Investor sentiment weakens
There has been a further pointer to weakening investor confidence in Australia, with the latest analysis from the Financial Services Council (FSC) revealing a decline in chief investment officer sentiment with respect to Australian equities.
The FSC's Chief Investment Officer Index said confidence in the equities market had slipped back to mid-2012 levels — a finding that was consistent with research on financial planner sentiment released exclusively to Money Management by specialist researcher Wealth Insights last week.
Commenting on the FSC analysis, the organisation's chief economist, James Bond, said that while sentiment remained positive for Australian and international equities, it had fallen from the exceptionally high levels recorded in March.
"What we are seeing this quarter is that the strong, positive view of equities from CIOs that has underpinned market confidence in previous quarters has waned," he said.
"This is because CIOs saw equities as being undervalued and well priced in 2011 and 2012. However, there is a general view that the markets are now ‘more fully priced'."
However, Bond said that despite recent market conditions and the drop in confidence, CIOs still expected equities to outperform other asset classes over the coming 12 months.
Bond said the CIO's greatest concern was that the Reserve Bank and other central banks got monetary policy right in some difficult policy conditions.
He said CIOs saw unwinding action taken by governments and central banks during the GFC as the greatest long-term risk.
"The impact of reversing quantitative easing in the US is seen as having both short and long-term implications," he said. "The inevitable unwinding of expansionary fiscal positions and government debt on economic activity in the US and Europe are also seen as significant risks to strong growth."
Recommended for you
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
Fund managers are entering 2025 with the most bullish sentiment since August 2021 and record high allocations to US equities, thanks to the incoming Trump administration.
