26/03/2009 - 14:11

Investor confidence worst in four years

26/03/2009 - 14:11

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Investor confidence has fallen to the worst level in more than four years due to the global financial crisis, a new quarterly survey shows.

Investor confidence has fallen to the worst level in more than four years due to the global financial crisis, a new quarterly survey shows.

The Investment and Financial Services Association/CoreData index of investor sentiment fell 9.9 per cent to minus-22.3 points in the first quarter of 2009, compared to a negative 20.3 point reading in the final quarter of 2008.

The index was published for the first time on Thursday using data compiled since the final quarter of 2004. In that quarter, the index reading was a positive 17.5 points.

"Since early 2008, the global financial crisis has created intense volatility on investment markets and it is now flowing onto the real economy," IFSA chief executive Richard Gilbert said in a statement.

At the end of 2007, the index was up 14.4 points.

It began moving into negative territory in early 2008 and has remained negative ever since.

"Investor sentiment is at a low without a doubt, however it must be noted that the measure is only one-fifth along its full spectrum in terms of negativity," CoreData head of market intelligence Craig Philips said in a statement.

"We have seen that despite everything that has happened since the financial crisis went 'full-blown', three quarters (or 76.8 per cent) of investors are saying they remain confident about their ability to ride out the storm."

The index is based on research carried out by CoreData since December 2004 and in presented in partnership with IFSA.

It takes into account investor expectations regarding the performance of the investment market, their perception of the current financial situation and their future investment intentions.

A score of zero means investors are neutral about the market, a score of plus 100 is extremely positive and a score of minus 100 is extremely negative.

But this is not the first time that the index has fallen into negative territory.

"Through the quarterly survey and the development of the Investor sentiment index, we are now able to assess how investors are feeling about a range of issues," Mr Gilbert said.

IFSA represents the retail and wholesale superannuation, funds management and life insurance industries.

 

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