Key Debate: Has a range bound, volatile market dampened the spirit of high net worth investors (HNI) towards equities?
Market View: Tepid trading turnover, falling retail delivery volumes suggest that retail and high net worth investors are losing appetite for equities. We surveyed 97 of Morgan Stanley's private wealth customers with the help of our private wealth management team. Here are the results of the survey:High net worth investors see another 10% upside to equities for the remainder of 2010 no different from institutional survey (see our report, "MS Institutional Investor Survey: Room for More Bullishness", dated July 5, 2010)
HNI see range bound bond yields again no different from institutional investors.
They consider global markets and corporate profits as the most important driver of Indian equities even as they worry most about inflation.
HNI are overwhelmingly focusing on stock picking as their equity strategy though one-fifth of investors we surveyed find equities expensive and will buy only on a correction.
About half the surveyed investors like Financials and Industrials sectors the most, whereas just over 40% believe Materials will be the worst performing sector in 2010.
Even with a cautiously optimistic view on equities, it is still the biggest asset on HNI portfolios. Nearly 40% of the investors we surveyed have more than half their current portfolios in equities. Real Estate accounts for a quarter of HNI portfolios.
Given this position, it is not surprising that HNI believe that Mid-caps will be best performing asset class in 2010 followed by the BSE Sensex, Gold (which is currently 7% of portfolios) and Real Estate. Cash is considered to be the asset class with the least likely returns followed by government bonds and crude oil. Surprisingly, HNI still have around 10% of their portfolios in cash based on our survey.
Conclusion: We think that HNI are backing risk assets and could continue to support equity markets. Their bullishness on Real Estate is an interesting input for our positive call on property stocks. Their bearishness on Materials reinforces our counter consensus call on the Materials sector. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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