Brexit Vote Hit Sentiment In Singapore, Says JP Morgan

Tom Burroughes

5 August 2016

The UK decision to quit the European Union influenced the thinking of investors thousands of miles away, instilling greater caution in them, according to a JP Morgan Asset Management poll of 502 Singapore-based individuals.

The survey, taken among retail investors in the Asian city state, showed sentiment fell after the 23 June referendum result - which confounded many pundits - was announced.

In the first week of July, the JPMAM survey results gave an index reading of 101. That was four points down from the 105 registered the week before the Brexit vote, and the same level as in December 2015.

The index is derived from a score of investors’ responses to a series of questions. The online survey, conducted by TNS Singapore, comprised fieldwork done from 6-17 June (before Brexit), and from 1-7 July (after). A total of 502 respondents were polled in June and 200 were re-contacted in July.

An index level of 100 is neutral, while 200 is extremely optimistic and zero is extremely pessimistic.

Before Brexit, investors were more optimistic compared to six months ago when asked about the six components of the index – the local stock market index, Singapore’s economy, the investment environment, the global economy, appreciation in investment portfolios, and increase in investment. After the Brexit decision, 44 per cent of respondents turned bearish on the global economy and said it was extremely or somewhat unlikely to improve in the next six months, against 35 per cent pre-Brexit and 41 per cent in December 2015.

In the June survey respondents were more optimistic on the Singapore economy compared to six months earlier. Some 33 per cent of them said the Singapore economy was extremely or somewhat likely to improve against 28 per cent at the end of 2015. After Brexit, only 30 per cent of respondents expected improvements, with 38 per cent maintaining a neutral outlook against 30 per cent before Brexit.

The survey found that after Brexit 85 per cent of respondents were likely to maintain or increase their investments, relatively unchanged from the 84 per cent who indicated the same a week before Brexit.

Among investors of mutual funds, there were significant changes in asset allocation, with investors pulling out of equity and balanced funds and moving into fixed income.