FYI | Oct 15 2009
By Chris Shaw
The gains in equity and property prices in recent months have done a lot for investor confidence. The ING Group Investor Dashboard Sentiment Index for the September quarter shows Australians have become increasingly bullish about their finances, with the investor sentiment score increasing to a reading of 143 compared to 116 in the June quarter; the first signs of optimism since December of 2007.
The survey interviewed 1,340 affluent investors in 13 countries throughout the Asia Pacific region and across all countries the index rose to a reading of 143 from 132 previously, where a reading of 121-160 is considered optimistic. Only India and Japan showed no improvement in readings for the quarter. Despite this India remains the most optimistic nation, followed by China.
ING Investment Management deputy CEO and head of distribution Martin Donnelly believes the rising share market has been the biggest driver of the improvement in sentiment, with the result being more money is being allocated back into riskier assets. The survey results reflect this, as 60% of Australians surveyed believe the share market will move higher over the next three months, up from 51% in the previous quarter.
There remains some caution on the part of investors overall however, as while risk appetite is increasing and the trend is to less Australian investors continuing to follow a conservative investment strategy, there is still a majority of 56% favouring low risk/return investments.
Return on Investment or ROI for Australian investors rose in the quarter for 58% of those surveyed, up from 39% in the June quarter, while only 16% reported a decrease. The outlook for the future is increasingly optimistic and 66% expect a further gain in ROI in the December quarter. Among those surveyed 48% said their household financial position had improved in the period against 36% in the previous three months.
Among the nations Australia scores very highly as 76% of Australian investors reported an improvement in their local economic situation during the September quarter, up from just 46% in the June quarter. 78% are expecting further improvement in the December quarter. This was the strongest increase of any nation and put the country third on such a measure, behind only China at 83% and Singapore at 82%.
The positive outlook for Australian investors comes despite expectations inflation and interest rates will increase, with 90% and 93% respectively expecting the two measures to move higher in 2010, the latter being the highest in the region. Such an outlook isn’t impacting on investment decisions, Donnelly noting Australian investors plan to invest more in domestic shares and property to counter the increases.
With respect to corporate earnings the survey showed 63% of Australian investors saw results in the September quarter as meeting their expectations, while 19% viewed them as better than expected. The business outlook is not as positive though as the survey shows 63% expect negative corporate news in the next six months, which could flow through to fluctuating investor sentiment in 2010 in the group’s view.
