Australians concerned about economic outcomes of the current White House administration: Investment Trends

From
Recep Peker

Peker Recep

Leading research firm Investment Trends has released its October 2018 Investor Intentions Index, a monthly study that tracks investors’ market outlook and intended investments.

The study draws on monthly surveys which were answered by 2,095 Australian investors over the last 12 months.

Australian investors’ share market return expectations turn negative for the first time since the GFC

The forward looking return expectations of Australian investors fell sharply in October, in line with the performance of the market. Aussie retail investors are now expecting a negative return over the next 12 months – the first time return expectations have gone negative in Australia since Investment Trends began tracking this in 2009.

Each month we ask investors what return they expect from the Australian stock market, excluding dividends, over the next 12 months. In October the average capital gain expectation of investors fell to -1%, down from +1.2% in September and +4.7% in January (see chart).

“Investors now believe we’re in a bear market, on average expecting domestic markets will be lower in 12 months’ time than where they are today,” said Recep Peker, Research Director at Investment Trends. “While recent volatility has played a hand in driving this pessimism, investors are more concerned about major global issues.”

Throughout 2017 investors were becoming increasingly desensitised to both market volatility and global events. In fact, when asked to rate their level of concern with the situation in the world’s financial markets, in February 2018 the average investor was the least concerned since the GFC.

The picture is very different in October 2018, with concern levels reaching a 22 month high. When asked what they are most worried about, only 27% cite the recent share market volatility – the sixth-most cited reason.

Geopolitical events are casting a darker shadow over investors’ outlook than domestic issues, with investors most concerned about the current White House administration (46%); tension between the world’s major economies (40%); global debt levels (33%) and a China slowdown (32%).

“Whether directly or indirectly, Australians are concerned about the economic outcomes of the current White House administration and the trade policies being implemented both by the US and in response to them,” said Peker. “With capital gain expectations for the Australian stock market turning negative at the same time that the local property market has cooled, financial services firms of all kinds will need to work hard to convince Australians to stay invested through the current cycle.”

 

 

Oct 2017: 3.1%

Nov 2017: 4.3%

Dec 2017: 4.8%

Jan 2018: 4.7%

Feb 2018: 4.4%

Mar 2018: 1.6%

Apr 2018: 1.9%

May 2018: 3.8%

Jun 2018: 3.0%

Jul: 2018 2.7%

Aug: 2018 2.5%

Sep: 2018 1.2%

Oct: 2018 -1.0%

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