Investor confidence down as US uncertainty looms

Australian investors have reviewed their bullish optimism over the performance of the Australian share market and are now bracing themselves for the full impact of a downturn in the US economy, the latest TD Waterhouse Investor Sentiment Survey has revealed.

The survey, conducted between 29 April and 3 May 2002, found only 43 per cent of investors expect the Australian share market to improve over the next twelve months, well below the 65 per cent who were optimistic about the market in the previous TD Waterhouse survey, conducted in January.

Moreover, almost 15 per cent of investors were preparing themselves for a marked downturn in the Australian share market, almost double the number with such concerns in January.

TD Waterhouse Managing Director Karen Buck says the latest results are “an expression of uncertainty about what’s around the corner”.

“The survey suggests a shift in sentiment among Australian investors, but overall Australian investors remain optimistic — cautiously optimistic,” Buck says.

The down beat expectations for the Australian share market were largely the result of continuing uncertainty over the performance of the US economy.

According to the survey, 22 per cent of investors believe the state of the US economy is the issue with the most potential to adversely affect the Australian share market, although this was down from 28 per cent in the previous survey.

Interest rates are also beginning to increasingly play on investor’s minds, with 16 per cent - up from 9 per cent in January - highlighting it as an area of concern.

Despite lingering doubts about the local market, the vast majority of investors are still expecting an improvement in the performance of their managed funds over the next 12 months, the survey found.

Almost two-thirds of investors interviewed by TD Waterhouse in the latest survey, down from 71 per cent in January, were anticipating stronger returns from managed funds over the year.

“There is still a considerable degree of confidence being expressed by Australian investors, but there is clearly a softening of sentiment,” Buck says.