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Investors more optimistic: ING survey

As the China craze persists, Taiwan’s investor sentiment index surged to a two-year high of 153 points in the third quarter of the year, up from 136 points in the previous quarter, the ING Investor Dashboard quarterly survey showed yesterday.

That was approaching the index’s “very optimistic” category — above 160 points — and remained the third-highest level next to that in China and India among 12 markets in the Asia-Pacific region.

In the third quarter, the TAIEX gained 14 percent on expectations of Taiwan’s signing of an economic cooperation framework agreement (ECFA) and a memorandum of understanding (MOU) on cross-strait financial services with China, ING said in a statement.

The survey showed the nine other indices for Taiwan — covering personal and household financial situations, and return on investment in the third quarter along with expected return on investments and stock market in the next quarter — all set new highs since the survey’s inception two years ago.

Moreover, the ratio of local investors who had an optimistic outlook on their personal and household financial situations came in at record highs of 63 percent and 60 percent respectively, which placed Taiwan at No. 2, behind China in Asia.

The survey also found that Taiwanese investors have become more aggressive, with 63 percent of respondents reporting an appetite for high-risk investments and 67 percent favoring medium-risk investments.

When it comes to the choice of investment tool, local investors prefer local stocks (22 percent), followed by cash and deposits (17 percent) and overseas mutual funds or unit trusts (16 percent). What was noteworthy is that 43 percent of Taiwanese investors expanded their exposure to China last quarter, with funds as the preferred tool.

“For Taiwan investors, local stocks and China-related investment tools have become their favorite because of closer cross-straits relations and a firmer stock market,” Steven Billiet, CEO of ING Securities Investment Trust (Taiwan), said in the statement.

As stock market volatility looks certain to intensify, Billiet said investors should seek a balance and reduce risks by placing greater emphasis on bonds.

Investors, however, should focus on investment-grade corporate bonds as their core holdings to secure reliable returns, he said.

Most local investors were were optimistic about the local economic performance in the fourth quarter — 72 percent — compared with the average 69 percent in 13 other Asian markets.

Overall, the survey showed that Asia’s investment sentiment index has grown for three consecutive quarters and reached a two-year high of 143 points last quarter.

“It clearly reflects growing optimism that the Asian economy has put behind the financial crisis and is now firmly on track to recovery,” ING said.
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