8th wave of Investment Confidence Index

8th wave of Investment Confidence Index – by J.P. Morgan Asset Management in association with ValueNotes

The Investment Confidence Index (ICI) has weakened 8.5 points from the last quarter and the score has touched its lowest (123.8) since its inception in August 2009

– Mounting inflationary pressure along with poor governance and corruption have been voted as the biggest negatives for the Indian economy

 

To download the presentation, please click here

 

13 Sept 2011: JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) in association with ValueNotes announced the findings of their eighth 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. ICI captures the confidence of the retail and corporate investor sector as well as financial advisors on the Indian economic and investment environment.

 

Investment sentiment appears affected by prevailing macro-economic factors such as recessionary conditions across global markets, frequent hikes in interest rates and volatility in the domestic investment environment.

 

However, the survey results also reveal that the Indian financial fraternity maintains a positive outlook with 44% of investors and advisors expecting the benchmark index to trade between 20,000 and 22,000 by the end of this year.

 

Investment activity of retail investors in mutual funds has revived significantly (11 percentage points) since the last quarter. India Inc. and retail investors both continue to maintain a positive outlook towards an increase in corporate profits and personal income respectively, while the advisor community continues to be upbeat about an increase in clients’ investments.

 

It is also interesting to note that, while retail confidence across all cities hovers below 150, Delhi/ NCR emerges as an outlier displaying highest confidence (158).

 

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 July 2011 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 ICI score is derived from responses to the following questions posed to all target segments:

 

  1. The likelihood of the Indian economic situation improving from current levels in the next six months.
  2. The likelihood of an improvement in the general investment market environment and atmosphere from current levels in the coming six months.
  3. The possibility of the global economic environment improving from current levels in the coming six months.
  4. The likelihood of the BSE Sensex increasing in the next six months.
  5. The prospect of your / your clients’ investment portfolio appreciating in the coming six months.
  6. 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, “ICI for the current wave has been impacted by a significant fall in the outlook on the global economy, domestic interest rate hikes and inflationary concerns. Despite this negative news flow, the Indian financial fraternity maintains a positive outlook with a majority of investors and advisors expecting the benchmark index to trade between 20,000 and 22,000 by the end of this year. Another interesting finding is that young investors (age 22 to 25 years) appear highly enthusiastic about investing in mutual funds.”

 

Mr. Arun Jethmalani, Managing Director, ValueNotes commented, “Growing vulnerability of the global economy and uncertainty in the domestic investment environment have taken a toll on investment confidence, dragging the ICI down to its lowest ever. Interestingly, confidence within India Inc. appears to be shaken the most, amidst rising inflationary pressure, poor governance and corruption; even as the advisor community is a little more optimistic about financial investments.”

 

Key findings:

 

  • Retail Investor Confidence Index, despite witnessing a 4.2-point decline from last quarter, ranks the highest (137.5). Advisor Confidence Index comes a distant second (124.9) while, Corporate Confidence Index touches its lowest (109).
  • Among the three advisor categories, banks (115) are the most sceptical lot, as confidence slips by 15 points since March 2011. N/RDs and IFAs register a marginal fall in confidence levels (2-point and 3-point respectively).
  • Delhi investors brim with optimism. IFAs in Mumbai are a despondent lot and their confidence is the lowest this quarter.
  • Personal network continues to be the most preferred source of information for investment decision making among retail investors (26%).
  • Investment activity across all instruments falls among corporate treasuries, with activity in debt mutual funds (74%) falling 18 percentage points since last quarter. Money market mutual funds (84%) remain the most popular debt instrument.
  • Retail investors’ activity (61%) in mutual funds has improved significantly (11 percentage points) since last quarter. Young investors (age 22 to 25 years) along with the 55 to 60 years age group appear highly enthusiastic about investing in mutual funds (69% and 72% respectively).
  • Banking and financial services emerges as the most attractive sector for investment among retail investors (36%) and advisors (56%).
  • Investors are becoming cautious as preserving capital emerges as a popular investment strategy among retail investors (40%). However, 40% investors, in comparison to 57% in March 2011, are expected to turn “somewhat aggressive” about their investment strategy in the coming 6 months.
  • It is interesting to note that 50% of corporate treasuries expect to maintain the current investment level in liquid funds ahead of RBI’s regulation on limiting banks’ exposure in liquid funds to 10% (effective from Jan 2012).

 

To download the presentation, please click here

For a copy of the report, please mail us

 

Notes to Editors

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. WithUS$1.298 trillion* in assets under management (as at 31 December 2010) 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.

*Note: Includes Investment Management and Private Banking

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.

 

http://www.valuenotes.co.in/downloadFile/download.php?file=JPMAM_VN_ICI_wave7_presentation-April2011.pdf&site=Research
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