Retail investors’ confidence in Singapore took a hit following concerns over Brexit’s impact on the global economy and investment portfolios, according to a survey by banking giant JP Morgan.
The JP Morgan Investor Confidence Index—a half-yearly survey of investor sentiment by JP Morgan Asset Management—stood at 101 points in July. This was a slight dip of 4 points when the survey was conducted a week earlier before the UK voted to leave the European Union, Channel NewsAsia reported.
A reading of 200 on the index shows that investors are “extremely optimistic” about conditions in the next six months, while a zero reading indicates extreme pessimism. A reading of 100 shows investors are neutral.
Some 42% of respondents also said they thought the benchmark STI was extremely or somewhat likely to increase in the coming six months, compared to 36% in December last year.
JPMAM’s Head of Singapore Funds and Global Strategic Relationships for APAC, Brian Tan said the latest survey results are a reminder of how market events can affect retail investors’ confidence and lead to an “almost immediate response” in their investment behavior.
“Post-Brexit, mutual fund investors reacted with a dramatic shift in allocation with many pulling out of equity funds and significantly increasing their allocation to bond funds,” he observed.
Timing the Market?
“However, the latest survey results are also a reminder of how market events can affect retail investors’ confidence and lead to an almost immediate response in their investment behavior.”
Despite the dip in confidence following Brexit, Tan said it was encouraging that a majority of investors indicated that they planned to stay invested and not try to time the market.
Looking ahead, the survey also showed that more than half of respondents planned to invest in Singapore, and over a quarter in Asia.
There was also significant interest in investing in real estate post-Brexit, with 37% of respondents considering this asset class, compared to 27 prior to Brexit.
Around one-third of respondents also said they believed that the Singapore dollar would appreciate against the US dollar after Brexit.
The survey was commissioned by JPMAM and conducted by TNS, an independent research company. This is the 12th time the survey has been conducted.
