5th wave of Investment Confidence Index by J.P. Morgan Asset Management in association with ValueNotes

– Retail investor confidence continues to be highest among all categories for the third consecutive quarter
– Overall confidence highest among Chennai investors and IFAs
– Delhi is the only city to have witnessed a steady rise in confidence since September 2009
– Debt mutual funds maintain their popularity among Corporates; Retail investors become cautious
– Corporate sentiment about BSE Sensex declines

 

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Mumbai, October 2010: JPMorgan  Asset  Management  India  Pvt.  Ltd. (JPMAMIPL) in association with ValueNotes today announced findings of the fifth 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 of the Fifth Wave of the ICI show that a range of economic factors  have  dented  corporate  confidence  levels,  but  retail  and  advisor confidence has improved across all indicators. The results of the current survey  clearly  suggest  climate  change  is  beginning  to  worry  the  Indian investor. Increased protectionism in the developed world has also started to weigh on sentiment within the Indian financial 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 September 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:

  1. The likelihood of the Indian economic situation improving from current levels in  the next six months.
  2. The possibility of the global economic environment improving from current levels in the coming six months.
  3. The likelihood of the BSE Sensex increasing in the next six months.
  4. The  prospect  of  your  /  your  clients‟  investment  portfolio  appreciating  in  the coming six months.
  5. 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, “Despite the concerns surrounding the global economy, it is reassuring to see that retail investors still remain optimistic and confident as a whole. It is also encouraging to see that confidence is returning among IFAs and to know that brokers and financial advisors are considered to be the most preferred sources of information for making investment decisions among retail investors.”

 

Mr.  Arun Jethmalani, Managing Director, ValueNotes commented, “After  a marginal decline in the previous quarter, the Investment Confidence Index has gained 4.9  points.  Retail  and  advisor  confidence  have  improved  across  all indicators, while corporate confidence remains subdued. The financial community remains optimistic about the domestic economy, but is concerned about US/global economic growth, increasing protectionism and climate change.”

The ICI now stands at 145.3, climbing up 9.4 points or 6.9% from the July 2009 reading  of 135.9.  The  Retail  Investor  Confidence  Index  ranks  highest  at  160, followed  distantly  by  the  Advisor  Confidence  Index  (144.1)  and  the  Corporate Confidence Index (131.8).

 

Key findings:

  • Retail investor confidence continues to be highest among all categories for the third consecutive quarter, and has increased 21.7 points since July 2009 to reach 160 in September 2010.
  • From a one-year perspective, high GDP growth has remained the strongest positive economic indicator among corporates  (34%) and advisors  (37%). In September 2009, retail investors had felt RBI‟s monetary measures and high GDP growth to be the strongest positive indicators. However, in September 2010,  retail investors  (24%) consider resurgence in corporate profits as the strongest economic indicator.
  • IFAs  continue  to  be  the  most  confident  category  (156.8)  among  advisors. Confidence  among  N/RDs  has  revived  (140.4)  after  hitting  an  all-time  low (126.9) in June 2010.
  • Chennai IFAs  (166) as well as retail investors  (169) are the most optimistic among all cities. Interestingly, while confidence among retail investors across most cities has witnessed a fair bit of volatility, Delhi is the only city to have witnessed a steady rise in confidence since September 2009. IFA confidence is lowest in Delhi/ NCR (148) in the current quarter.
  • Optimism among retail investors across all wallet sizes recorded an increase from September 2009 levels. “High Net-worth Individuals” (HNI) retail investors with investible surplus of INR 25 – 50 Lakhs are most confident at 162, and have witnessed  a  run-up  of  over 19  points  since  September 2009.  Hyderabad continues its status as the least confident city, but appears to be improving, given the 23-point increase in its Retail Confidence Index since July 2009.
  • The survey findings suggest that brokers (29%) and financial advisors (24%) are considered as the most preferred sources of information for making investment decisions among retail investors.
  • Although investment in debt mutual funds witnessed a drop of  6 percentage points from June  2010, it continues to remain the most preferred investment instrument among corporates, with  94% opting for it in the September  2010 survey.
  • Interestingly, investment  activity  among  all  financial  instruments  dropped drastically despite retail confidence reaching an all time high. Retail investors’ preference for  stock  investments  remained  unchanged  from  the  previous quarter, while preference for mutual funds, which had shown some recovery during the last quarter, dropped 15 percentage points this quarter.
  • Corporate sentiment about the BSE Sensex has declined to 119, slipping 24 points from September 2009.
  • In  February 2010,  majority  of  retail  investors  (70%)  and  advisors  (71%) expected that the Sensex would trade between  18,000 and  19,000 in June 2010. However, both the categories proved to be slightly more optimistic as the Sensex  traded  between  17,500  and  18,  500.  47%  investors  in  Hyderabad expect the BSE Sensex to trade between 21,000 and 22,000 in December 2010.
  • Investors in Hyderabad and Pune are the most bullish with  75% and  59%, respectively, expecting an increase from current trading levels.
  • IFAs across all cities expect  the BSE Sensex to  trade at a  higher level in December 2010. Hyderabad IFAs are the most optimistic (79%) closely followed by Bengaluru IFAs (65%) of the BSE Sensex trading at higher levels among the cities.

 

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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. With US$1,219.4 billion* in assets under management (as at 31 March 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.

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.

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  • 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.
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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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