Investor sentiment lowest since 2004

Despite the investor sentiment index being at its lowest point since 2004, investors are still confident they can ride out the storm, according to Investment and Financial Services Association (IFSA) and CoreData research.

The research shows that the index fell from +14.4 at the end of 2007 into negative territory in early 2008, and has since fallen further into the negative, currently standing at -22.3.

However, despite concerns the situation may get worse before it gets better, 76.8 per cent of investors said they felt confident they could ride out the storm, according to CoreData head of market intelligence Craig Phillips.

The index takes into account investors’ expectations regarding the performance of the investment market, their perception of the current financial situation and their future investment intentions.

According to the index, over half of investors said they were unlikely to invest more into existing products over the next quarter, while around a third said they were likely to invest more.

Meanwhile, IFSA chief executive Richard Gilbert said “since early 2008, the global financial crisis has created intense volatility on investment markets and it is now flowing onto the real economy".

“Falling interest rates, the reduction in petrol prices and the Government’s stimulus packages are all likely to have contributed to the fact that the household financial situation seems to have improved slightly in the first quarter of 2009. Having said that, investors are the least optimistic about their household financial position in the next 12 months since the survey began, Gilbert said.

The industry, regulators and government must continue to consider ways and means of bolstering investor confidence, Gilbert said.

“The 2009 Federal Budget has the potential to provide confidence and certainty for all Australians who are investing over the long term.”