6th wave of Investment Confidence Index by J.P. Morgan Asset Management in association with ValueNotes

– Retail investor confidence is highest in Pune
– Hyderabad sees highest rise in retail investor confidence
– A significant percentage of retail investors indicate interest in investing in global markets
– Corruption along with inflation kills confidence in India

 

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Mumbai, January 2011: Today, JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) in association with ValueNotes announced the findings of their sixth 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.

 

The single biggest finding this quarter is that global economic worries appear to be receding within the investment community. The findings suggest that confidence among the Indian financial community has begun to steady. Though the ICI has remained stable over the quarter, the underlying sub-indices have changed. While confidence in the Indian economic situation and optimism in increasing investments has decreased, the fall has been offset by optimism over the global economic outlook and investment portfolio appreciation.

 

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 December 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 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, “It is encouraging to see that investors are becoming less wary of the global economic situation and that a significant percentage of them are willing to explore investments in international markets. This tells us that whilst investors have strong belief in the long term growth of the Indian economy they are becoming more cognizant of the benefits of diversification. As a fund house that strongly encourages diversification and offers a number of products designed specifically for investors that are interested in apportioning a part of their investments to global markets, this is a trend we are monitoring closely.

 

Mr. Arun Jethmalani, Managing Director, ValueNotes commented, “Though investor confidence has remained steady over the last quarter, the underlying drivers have changed. Even as Indian investors appear less worried about the global economy, domestic concerns have resurfaced. Worries over inflation are still dominant, but corruption has emerged as a major issue. This has kept investor confidence down and is impacting fresh investment flow.

The ICI now stands at 146.3, climbing 5.1 points or 3.5% from February 2010 reading of 141.2. The Retail Investor Confidence Index ranks highest at 159.5, followed distantly by the Advisor Confidence Index (147.2) and the Corporate Confidence Index (132.2).

 

Key findings:

  • Older investors get cautious as confidence among retail investors from the age group of 60-65 years dipped sharply by 15 points from the last quarter and now stands at 140.

 

  • The Corporate ICI has been range bound in the last four quarters and remained unchanged for December 2010 (as compared to September 2010) at 132 points.

 

  • IFA confidence has seen the maximum volatility over the last four quarters. Confidence among IFAs (146.9) this quarter declined 10 points from September 2010 (156.9). On the contrary, N/RDs (147.2) have recorded an increase of 6.8 points.

 

  • A significant percentage of retail investors (47%) and their advisors (44%) indicate interest in investing in markets outside India. Brazil and China appeared to be attractive investment destinations for investment recommendations from advisors while their retail investors prefer USA and other Asian markets.

 

  • A higher percentage of retail investors (19%) and advisors (14%) are optimistic about growing corporate profitability in comparison to corporates themselves (12%).

 

  • Inflation remains the biggest cause of concern over the past four quarters among retail investors (19%), corporates (63%) and advisors (48%). Corrupution has emerged as the new confidence killer with 19% retail investors, 8% corporates and 16% advisors voting it to be the most negative economic indicator in the current scenario.

 

  • Retail iinvestment activity between stock and Mutual Funds continued to move inversely as stocks declined to 68% while Mutual Funds increased to 66%.

 

  • IFAs from Pune (96%) are most positive closely followed by Delhi/NCR and Kolkata (93% each). Chennai IFAs are the least confident among all cities with only 84% of them expecting the BSE Sensex to trade above the current levels.

 

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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$1,257 billion* in assets under management (as at 30 September 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.

 

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