Investors confident of stronger stock market performance

A stock brokerage in Nanjing, Jiangsu province. Provided to China Daily

Around two-thirds of Chinese investors are expecting a major turnaround in the stock market this year after a disappointing 2012, a survey from global investment management company Franklin Templeton showed on Tuesday.

According to the survey - conducted in January among a sample of 501 investors in China - 68 percent of those surveyed believe the stock market will rise, compared with 11 percent asked the same question last year.

Moreover, they expected an investment return rate of 13.2 percent this year, an increase from last year's expectation of 7.8 percent. And 43 percent of Chinese investors think China offers the best global equity opportunities this year, and over the next decade.

Looking at the global market, investors said they expect a return of 9.3 percent from the stock market this year, the survey said.

"We think their positive expectations are attributed to the fact that despite the slowing growth rate, China's economy still displays solid fundamentals and strong long-term growth prospects," said Amy Wang, chief representative of Franklin Templeton Investments' Beijing office.

"With further reforms put forward on China's capital market, we see healthier development and growth in the future."

Chinese mainland shares hit two-week highs on Tuesday, with the benchmark Shanghai Composite Index closing at 2,235.6 points, up 0.2 percent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings inched up 0.2 percent to 2,529.9 points. Both indexes hovered around two-week highs.

Respondents said a collapse in the real estate market and declining exports were seen to be the biggest threats to the stock market, followed by an economic slowdown.

The survey showed that Chinese investors have become more sophisticated in their investments, with a rising interest in alternative investment products.

Precious metals, real estate and stocks were predicted as the top three performers this year and over the next 10 years, with non-metal commodities close behind.

In 2012, commodities were expected to be the best performing asset class over the next decade, while stocks and real estate were considered the riskiest by Chinese investors.

The study showed that mutual funds have attracted a lot of interest from investors, with the vast majority of Chinese investors (73 percent) currently investing in mutual funds and planning to invest in them in five years (89 percent).

They also expected to allocate a larger percentage of their overall investments to mutual funds in the next five years.

When asked about their plans, Chinese investors indicated they will allocate 67 percent of their investments domestically in the next 10 years, with 33 percent to developed and emerging markets.

Lack of knowledge about other markets was the top concern of investing outside of China, based on the impact of exchange rates on investment returns and regulatory barriers to investing outside of China.

"The survey still demonstrates a preference in keeping their money close to home - Chinese investors are just starting to explore overseas markets.

"They are starting to put more focus on various asset classes and markets to mitigate risks," Wang said.

The top three investment goals for investors were school and university fees, and home purchases for those between the ages of 25 and 44, while older respondents said they were more concerned with retirement.

Purchasing a new home was also important to more affluent investors with a household income exceeding 200,000 yuan ($32,400), with retirement their fourth most important goal in 2013, after purchasing a home, emergencies and other investment goals.