Investor sentiment up, but still negative

Investor sentiment slightly improved in the last quarter of 2010 but is still lingering in negative territory.

According to the latest CoreData Investor Sentiment Index, which surveyed around 900 Australians, investor confidence stood at -5.3 points – a slight improvement from -9 points in the September 2010 quarter.

The index also found that most investors did not trust the Government to maintain the current legislation around superannuation and that almost half believe the Government was not providing a good investment climate.

A considerable 60 per cent had withdrawn money from their existing investments, compared to 21.3 per cent from the September quarter. However, the amount of money used to purchase new investments had only risen by around 17 percentage points.

CoreData head of advice, wealth and super Kristen Turnbull said this suggested that the bulk of assets remained stuck in the cash system.

“According to the latest results, we could remain in this holding pattern for some time with very low propensity to invest new money in existing investments over the next quarter and even fewer people intending to invest money directly in new equities,” Turnbull said.

“Despite this, sentiment towards Australian equities remains by far the strongest of the asset classes, while property sentiment continues to decline, painting a bleak picture for direct and indirect property in the coming months.”

Turnbull added that increased savings – evidenced by the money in cash and the decline in non-essential spending – resulted in financial security improving for the first time since the end of 2009.

In the main, investors remained content with their investments, with dissatisfaction dropping slightly from the previous quarter.

Overall sentiment remains negative, which suggests investors were wary of investing money at this time, according to the report.