Australian retail investors ended 2018 with a bearish market outlook. As at December 2018, investors on average expect the All Ordinaries Index to grow by +0.3 per cent over the course of the next 12 months, excluding dividends.
According to research firm, Investment Trends, these expectations are well below what the market saw at the end of 2017, where investors expected capital gains of +4.8 per cent for calendar year 2018.
“Q4 2018 stands out as investors’ most bearish quarter since the GFC, with the average investor closing the year expecting no capital gains from domestic shares in 2019,” said the Research Director at Investment Trends, Recep Peker. “Despite this, they still believe in the income potential of Aussie shares, expecting a yield of 4.1 per cent over the next 12 months.”
Peker was referring to the results of Investment Trends December 2018 Investor Intentions Index, which found that investors’ return expectations were being dragged down by their mounting concerns with the current state of the world’s financial markets.
According to Peker, on a scale of 0 to 10, where 10 is ‘extremely concerned’, the latest readings placed the average investor concern level at 6.6 – the highest level since February 2012.
When asked what they were most concerned about, top of mind for investors was tension between the world’s major economies (cited by 55 per cent, up from 40 per cent in October), followed by the current White House administration (53 per cent, up from 46 per cent) and a slowdown in China’s economy (41 per cent, up from 32 per cent).
From a domestic perspective, 30 per cent of respondents were worried about property prices, on par with concerns of share market volatility.
“The last few months has seen investors take an increasingly global perspective when considering what factors may affect their portfolios. Recent market falls have helped confirm their fears, dragging down the average investor’s outlook for 2019,” Peker said.
“However, where some are fearful, others see opportunity, with nearly a quarter expecting strong returns from domestic equities in 2019.”
The Investment Trends December 2018 Investor Intentions Index results are based on monthly surveys, which were answered by 2,195 Australian investors over the last 12 months.
