Market volatility sees 'flight to cash'
Nervous investors are moving into cash and term deposits as the result of uncertainty in the stock market.
ME Bank's National Consumer Call Centre recorded a 6 per cent rise in enquiries about term deposits on Friday 5 August, following the largest fall in the US Dow Jones Industrial average since December 2008, the night before.
The chair of the Self-Managed Superannuation Fund Professionals' Association of Australia, Sharyn Long, said she was not surprised that there had been a move by investors towards term deposits, since investors in the pension phase are particularly vulnerable to sudden downwards movements in equities. She added that the move to term deposits may well be quicker this time around, compared to the reaction at the end of 2008 at the height of the global financial crisis.
ME Bank group executive for brand, product and distribution Ian Hendley said he couldn't say for certain if the increase in enquiries was linked to the stock market crash, but "it would be logical that people are looking for a haven for their money".
Commonwealth Bank general manager for deposit and transaction products Anthony Hughes said his bank had seen a 15 per cent increase in term deposit lodgements on Friday 5 August, as compared to the previous Friday. Hughes added that the increase was certainly evidence of a "flight to cash".
A Westpac spokesperson said that Westpac had seen a moderate increase in term deposit enquiries since Wednesday 3 August, adding that the bank believed consumers would hold off from making their investment decisions over the next few days.
A spokesperson for ANZ said that while it didn't see a notable increase in term deposit enquiries on Friday, the bank had seen a significant increase in term deposit enquiries over the last few months.
Recommended for you
Advisers at DOD Bookkeeping, which received an $11 million penalty last week, received as much as 40 per cent of their remuneration via a bonus when clients purchased a property via a SMSF, according to court documents.
Private wealth manager Escala Partners has launched an end-to-end investment platform to strengthen its alternatives capability as clients seek sophisticated vehicles.
Perpetual Wealth Management has hired two advisers from Ord Minnett as part of five hires, just weeks after the rival firm announced it had picked up six from Perpetual Private.
ASIC has cancelled the AFSL of a Perth financial services firm following payments to its clients by the Compensation Scheme of Last Resort after a failed managed investment scheme.
