Investors look beyond short term events for OS buying opportunities

Demand for overseas investment positive: CGIII Report

September saw investor concern about global markets at its lowest since the global financial crisis (GFC), according to the Certitude Global Investing Intentions Index (CGIII) Report, released this week.

This is despite potentially negative fallout from short term events in the news when the survey was conducted, such as the then looming prospect of the US government shutdown and ongoing concerns about the US debt ceiling.

The Certitude Global Investing Intentions Index, produced by Investment Trends, tracks the net demand for global assets. It is part of the wider monthly CGIII Report that collates the views of more than 750 leading investors, including high net worth individuals, self-managed super funds and higher income investors.

While the Index fell slightly from 175 in August to 160 in September, this still positions it firmly in “positive” territory – considerably above the “neutral” level of 100. The CGIII Report shows that three quarters of investors expect international markets to rise in the next 12 months. Only 11% believe global markets will fall, down from 15% in August.

At the same time, the CGIII Report found that levels of concern about investment markets dropped to 5.8 from 6.0 out of 10 in August, indicating investors are less worried about global markets than at any time since the onset of the GFC.
Craig Mowll, CEO of Certitude Global Investments says the CGIII result well above the 100 mark shows that local interest in global assets remains strong.

“The September Index clearly shows that buyers of global assets continue to outweigh sellers. In terms of the local market, the CGIII Report highlights that Australians are feeling a newfound confidence about the economy in general, reporting feeling more positive about opportunities at home as well as overseas. In fact, they expect the Australian stock market to rise by 7% over the next 12 months, up from 6% the month before, while looking for gains in global markets of 4% over the same period.”

Other CGIII Report findings show that nearly two in three investors (64%) expect the economy to record healthy growth in the next 12 months, up significantly from 36% in August.

“Australians naturally favour their home market, but there is also plenty of willingness to take up global opportunities among those seeking broader horizons. It seems from these latest findings that long-term investors are looking beyond the short-term events such as the recent events in the US and seeing them more as a buying opportunity than cause for concern.

“It’s also likely that confidence in global markets is being tempered by concerns about sovereign debt issues in Europe and geopolitical issues in the Middle East. Again, these issues don’t appear to be disturbing investors unduly – they seem to be seen more as opportunities to find value for those who know where to look.

Mr Mowll went on to say that the survey also revealed that more investors are looking to outsource their global investment decisions to experts, with 40% in the September survey planning to access global investments through actively managed funds, up from 31% in August. Fewer investors say they intended to gain exposure to international markets by investing directly in shares (31%, down from 39%).

Asian markets grew in popularity as a destination for investment, according to the CGIII Report, with a total of 35% saying they would like to invest in various Asia countries in the next 12 months, up 10 percentage points from August and at its highest since the CGIII research began in June 2013.

Twenty-nine per cent of investors were interested in using international funds covering multiple regions, up from 25% the month prior.

In contrast, 44% would like to invest in the US over the coming 12 months, which is down from 51% last month.

• Net demand for global investments remains positive, with more buyers than sellers of overseas assets. However, the Certitude Global Investing Intentions Index[1] decreased by 8.6% in September from 175 to 160.
• Investors’ concern level about global markets has fallen to the lowest level since the GFC, with an average of concern level 5.8 (out of 10).
• The proportion of investors seeking exposure to global investments through actively managed funds jumped to 40% in September, up from 31% in August. Fewer investors said they intended to gain exposure to international markets through direct shares.
• Interest in the US decreased, with 44% of respondents saying they would like access in the next 12 months, down from 51% in August. Meanwhile, 35% said they would like to invest in Asia in the next 12 months, up from 25% in August.
• Sovereign debt issues in Europe were the main barrier preventing investors from boosting their global allocations, with 16% of investors saying that was their main concern, up from just 2% in August.