India News Online » News Analysis » Indian Economy » 

Investments & Joint Ventures: India ranks high on investors’ scale: ING

	April 21, 2008

ING Asia Pacific (“ING”) last week released data from the quarterly ING Investor Dashboard survey which shows a further decline in investor sentiment in Asia, reinforcing the reality that the region is not insulated from the global market uncertainty. However, the ING Investor Dashboard Sentiment Index for India continues to reflect the highest level of investor optimism across Asia.



In Q1 2008, India retains the position of being the most optimistic market; however the increase in investor sentiment is a miniscule 0.6% increase from Q4 2007. India’s investor sentiment rose to 168 for Q1 2008 from 167 in Q4 2007. The index for India registered 168 for Q3 2007.



As the region continues to take in the impact of the subprime crisis, global credit crunch and U.S. economic slowdown, the ING Investor Dashboard’s pan-Asia sentiment index fell to 125 for Q1 2008 from 135 for Q4 2007. The ING Investor Dashboard’s pan-Asia sentiment index registered 141 for Q3 2007.



Following the success of the ING Investor Barometer in Europe, an authoritative market indicator followed by key players in the European financial industry, the ING Investor Dashboard is the first quarterly survey in Asia Pacific that provides a specific industry benchmark for pan-Asia (ex-Japan) investor sentiment. It also allows for investor attitude and outlook across 13 individual markets to be referenced against a pan-Asia sentiment index on a quarterly basis.



Fast-growing markets like China and India continue to reflect the highest levels of investor optimism across Asia.



Despite the overall decline, pan-Asian investor sentiment (at the index level of 125) for Q1 2008 remained within the optimistic level. Fast-growing markets like China and India reflected the highest levels of investor optimism with investor sentiment index scores of 136 and 168 respectively.



The subprime and credit crunch have also remained key areas of concern for Indian and other Asian investors. 67% of investors in India and more than 73% of respondents in Asia (ex-Japan) expect the subprime crisis to impact their investment decisions in Q2 2008.



Looking forward, the data also shows that Indian and most Asian investors are cautiously optimistic about the longer term, even though they are less bullish than in previous quarters about the current performance of their economies and markets. Survey results also indicate that Indian investors are among some of the more bullish in Asia.



For Indian and most Asian investors, outlook on the economy, return on investment and state of personal financial situation for Q2 2008 are more positive compared to sentiment for Q1 2008, indicating that most Indian and Asian investors do not think economic growth will slow down significantly in the longer term and they are optimistic that the worst may be over.



In India:



* 72% of investors believe the economy will improve in Q2 2008; 62% of them thought the economy improved in Q1 2008



* 84% of investors say they expect their return on investment to increase in Q2 2008; 78% of investors thought their return on investment had increased in Q1 2008



* 83% of respondents say they expect their state of person financial situation to improve in Q2 2008; 75% felt their state of personal financial situation had improved in Q1 2008





In Asia (ex-Japan):



* 48% of respondents indicate they have a positive outlook for the economy in Q2 2008 compared to 32% who felt the economy had improved in Q1 2008



* 57% of respondents also say they expect their return on investment to increase in Q2 2008



* 56% of respondents also say they expect their state of personal financial situation to improve in Q2 2008 compared to 40% who felt their state of personal financial situation had improved in Q1 2008



"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 U.S. economy, India and other Asian economies will remain robust. Over the recent years, India has grown at around 8%, well above its long term trend rate of 4%. 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%. Contrast this with the growth of 1-2% in developed markets or 6-7% 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," commented Mr. Vohra.



India adopting a "Wait and See" Approach While Focusing on Asia and Considering Lower Risk Investments



The ING Investor Dashboard survey also indicates that Indian investors are gravitating towards lower risk investments. Consequently, India has seen a significant increase (18%) in the percentage of investors who favour gold. Investors in other markets in Asia appear also to be factoring in the impact of the global economic uncertainty by taking a “wait and see” approach and moving towards lower risk investments.



82% of Indian respondents view lower risk investments as favourable compared to 68% for high risk investments



54% of respondents for Asia (ex-Japan) view lower risk investments as favourable compared to 47% for medium risk investments and 38% for high risk investments.



"We think the global crisis is a result of some of the excesses of the past. Easy liquidity in the past led to the creation of a bubble in the housing markets, which in turn fuelled a commodity bull-run in emerging markets. The long-term growth drivers in the Indian market are very much still intact. And the global investments horizon is replete with opportunities. All in all, we believe that in every crisis is an opportunity. In any case, the return of risk perception helps remind investors of the importance of diversification," concluded Mr. Vohra.



Other highlights of the survey findings on India include the following:



* Indian investors seem to be getting more aggressive on the stock markets while reducing their property allocation.



* Although India is still a popular destination for future investments amongst investors in most markets who will invest overseas, it seems to be loosing some of its favor, with the future investment intention being slightly lower than the current investment levels.