Rattled by sub-prime fallout
Australian financial advisers are more optimistic about the outlook for the domestic share market than their clients.
That is the bottom line of the latest CoreData Adviser Sentiment Index when weighed against the CoreData Investor Sentiment Index, which closely examined the views of both advisers and clients for the April to June quarter of this year.
The research showed that while consumers had clearly been spooked by the sub-prime meltdown and its consequent impacts on the markets, advisers appeared to be much more confident about the strength of the Australian market and the pace of its recovery. What is more, advisers with higher levels of funds under advice tended to be more optimistic than most.
Both sets of respondents were asked to compare the current quarter with the next quarter and to state whether they thought the share market in Australia would be better or worse for investors. The result was that 45.1 per cent of investors expected the situation to deteriorate compared to only 15.9 per cent of planners.
In fact, one in two advisers believed the outlook for Australian equities in the final quarter of this financial year would be one of improvement compared to just a quarter of the investors surveyed.
Indicating the degree to which investors have been spooked by current market conditions, 5.6 per cent said they believed the situation would be much worse, with 39.5 per cent believing things would be somewhat worse. This compared to 7.6 per cent of advisers who were prepared to suggest that things would be much better and 45.4 per cent who believed things would be somewhat better.
Commenting on the outcome, CoreData’s Craig Phillips said the data indicated the degree to which the investment paradigm had shifted in Australia.
He said the previous (January-March) index revealed investors were generally positive towards the market outlook for the first quarter of 2008.
“It seems they believed the end of the 2007 credit crisis-led rout of the share market was to be a short lived affair and that things would return to normal,” Phillips said.
“However, with 2008 so far indicating the sub-prime associated rot is more insidious, investors are now realising stocks don’t always go up and that the paradigm for investing has shifted.”
AUTHOR
Mike Taylor
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