Investor sentiment spikes
The level of concern being felt by Australian investors has fallen to a 40-month low, according to the latest Investment Trends Investor Intention Index.
The January 2013 index has revealed what Investment Trends is describing as a "big spike" in investors' market return expectations.
It said Australian investors' concern levels (with the situation in the financial markets) had fallen to a 40-month low.
The index analysis said that investors' fear levels had been dropping steadily since late 2011, when they were at levels last seen during the depths of the financial crisis.
"Up until the end of 2012, this decline in fear levels had not translated to an increase in investors' 12-month market return expectations, which have been hovering around the 3 per cent to 4 per cent mark (excluding dividends) since the beginning of 2012," Investment Trends senior analyst Recep Peker said.
He said that in the latest index, for the first time, there had been a big spike in investors' market return expectations.
Peker said that in January, the average investor was expecting the Australian stock market to rise by 7 per cent (excluding dividends), jumping up from 5 per cent in December, and this corresponded with a rapid improvement in the stock market.
"Return expectations don't predict returns, but they do predict investment activity, therefore this is a huge development," Peker said. "January is the most positive we have seen investor return expectations in the last 20 months.
"Half (49 per cent) of investors say they plan to increase their exposure to Australian shares in the next month, up from 37 per cent in December 2012," he said.
"There is a significant jump in the appetite for direct shares, and for the first time since the inception of this study there are more investors who intend to reduce their exposure to term deposits than increase their exposure."
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