Jakarta, INDONESIA-Indonesian investors are the most bullish in Asia, with sentiment rising on the on the back of high expectations in real estate and stocks, a global fund manager says.

Manulife Financial sa MFC.T +1.50%id this week that its latest survey of investor sentiment showed Southeast Asia's largest economy on the leading edge of a trend of rising optimism across Asia, gaining six points in March to 60 overall based on perceptions of returns across asset classes.

The survey interviewed 500 investors from mid-April to May in Indonesia and 3,500 investors across Asia. In the case of the two highest scorers-Indonesia and Malaysia-the interviews were conducted face to face, while others were done online.

The index is calculated as a net score of the percentage of people saying it's a "good or very good time" to invest, minus the percentage of saying it's a "bad or very bad time to invest," for each asset class.

Manulife also offered a warning, saying investors in Southeast Asia's largest economy are holding too much cash, a criticism it also made of investors in Singapore and Malaysia.

Nevertheless, the Asia-wide index rose four points to 21. Singapore rose slightly to 12 and Japan made the greatest leap-17 points-to 21. Malaysia had the second-highest sentiment index on the list despite a slight fall from the first quarter. Hong Kong, which was already in the negative territory in March, slipped further.

Across Asia, investors were most bullish on property investments.

Relatively few Indonesians take part in the country's sometimes volatile stock market, which is subject to wild swings in foreign investment sentiment. But the market finished in the positive territory last year amid buckling markets world-wide, and it was the best emerging-market performer in the world from 2009 to 2011.

Nearly 80% of Indonesian investors said they expected to be better off two years from now, up by 13 percentage points since March.

Still, Indonesian investors "are holding too much cash, amounting to almost half their total assets, Legowo Kusumonegoro, president director of Manulife's Indonesian unit, told reporters. But a "strong increase in investor sentiment toward stocks is a great first step towards taking action."

Cash remains the primary asset holding for Indonesian investors, amounting to 41% of their total assets excluding principal residences. Investors held about 12 months of personal income in cash, but half of respondents felt it was too little. Only 8% of investors said they thought their cash holdings were too high.

Mr. Legowo said Indonesian investors appear to be shifting their assets from fixed-income mutual fund products to stock funds.

The index findings suggest Asian investors are "warming to signs of recovery in the real economy, and that's also reflected in our findings from North America," Robert Cook, president and CEO of Manulife Asia, said in a statement. "But many aren't yet ready to invest further and most are holding on to too much cash, thereby effectively losing money."

Despite the strong overall sentiment, investors in Indonesia appear hesitant about their own plans, Manulife said. Only 9% said they planned to invest more in global stocks over the coming year.

Respondents in Indonesia said they had high expectations for returns on market investments in the next 12 months, with 90% saying they expected annual returns of better than 25% on property stocks as well as funds comprising equities and bonds.

By Linda Silaen and Ben Otto

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