2nd wave of ICI by J.P. Morgan Asset Management in association with ValueNotes

Appetite for investing is back

Delhi sees continuous improvement across all parameters.

JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) in association with ValueNotes today announced findings of the second wave of the Investment Confidence Index (ICI) in India. The J.P. Morgan Asset Management – ValueNotes Investment Confidence Index (ICI), which was launched in August 2009, is published on a quarterly basis. The ICI captures the confidence of retail investors, corporate investors and financial advisors on the Indian economic and investment environment. The findings for this quarters’ survey show that the prospect of a global economic recovery drives confidence across the board, supported by a sustained confidence in the Indian economy.

Delhi has seen a steady increase in levels of confidence over the last quarter in all parameters. Levels of retail confidence rose by 6 points from 139.7 points in July 2009 to 145.7 points in September 2009. The city also witnessed significant increases in the levels of advisor confidence. Advisor’s expectations of an increase in the level of client investments moved up from 128.1 points in July 2009 to 162.9 points in September 2009 – a leap of 34.8 points.

ValueNotes, an independent market research company, was commissioned by J.P. Morgan Asset Management to conduct the survey. The ICI was developed by interviewing a random sample of retail investors (with a wallet size in excess of INR 200,000), corporate investors and financial advisors. The survey took place in September 2009 in eight cities across India: Mumbai, Delhi/NCR, Kolkata, Chennai, Ahmedabad, Bengaluru, Pune and Hyderabad.

The key objective of the ICI is to quantify confidence in the investment environment among investors and advisors. The survey also attempts to study investment behaviour and sentiment based on key factors such as the improvement in the Indian and global economic environment, general investment atmosphere, expectation of growth in investment portfolios and others. Additionally, ICI analyses the short term and long term changes in investment behaviour and outlook every quarter, from an investor and advisor standpoint.

The J.P. Morgan Asset Management – Valuenotes Investment Confidence Index score is derived from responses to the following questions posed to all target segments:

1. The likelihood of the Indian economic situation improving from current levels in the next six months.
2. The likelihood of an improvement in the general investment market environment and atmosphere from current levels in the coming six months.
3. The possibility of the global economic environment improving from current levels in the coming six months.
4. The likelihood of the BSE Sensex increasing in the next six months.
5. The prospect of your / your clients’ investment portfolio appreciating in the coming six months.
6. Expected increase or decrease in the amount of investment and/or increase in mutual fund inflows in the coming six months.

Responses to these 6 questions also form the basis for arriving at the Retail Investor Confidence Index, Corporate Confidence Index and the Advisor Confidence Index which are sub-indices of the Investment Confidence Index. At any given point, the indices can move from ‘0’ to ‘200’, with ‘0’ depicting the most negative outlook; ‘200’ depicting full and absolute confidence and ‘100’ showing a neutral position.

Mr. Krishnamurthy Vijayan, Executive Chairman of J.P. Morgan Asset Management said, “The results of the second wave of the investment confidence survey suggest that confidence has picked up across all segments in the financial and investment community.  While confidence across all indicators increased in September 2009, the highest increase was recorded in expectations of improvement in the global economy (21.4 points) and increase in the amount of investments (17.2 points). This is a re-affirmation from the investment community that appetite for investing is definitely back.”

Mr. Arun Jethmalani, Managing Director, ValueNotes commented, “The ICI increased 10.5 points to 146.4 in September 2009, reflecting widespread optimism among investors and advisors. Of the three underlying indices, the Advisor Confidence index is the strongest, breaching the ‘150’ mark to reach 151.7. Interestingly, advisor confidence is driven by their expectation of clients increasing investments, even as individual investors and companies are less bullish."

Key findings:

