SINGAPORE: Retail investors here are less confident in their outlook for the next six months amid growing expectations of a weaker global economy, according to a survey by J.P. Morgan Asset Management released on Wednesday (Jan 14).

The J.P. Morgan Investor Confidence Index, a half-yearly survey of investor sentiment, showed the largest drop in confidence in two years. The index fell eight points to 113 in December from 121 in June 2014 – the weakest level since December 2012 when the index was at 106. An index level of 100 is neutral, while 200 is extremely optimistic while zero is extremely pessimistic.

About 32 per cent of respondents expected the global economic environment to worsen over the next six months, an increase of 11 percentage points from June 2014. Investors polled were also less bullish on the Singapore economy, with 23 per cent expecting the local economy to decline, up from 13 per cent previously.

Investors were also less confident about the outlook for the Straits Times Index (STI), with 21 per cent of respondents – up from 11 per cent before – expecting the STI to decline. The survey saw a sharp increase of 13 percentage points to 27 per cent in the number of investors who expected the Singapore dollar to depreciate against the US dollar in the next six months.

Commenting on the survey, Mr Steven Billiet, CEO of JPMorgan Asset Management Singapore, said: “It was not surprising to see investor confidence somewhat shaken in the last quarter of 2014, given some of the developments affecting financial markets that resulted in greater volatility.”

NO CUTTING BACK ON INVESTMENTS

Still, survey respondents showed no signs of cutting back on their investments – 46 per cent indicated they are likely to increase their investment while 42 per cent, down from 44 per cent previously, plan to maintain their current investment amount.

However, more investors are leaning towards capital preservation in their investment objectives – from 41 per cent to 46 per cent. Fewer respondents cited capital growth as a key objective – 39 per cent, down from 44 per cent – with 46 per cent aiming to generate a stable income stream, against 41 per cent six months earlier.

The top three investment products for stable income cited by bond investors are Real Estate Investment Trusts or REITs (50 per cent), high dividend stocks (43 per cent) and bonds (33 per cent).

Investors are shying away from local investments, with 53 per cent choosing Singapore asset classes, down seven percentage points from June. More respondents – up four percentage points to 32 per cent – are choosing to invest in Asian regional assets, while 23 per cent are eyeing Asian single country markets, up two percentage points.

The poll, conducted from Nov 26 to Dec 11, 2014, surveyed 509 investors aged between 25 and 60 years old with an annual personal income of at least S$ 60,000 and five years of active investment experience.