61% of Asian financial advisers see regional inflation as "significant" threat

This is up from 38% in Q2.

According to the latest international adviser confidence barometer by Royal Skandia, the fear of inflation negatively impacting Asian economies has risen significantly since last quarter.

Advisers operating in Hong Kong are the most anxious over the rising level of inflation in their region, with 64% of respondents concerned about the effects on their economy. Whilst financial advisers from Singapore seem concerned to a lesser degree, over half (56%) still think this to be a valid threat to their local economy, an increase of over 15% since Q2.

Here's more from Royal Skandia:

Although fear of inflation has risen, global contagion is the top concern for Asian advisers, with over two thirds (65%) believing this is the biggest threat to local economies. This sentiment is particularly strong in Hong Kong, where over three quarters (79%) of advisers fear other struggling economies will have detrimental effects on their own. Interestingly, respondents from Hong Kong seem less anxious about the European debt crisis than they were in Q2, with a drop from 67% to 46%.

Unlike their counterparts in Hong Kong, Singaporean advisers are increasingly concerned about the European debt crisis. The effects of the economic turmoil persisting in Europe are seen as the largest threat to the region with nearly two thirds (63%) of respondents selecting it, an increase of over 20% since last quarter (52%).

The concern about struggling markets has impacted the overall economic confidence levels reported by Asian advisers. On average, Asian advisers are far less confident about the global economy than their local economies. The average confidence for Asian advisers in the global economy is 5.2 out of 10; this is slightly lower than the global average of 5.6. However, the average level of confidence for Asian advisers intheir local economies is 6.4 compared to a global average of 5.5.

For the third quarter running, financial advisers operating in Singapore are the most optimistic about their local economy, with a confidence level of 6.8. However, they had the joint lowest confidence (with European advisers) of five out of 10 in the global economy, showing just how concerned advisers from Singapore are about the effects of global economic instability.

Whilst Asian advisers are feeling quite confident about their local economies, their clients are not very confident as regards investing. Nearly half (45%) of the respondents reported that clients have become more risk-averse in the last quarter, and over half (53%) said clients have also become increasingly nervous to make new investments.

Mike Leeson, head of sales in Hong Kong and NE Asia at Royal Skandia, commented, “It is good to see that Asian financial advisers remain positive about their local economies. However, it is clear that advisers are very wary of the impact of other more turbulent economies on their own regions, and this is reflected in low confidence levels for the global economy. It is interesting that advisers in Asia are increasingly concerned about inflation; this is likely to be a result of the rising costs of living, especially the high property prices, in the region.”

The quarterly international adviser confidence barometer was conducted by Royal Skandia, part of Old Mutual Wealth in Q3 2012 and attracted responses from 348 advisers from around the world – Hong Kong, Singapore, UAE, UK, Europe, Africa, Latin America and Thailand.