Retail investor confidence crashes to 3-year low: survey

Almost 3 in 10 think the STI will plummet.

Singapore retail investors’ confidence in the local stock market and economy in the next six months has dropped sharply. According to a report by J.P. Morgan Asset Management (JPMAM), the J.P. Morgan Investor Confidence Index dropped 15 points to 101 in December 2015, reflecting the lowest level since June 2012. An index level of 100 is neutral, while 200 is extremely optimistic and zero is extremely pessimistic.

JPMAM’s half-yearly survey of investor sentiment revealed that compared to June 2015 when the index stood at 116, more investors are now expecting the economic and investment outlook to deteriorate.

Despite the gloomy sentiment, almost 9 in 10 (85%) stated that they plan to stay invested, and only a minority plan to cut their investments. Only 36% of respondents believed that STI would rise in the first half of 2016, down from 53% six months ago. Those who thought the STI would likely drop surged to 31% from 17% in the June survey.

Only 28% against 42% previously were expecting a better Singapore economic environment. Mirroring the climbing pessimism, the number of respondents sensing a weaker economic environment rose to 39% from 22% in June.

Those investing in equity funds shifted some money out of local and Asian regional equity funds, down 3pp and 1pp respectively. Also, half of bond fund investors remain invested in Asian bonds, although that was down by 9pp from before.

Meanwhile, almost 7 in 10 (67%) have retirement savings, and a little over 6 in 10 (64%) invest these savings, mainly through banks or insurance companies. Of these, almost 80% put more than 25% of these savings to work. Their investment goals are mostly to drum up a stable stream of income (36%) and to seek capital growth (32%).