Go To San Francisco To Find The Most Bullish Investors In US - Morgan Stanley

Tom Burroughes

23 April 2013

High net worth investors living in San Francisco’s Bay Area of California are the most bullish of any group of wealthy individuals polled in eight metropolitan areas of the US, according to a survey by Morgan Stanley.

The other centers in which HNW individuals were surveyed were Boston, New York City, Chicago, IL, Houston, TX, Denver, CO, Atlanta, GA, and Los Angeles, CA. At the least bullish end of the spectrum were residents in Atlanta, the poll found.

The poll “found broad optimism among HNW investors around six key sentiment indicators: A majority believe that the 1) global, 2) national and 3) individual state economies will be better or the same at year-end compared with the first three months of 2013,” the report from the US firm said.

Investors are also more optimistic about their personal financial prospects, with clear majorities predicting that the investment climate, their personal investment portfolios, and their overall financial well-being will be better or the same at year-end, it said.

In aggregate, San Francisco Bay Area investors were more bullish than the national findings on these six key sentiment indicators by 56 percentage points, followed by Boston and Los Angeles .

In the home of Silicon Valley in north California, nearly four in ten HNW investors say they have put funds into a start-up, but only 23 per cent plan to do so in the next three years. Bay Area investors say innovative ideas are the most important consideration for investing, start-up or not, followed by strong financial backing.

Atlanta was the least bullish in aggregate , followed by Houston and Chicago .

In Boston, retirees are less satisfied with the results of their investment portfolio, with 48 per cent saying performance is worse than expected, compared with 36 per cent nationally. Investors in the Tri-State area are more bullish on prospects for the national economy, with 74 per cent predicting it will be better or the same at year-end, versus 66 per cent nationally. Prospects for the local economy are seen as even brighter – 81 per cent better or the same.

As for Atlanta, investors see less improvement in housing, with only 34 per cent seeing a price increase , and 31 per cent seeing home prices decrease . Fully, 64 per cent of those surveyed say foreclosures have affected their neighborhoods, compared with 43 per cent nationally.

Other centers

In Chicago, investors are by far the most bearish nationally on their state economy, with 58 per cent predicting it will be worse at year-end, compared with 22 per cent nationally. The financial well-being of Illinois was cited as a concern by 93 per cent .

In Houston, HNW investors say energy makes up a fifth of their investment portfolio, with roughly half in oil, a quarter in natural gas, and the rest in "other" . Accordingly, 53 per cent see great potential in natural gas, 47 per cent in oil and 24 per cent in alternative/renewable sources.

In Denver, investors are bullish on housing. Three times as many investors see increases in local housing prices compared with those seeing decreases .

In Los Angeles, investors are downbeat about one of the largest local industries - entertainment - with only about a third seeing it as a "good" opportunity and 46 per cent saying they are neutral on it. The top six favored industry sectors were technology , energy , bio-tech , communications , real estate and pharmaceuticals .