HONG KONG: A string of quarterly dips in investor sentiment has led to global financial services group ING rating Hong Kong the third-most pessimistic Asian market.
The fourth-quarter decline in confidence last year was the third-straight quarterly drop.
And for all 2008, according to the ING Investor Dashboard Sentiment Index, confidence fell 58 percent as the global financial crisis sent stocks tumbling.
Despite the gloomy market sentiment, ING said, investors may consider investing in shares of mainland insurance companies that may outperform the market this year.
Michael Chiu, senior investment manager of ING Investment Management Asia-Pacific, said more local investors expect the economic deterioration to continue hurting the local economy and their personal finances.
“Almost 90 percent of Hong Kong investors say they have been affected by the credit crunch and the US economic meltdown,” Chiu said yesterday.
Amid the financial crisis, more Hong Kong investors are keeping their current low-risk investment portfolios, while 42 percent intend to hold more cash or deposits this quarter.
“Investors should consider moving away from cash, as its long-term value will likely depreciate,” Chiu said. “And they should look at investment plans that cover a portfolio of real assets, including equities and real estate.”
Chiu expects the current bailout plans and fiscal measures from different countries to result in higher inflation in the medium to long term.
Investor sentiment in the overall pan-Asia region, excluding Japan, tumbled 46 percent last year.
The mainland and Taiwan markets, however, showed significant upswing in the fourth quarter of 2008. Investor sentiment in both markets soared 17 percent quarterly.
Chiu said the surge in the mainland index was possibly driven by the central government’s announcement of an economic stimulus package and interest-rate cuts, while the jump in Taiwan’s index was likely boosted by optimism in cross-Straits relations and economic stimulus measures.