Thursday 28 Mar 2024
By
main news image

A crosscurrent of macro-economic developments, ranging from monetary easing and stimulus in mainland China and Japan to the collapse in oil prices, heavily influenced retail investor sentiment in the fourth quarter of 2014, according to Manulife Investor Sentiment Index.

Overall, regional sentiment was down two points to 26, dragged lower by Indonesia, where sentiment dropped 14 points to 50; Malaysia, which fell eight points to 47; and Hong Kong, which declined five points to -10.

"Retail investor sentiment is readily affected by factors that hurt their hip pocket and that impact the employment and economic outlook. Investors in Indonesia were spooked by the lifting of the fuel price subsidy and associated inflation pressures.

“Malaysia, being a net oil exporter, was hit by the collapse in oil prices. We expect oil to sink below US$40 a barrel and to stay low for about six months. This will continue to be a headwind for Malaysia's economy," says Manulife Asset Management chief economist Megan Greene.

Hong Kong sank further on investors' gloomy opinion of the real estate market, with investment property falling a further nine points to -36, due to high property prices and the prospect of interest rate increases given the US dollar peg. Less of a factor was Occupy Central, which only two out of five Hong Kong investors said influenced their investment decisions.

The index declines were offset by a jump in mainland China, where jubilant investors pushed the local index up 14 points to 29. The surge was driven by confidence in equity markets, with sentiment climbing 29 points to 58, reflecting retail investors' confidence due to lower interest rates, strong lending environment and further liberalisation of capital markets.

Japan was another riser, with sentiment up four points to 12, driven by the government's stimulus spending and Prime Minister Shinzo Abe's December election victory, which renewed his mandate for structural reform.

"An oversupply of everything from oil to liquidity drove markets and investor sentiment in late 2014," says Greene.

"In 2015, big macro-economic events will continue to loom large in markets. China will continue to benefit from targeted monetary and fiscal stimulus, but will see its growth decelerate moderately to around 7% in 2015.

“When it comes to Japan, we see very sluggish growth. The weaker yen has failed to boost exports due to competitiveness problems, so the outlook really hinges on deep structural reform.”

      Print
      Text Size
      Share