Hong Kong retail investors are cautiously confident in their outlook for the next six months amid a continued slowdown in Chinese mainland's economic growth, possible further US interest-rate hikes and weaker oil prices, according to a quarterly J.P. Morgan Asset Management (JPMAM) survey released on Monday.

The latest quarterly results, reflected in the J.P. Morgan Investor Confidence Index, show that local investor confidence remains stable at the start of 2015, with an index rating falling slightly by two points to 117.

The index is designed to reflect local investor sentiment towards the Hong Kong market for the next six months. A number topping 100 on the index ranging from 0 to 200 indicates a positive outlook.

The survey showed that only 40 percent of respondents expected the Hang Seng Index to be trading above 24,000 points in the next half of the year, compared with 85 percent in the last survey.

And, 50 percent of investors feel that a sluggish Hong Kong stock market will be a key risk in the first quarter of this year, up from 41 percent last quarter.

"However, we believe this slip in confidence will be short-lived since other investor' attitudes appear positive," said Karen Cheng, vice-president of private bank distribution at JPMAM. "Looking forward, 43 percent feel that 2015 will be better than last year. Confidence in the local, mainland and global economic outlook is expected to catch up with this positive sentiment."

Of those predicting a better 2015, 19 percent cited the introduction of the Shanghai-Hong Kong Stock Connect Program as a factor, with 69 percent saying the landmark "through-train" program has increased their confidence in the mainland's financial markets.

However, while 57 percent are optimistic about A shares in the first quarter of the year, only 35 percent show an interest in investing in this market.

The much-anticipated stock link had a softer impact than expected as barriers remain, most notably a lack of familiarity with the A-share market, a perception of greater risk, and perceived lower flexibility given that day trading is prohibited, Cheng said.

With a strong US dollar and weak oil prices being two important themes surrounding emerging markets at the end of 2014, Asian countries benefit as a net oil importer and as a manufacturing hub from stronger US demand, said Grace Tam, global market strategist at JPMAM.

Although lower crude oil prices would provide a welcome tailwind for growth, its impact on Hong Kong's economy should not be overestimated.

"The positive effect on consumer spending probably represents the most important boost to the economy from lower energy prices while its estimated effect on exports, on a net basis, is supportive but negligible," said Ryan Lam, senior economist at Hang Seng Bank.

"At a wider level, with emerging markets being the most appealing for investors, a slowing mainland economy is of the greatest concern, followed by the uncertainties brought by economic reforms on the mainland," Tam said.

sophia@chinadailyhk.com

(HK Edition 01/20/2015 page8)