Indian investors most optimistic among Asian counterparts: ING

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According to the survey 'Investor Dashboard,' India retained first place in being the most optimistic market during the first quarter of 2008, but investor sentiment rose a minuscule 0.6 percent compared to the same quarter of 2007. During the first quarter of calendar year 2007, India's investor sentiment index was 167, and rose to 168 for the first quarter of 2008, it said.

Every quarter, the survey tracks and measures investor sentiment and behavior of mass affluent investors from 13 Asia-Pacific markets including China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan, Australia and New Zealand.

However, the markets in Japan, Australia and New Zealand were not included in the sentiment index score.

Each market covered is assigned an investor sentiment score ranging from 0 (signifying least optimistic) to 200 (most optimistic). For instance, ING Investor Dashboard's pan-Asia market sentiment index fell to 125 for the first quarter of 2008 from 135 for the last quarter of 2007, tracking the global credit crisis and the economic slowdown in the US.

In terms of investors' optimism, China came second with an index score of 136.

The Japanese were the least optimistic lot, followed by investors in Taiwan and Singapore, the survey noted.

Hong Kong and South Korea also saw the sharpest falls in confidence from three months ago, as they are more sensitive to a downturn in the US, ING said.

According to Vineet K. Vohra, India head of ING Investment Management, the Indian and Chinese markets have "young" investor bases, which tend to be more positive in their investment outlook and have bigger appetite for risks.

The survey suggested that Indian investors are getting more aggressive on the stock markets compared to their Asian counterparts as only 67 percent of investors in India, compared to more than 73 percent respondents from Asia (other than Japan) expect the credit crisis to impact their investment decisions in the April-June quarter of this year.

"It is not surprising to find that investor sentiment has fallen in Asia over the last two quarters. The reality is that markets around the world are linked and Asia is therefore not spared the effects of the credit crunch and a slowdown in the US economy. However, what we are seeing is that investors in fast growing markets like India and China appear more optimistic despite the global market uncertainty primarily because they have a "young" investor base which tend to be more positive in its investment outlook and their domestic economies are still strong," Vohra said.

Among the Indians surveyed, 72 percent of investors believed the economy will improve in the second quarter of 2008 while 62 percent of them thought the economy had already improved in the first quarter of 2008.

Besides, 84 percent of Indian investors said they expected their return on investment to increase in second quarter of 2008, compared to 57 percent of investors surveyed in Asia (except Japan). More surprisingly, 78 percent of Indian investors actually thought their return on investment had increased in the first quarter of 2008 despite the global credit crisis.

Indians were also more optimistic than others when it came to introspecting about their personal financial situation. About 83 percent of Indian respondents said they expected their state of person financial situation to improve in the second quarter of 2008 while 75 percent felt their state of personal financial situation had already improved in the first quarter of 2008. In comparison, 56 percent of respondents in Asia (excluding Japan) said they expected their state of personal financial situation to improve in the second quarter of 2008 while 40 percent felt their state of personal financial situation had already improved in the first quarter of this year.

"It may be premature to anticipate that the worst may be over. However, we believe that in the longer term, despite the volatility in the financial markets and a slowing US economy, India and other Asian economies will remain robust," Vohra said.

However, the Indian markets are not insulated from the global market uncertainty and many Indian investors are adopting a "wait and see" approach, ING said.

The survey noted that Indian investors were slowly moving to low risk investments. Besides noting a significant rise (18 percent) in the percentage of Indian investors who favored gold, the survey revealed that a significant number of Indian respondents (82 percent) viewed lower risk investments as favorable, while 68 percent favored high risk investments.

In comparison, 54 percent of respondents for Asia (except Japan) viewed lower risk investments as favorable, while 47 percent favored medium risk investments and 38 percent high risk investments.

However, "The long-term growth drivers in the Indian market are very much still intact," Vohra said.

"Over the recent years, India has grown at around 8 percent, well above its long term trend rate of 4 percent. This trajectory is expected to continue on into the foreseeable future. The 'slow-down' that people talk of, is nothing but a cyclical consolidation, rather than a change in the secular trend, and we may still see a growth of 7-8 percent. Contrast this with the growth of 1-2 percent in developed markets or 6-7 percent in emerging markets. In fact, apart from China, there is no other economy of this size that has the ability to grow at this pace," he said.

The ING survey, taken in March and covering 13 markets, polled 1,308 "affluent" investors with a minimum age of 30. "Affluent" investors are defined as those with $100,000 in disposable assets and investments though the definition was altered in some markets.