Kristen Paech writes that investor confidence is waning, but they’re hanging in there.
Consumer confidence in the financial markets has taken a battering in recent months, and deservedly so. Bad US economic news; extreme sharemarket volatility; the collapse of high-profile margin lenders, such as Opes Prime and Lift Capital; and seven consecutive interest rate rises since May 2006 have together pushed confidence levels to their lowest since 1993.
The Roy Morgan Consumer Confidence Rating was down 9.4 points in April to 100.1, a massive 24.2 points below the April 2007 rating of 124.3. According to the research, only 25 per cent of Australians (down 7 per cent from March and 22 per cent from December) expect “good” domestic economic conditions in the next year – the lowest since March 2003.
Some 37 per cent (up 7 per cent) expect “bad” economic conditions in the next 12 months, while 26 per cent expect “some good, some bad” and 12 per cent are undecided. In addition, brandmanagement’s first quarter Investor Sentiment Index shows investors are negative in their views about the domestic economy, international and local equities and property.
It is the first time attitudes towards global equities have gone into negative territory since the index began, while the reading for domestic equities is the lowest of the series. Waning confidence and concern over short-term portfolio movements is to be expected during these turbulent times.
