A new poll by Morgan Stanley Wealth Management shows that high net worth investors in the San Francisco Bay Area are the most bullish among eight U.S. metropolitan areas surveyed, while those in Atlanta are the least bullish.
The poll, conducted on a national level with a special focus on eight major markets, found broad optimism among high net worth 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.
Investors are even more optimistic about their personal financial prospects, with clear majorities predicting that the 4) investment climate, 5) personal investment portfolios and 6) overall financial well-being also will be better or the same at year-end.
With an over-sample of investors in Boston, New York, Atlanta, Chicago, Houston, Denver, Los Angeles and San Francisco, some interesting regional differences emerged:
The most bullish:
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 (27 percentage points) and Los Angeles (16 percentage points).
The least bullish:
Atlanta was the least bullish in aggregate (19 percentage points below the national average), followed by Houston (minus 12 percentage points) and Chicago (minus 11 percentage points – brought down by poor perceptions of the Illinois economy).
Other regional highlights include:
Boston – Retirees are less satisfied with the results of their investment portfolio, with 48% saying performance is worse than expected, compared with 36% nationally.
New York – Investors in the tri-state area (New York, New Jersey and Connecticut) are more bullish on prospects for the national economy, with 74% predicting it will be better or the same at year-end, vs. 66% nationally. Prospects for the local economy are seen as even brighter – 81% better or the same.
Atlanta – Investors see less improvement in housing, with only 34% seeing a price increase (vs. 41% nationally), and 31% seeing home prices decrease (vs. 20% nationally).
Fully 64% of those surveyed say foreclosures have affected their neighborhoods, compared with 43% nationally.
Chicago – Investors are by far the most bearish nationally on their state economy, with 58% predicting it will be worse at year-end, compared with 22% nationally. The financial well-being of Illinois was cited as a concern by 93% (80% “very concerned’). Nationally, this was not named as a top concern.
Houston – High net worth 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” (alternative, renewable, etc.) 53% see great potential in natural gas, 47% in oil and 24% in alternative/renewable sources.
Denver – Investors are bullish on housing. Three times as many investors see increases in local housing prices (64%) compared with those seeing decreases (20%).
Los Angeles – Investors are cool to one of the largest local industries – entertainment – with only about a third (32%) seeing it as a “good” opportunity and 46% neutral. The top six favored industry sectors were technology (76% “good”), energy (65%), bio-tech (65%), communications (59%), real estate (58%) and pharmaceutical (58%).
San Francisco – In the home of Silicon Valley, nearly four in 10 HNW investors (37%) say they have put funds into a start-up, but only 23% 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.
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Survey Methodology: 1,000 U.S. investors, age 25 to 75, with $100,000 or more in investable household financial assets. A third of those interviewed had $1 million or more in household financial assets. Over-sample of appx. 300 investors in eight metropolitan areas. Poll conducted by GfK Public Affairs January to March, 2013.