The Hong Kong Investor Dashboard Sentiment Index has slipped into a pessimistic level for the first time amid the global financial turmoil and market volatility, said ING, a global financial services group.

The index, indicating investor sentiment in the third quarter of 2008, shows a decline of 44 percent, year-on-year, which makes Hong Kong the fourth most pessimistic market in Asia, excluding Japan.

Compared with the second quarter, the index also registers the largest quarterly fall for the year, with a 36 percent decrease, as investors take stock of the global markets and economic developments.

Oscar Leung, senior investment manager of ING Investment Management Asia/Pacific, said the impact of inflation, the effects of the subprime crisis and the US economic slowdown were the three major factors contributing to the slump in investor sentiment in the third quarter.

He added that more Hong Kong investors have shown a negative view toward the local economy, as well as their personal finances during the global crisis.

"Around 69 percent of the local investors said the economy deteriorated in the third quarter, and 47 percent of them said their personal financial situation has turned bad," Leung said, noting that the three factors will remain key concerns for Hong Kong investors in the fourth quarter.

Leung said some markets, including Hong Kong and the mainland, will be the most vulnerable to external market developments and volatility in the global markets.

Meanwhile, Hong Kong, the mainland, South Korea and Singapore are the four Asian markets that appear to be most sensitive to the global subprime crisis in the fourth quarter.

As for riding out the current financial downturn, more Hong Kong investors will move away from high-risk investments, with 45 percent of them viewing low-risk investments as favorable, Leung said.

"Local investors will continue to hold on to cash or deposits in the fourth quarter, while they will avoid dabbling in local stocks, foreign currency and global resources investments," he added.

When asked if the Hang Seng Index has already reached its bottom level, Leung said it would be valuable to invest for long term if the benchmark index dips below 15,000.

"However, investors should be aware of their risk management and bearable risk level under such a volatile market situation," Leung added.

Concerning the global markets outlook, Senior Investment Manager of ING Investment Management Asia/Pacific Michael Chiu expects Asian markets, especially the Greater China region, in the medium to long-term, will outperform those of the US and Europe, which need time to recover from the recent financial crisis.

"Markets such as China and India have been growing rapidly, which will give them support to boost the economy," Chiu said.

(HK Edition 10/15/2008 page3)