• Advisor confidence has recorded the maximum growth, increasing 15.7 points, followed by corporate (9.0) and retail (6.8). Among advisors, banks continue to be the most confident (157.2) increasing 9.6 points and more importantly, breaching the “150” confidence benchmark. 
• Retail investor confidence continues to be the highest in Chennai at 164 increasing four points while Mumbai IFA confidence (153) increases 19 points to overtake Chennai IFAs for the top position.  Similarly, retail confidence in Hyderabad continues to be the lowest at 130, despite increasing 32 points and Hyderabad IFA confidence (144), despite increasing by four points, is the lowest among all cities.
• 56% of retail investors expect their income will increase and they will make additional investments over the next six months as compared to 48% in July 2009.
• A majority (50%) of corporate treasuries are of the view that GDP growth meeting/exceeding expectations is the biggest positive economic indicator while there was no clear consensus among investors and advisors. 18% of investors and 30% of advisors consider rise in stock markets and FII inflows, respectively as the most positive indicators.
• Investors (35%) and corporates (48%) consider inflation as the most negative economic indicator in India while advisors (37%) view the high government borrowings / fiscal deficit with concern, in the current scenario. 
• Similar to findings observed in July 2009, retail and corporate investors continue to be more confident of portfolio appreciation at 143.4 and 137.5, respectively than they are about increasing investments further at 141.8 and 136.5. 
• Advisors now more confident of clients’ increasing investments (167.7) than appreciation in their portfolio 156.9, unlike in July 2009, when they were more confident of portfolio appreciation (146.8) than an increase in investments (132.1). Interestingly, in July 2009 investors were more confident about increasing investments than their advisors. However, interestingly the views have reversed in September 2009.

About J.P. Morgan Asset Management
J.P. Morgan Asset Management is the brand name of J.P. Morgan Chase & Co’s asset management companies. J.P. Morgan Asset Management is a global asset management leader providing world-class investment solutions to clients. With US$1.1 trillion in assets under management (the Asset Management client funds of J.P. Morgan Chase & Co. as at 30 June 2009) and offices in 40 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

Commitment to India: JPMorgan Asset Management India Private Limited is the Indian arm of J.P. Morgan Asset Management.  It commenced its mutual fund business in India in April 2007, initially establishing its head office in Mumbai and subsequently opening satellite offices in Delhi, Kolkata, Chennai, Ahmedabad, Pune and Bengaluru. The firm distributes its funds through a network of banks, independent financial advisers and national distributors and currently has caters to investors in 141 cities across the country.

The firm is still in its infancy but has a very clear agenda of bringing the inherent strengths of J.P. Morgan Asset Management into the country, namely:

• Excellence and continuity in investment management
• A comprehensive and competitive range of products
• Strong systems and processes
• Exceptional risk management and controls

J.P. Morgan Asset Management manages assets on behalf of a broad range of retail and institutional investors in India.  It continues to expand its product range to meet the needs of its diverse client base, using the resources and expertise available from its global network.

About ValueNotes
ValueNotes is an integrated provider of business intelligence, information, research products and services. It operates at multiple points of the knowledge value chain to provide information, research, analytics, knowledge management and intelligence to a wide variety of users, and via multiple delivery mechanisms. ValueNotes’ customers include some of the leading global corporations, asset and wealth managers, management consulting firms, research publishers, PE and VC firms.  The company operates across multiple domains, but primarily BFSI, IT / BPO, Pharmaceuticals / Healthcare and Internet / Media. 

ValueNotes products and services are made available by different Business Units.

• Custom Research: Provides a wide range of bespoke services in the areas of business and financial research & analysis. Assessing market opportunities, quantifying customer / brand / investor perception, facilitating entry into Indian markets, enabling competitive intelligence, providing dedicated research support teams and providing research-enabled written content are among the key services provided.
• ValueNotes.com: Is a search engine and financial portal that aggregates research, news, information and independent third-party articles/analyses, primarily about Indian financial and equity markets. 
• Outsourcing Practice: Publishes proprietary Market Intelligence on the Outsourcing Industry. The current scope covers primarily BPO and KPO services, with an emphasis on knowledge services or KPO.

Statutory details: Sponsor: JPMorgan Asset Management (Asia) Inc. Trustee: JPMorgan Mutual Fund India Private Limited, a company incorporated under the Companies Act, 1956. Asset Management Company: JPMorgan Asset Management India Private Limited, a company incorporated under the Companies Act, 1956. JPMorgan Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, by JPMorgan Asset Management (Asia) Inc., liability restricted to initial contribution of Rs.1 lakh.

Risk Factors / Disclaimers: Mutual fund investments are subject to market risks. Please read the Offer Document, Statement of Additional Information and Scheme Information Document carefully before investing.

The information contained herein is provided based on a public survey. Although we endeavour to ensure that the information is as current and accurate as possible, errors do occasionally occur. Therefore, we cannot guarantee the accuracy and adequacy of the information. Readers should, wherever possible, verify the information before acting on it.

This information is based on our assumptions and interpretations of the survey conducted. No part of our compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed herein. Be aware that our assumptions and interpretations are partially based on our observation of participants’ past behaviour. Do not base your actions on the material so provided. These observations will change if different assumptions and interpretations are applied for the purpose of preparing this survey report.