the same city (153) recording a 2 point increase.
  • Hyderabad retail confidence declined 29 points to 101 after increasing 32.2 points in September 2009 and it continues to be the city with the least investor confidence. Pune IFA confidence (140) decreased 9 points and is now the lowest amongst all cities.
  • 60% of retail investors expect their income will increase and they will make additional investments over the next six months as compared to 56% in September 2009 and 48% in July 2009.
  • Unlike in September 2009, this quarter there was no clear consensus regarding the biggest economic indicator. Corporate treasuries (38%) and advisors (42%) are of the view that GDP growth meeting/exceeding expectations is the biggest positive economic indicator. Among investors (21%) RBI’s monetary measures scored as the most positive indicator.
  • Inflation continues to be the most negative economic indicator in India across all the three segments of the financial community – Investors (32%), corporates (62%) and advisors (45%). A significant percentage of advisors (41%) also consider high government borrowing / fiscal deficit as a key economic concern in the current scenario.
  • Optimism on portfolio appreciation has declined across the board – retail investors (1.5 point decrease), corporate treasuries (5.5 point decrease) and advisors (5.2 point decrease).
  • Unlike in September 2009, when advisors’ confidence of clients’ increasing investments was aligned with retail investors’ expectation, this quarter advisors’ expectation of inflows (173.7) far exceeds what their clients’ anticipate (141.9). Corporate outlook (132.0) on investment increase has declined as well.
  • Both investors and advisors expect Sensex to reach 18,000 – 19,000 in June 2010, range similar to the expected levels for March 2010 as indicated in September 2009. 93% of advisors and 83% of retail expect Sensex to rise from current (survey) levels.

 

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About J.P. Morgan Asset Management
J.P. Morgan Asset Management is the brand name of J.P. Morgan Chase & Co’s asset management companies. J.P. Morgan Asset Management is a global asset management leader providing world-class investment solutions to clients. With US$1,248.8 billion* in assets under management (as at 31 December 2009) and offices in 40 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

Commitment to India: JPMorgan Asset Management India Private Limited is the Indian arm of J.P. Morgan Asset Management. It commenced its mutual fund business in India in April 2007, initially establishing its head office in Mumbai and subsequently opening satellite offices in Delhi, Kolkata, Chennai, Ahmedabad, Pune and Bengaluru. The firm distributes its funds through a network of banks, independent financial advisers and national distributors and currently has caters to investors in 141 cities across the country.

The firm is still in its infancy but has a very clear agenda of bringing the inherent strengths of J.P. Morgan Asset Management into the country, namely:

  • Excellence and continuity in investment management
  • A comprehensive and competitive range of products
  • Strong systems and processes
  • Exceptional risk management and controls

 

J.P. Morgan Asset Management manages assets on behalf of a broad range of retail and institutional investors in India. It continues to expand its product range to meet the needs of its diverse client base, using the resources and expertise available from its global network.

About ValueNotes

ValueNotes is a leading provider of business intelligence and research, with expertise across industries, particularly in financial services, media, engineering, healthcare, IT and the outsourcing industry. It operates at multiple points of the knowledge value chain to provide bespoke competitive intelligence, research, analytics, knowledge management and intelligence to a wide variety of users. ValueNotes’ customers include some of the leading global corporations, asset and wealth managers, management consulting firms, research publishers, PE and VC firms.

ValueNotes products and services are made available by different Business Units.

  • Custom Research: Provides a wide range of bespoke services in the areas of business and financial research & analysis. Assessing market opportunities, quantifying customer / brand / investor perception, facilitating entry into Indian markets, enabling competitive intelligence, providing dedicated research support teams and providing research-enabled written content are among the key services provided.
  • IndiaNotes.com (formerly ValueNotes.com): Is a search engine and financial portal that aggregates research, news, information and independent third-party articles/analyses, primarily about Indian financial and equity markets.
  • Sourcing Practice: Publishes proprietary market intelligence on the (services) outsourcing industry, with an emphasis on knowledge services or KPO. It has dedicated research practices for legal, publishing, education and research & analytics.

 


Risk Factors: Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee against loss in the Scheme or that the Scheme’s objectives will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets. Past performance of the Sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme. Mutual funds invest in securities which may not always be profitable and there can be no guarantee against loss resulting from investing in the Scheme. For scheme specific risk factors and other details please read the Scheme information Document (SID), Statement of Additional Information (SAI) and other scheme related document carefully before investing. Statutory details: Sponsor: JPMorgan Asset Management (Asia) Inc. Trustee: JPMorgan Mutual Fund India Private Limited, a company incorporated under the Companies Act, 1956. Asset Management Company: JPMorgan Asset Management India Private Limited, a company incorporated under the Companies Act, 1956. JPMorgan Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, by JPMorgan Asset Management (Asia) Inc., liability restricted to initial contribution of Rs.1 lakh. SID, SAI, Key Information Memorandum and application forms are available at Investor Service Centres and distributors.
The information contained herein is provided based on a public survey. Although we endeavour to ensure that the information is as current and accurate as possible, errors do occasionally occur. Therefore, we cannot guarantee the accuracy and adequacy of the information. Readers should, wherever possible, verify the information before acting on it.
This information is based on our assumptions and interpretations of the survey conducted. No part of our compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed herein. Be aware that our assumptions and interpretations are partially based on our observation of participants’ past behaviour. Do not base your actions on the material so provided. These observations will change if different assumptions and interpretations are applied for the purpose of preparing this survey report.

 

 

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