Singapore investor sentiment index in Q2 plunged 7%

Singapore economy might suffer from external events, having caused a fall in investor sentiment in Q2 this year, said leading financial firm ING.

ING’s Investor Sentiment Index for Singapore in Q2 dropped seven percent to 140 from the previous quarter, against a backdrop of growing optimism in Southeast Asian region, which obtain an overall three percent increase in Q2 to 141.

A quarterly ING Investor Dashboard Sentiment Survey for the second quarter indicated that while Singapore-based investors are more confident now than during the 2008-2009 global recessions, they are still concerned about the tightening monetary and credit policies in China, worsening debt crisis in Europe and the financial slowdown in the US.
 
Mr. Tim Condon, head of research and chief economist of ING Commercial Banking Asia, said: “Singapore's economy is on track for record growth in 2010 but we expect uncertainties about the global economic climate to weigh on investor sentiment in the second half of the year.”

The survey also showed that during the second quarter this year, 33 percent of Singapore investors believed that the US economy had a negative effect on its investment decisions, up from 25 percent in the previous quarter.

Additionally, about 99 percent of Singapore investors believed that the euro zone debt crisis will have an impact on global economic growth, while 65 percent said it will affect the economic growth of Asia.

“Instead of triggering a 2008-style global financial crisis, the 2010 European debt crisis will produce a downgrade of Eurozone growth forecasts,” said Mr Condon. “The economic outlook for the world's most advanced economies is negative.”

While the Chinese government continued its tightening measures to limit inflationary risk, 58 percent of Singapore investors still anxious that China’s economy may be overheating, and 77 percent think a property asset bubble is forming steadily.

From the results of the survey, investors in India are the most optimistic in Asia, while those in Taiwan, Hong Kong and China reported the biggest quarter-on-quarter drop in sentiment in Q2.