Investor sentiment in Hong Kong and on the mainland has tumbled as investors react to the mainland's tightening credit and monetary policies, while worrying that the US economy may be slowing down and assessing the impact of the euro zone debt crisis upon the global economy, according to a recent survey conducted by the Dutch investment bank ING.

The ING Investor Dashboard pan-Asia Sentiment Index Survey was conducted in June 2010 and involved online interviews with nearly 3,800 investors across 12 markets in Asia. The ING index data includes an investor sentiment index for Hong Kong and the mainland as well as 10 other Asian countries.

In the survey, the ING Investor Dashboard Sentiment Index (IDSI) for Hong Kong has registered a 16 percent drop to 124 for the second quarter of 2010, down from its all-time high of 148 for the first quarter of 2010. On the mainland, the IDSI fell 18 percent to 127 for the second quarter from 154 for the first quarter of 2010.

Approximately 60 percent of the Hong Kong respondents and 60 percent of the mainland interviewees believe that the local economy will improve.

Although the global economy is clouded with uncertainties, the Dutch investment bank predicted that the economic growth rate on the mainland in 2010 will be around 9 to 9.5 percent and that Hong Kong can achieve high single-digit economic growth in the same year.

"Looking ahead, the third quarter of 2010 may not be pessimistic as the European debt crisis fades, and the mainland may gradually ease the tightening monetary policy, so that there may be more positive economic news coming out in the market," Michael Chiu, ING senior investment manager said in the press conference on Thursday.

For the local property market, ING said that with low interest rates in the city and uncertainties of the global economy, local investors will still prefer real estate investment in the next couple of years, although 67 percent of the Hong Kong respondents in the survey believe an asset bubble is already forming in the city.

For the mainland property market, ING predicted that mainland property prices may drop 10 percent for the third quarter of 2010, but added that the property market may bottom out in the June-July period.

Meanwhile, Credit Suisse economist Tao Dong has predicted that mainland property prices may exhibit a 15 to 20 percent decrease in the fourth quarter of 2010 as some mainland developers may be forced to cut their selling prices because of a lack of working capital.

China Daily

(HK Edition 07/16/2010 page3)