Australian chief investment officers (CIOs) are now a little less spooked by events in Europe and the risk of contagion with respect to China and the US, according to the latest Financial Services Council (FSC) Chief Investment Officer Invest Index.
The index is the product of a survey of chief investment officers from companies affiliated with the FSC and showed that even though respondents are a little less concerned by Europe’s debt problems, sentiment fell last quarter.
According to the index, on a scale from minus 100 to 100, chief investment officers rate the investment outlook for the next year as 16, down from 20 in December, last year.
Further, they cited the European debt crisis as being the biggest risk factor impacting investment returns in the next 12 months.
Commenting on the index results, FSC chief executive John Brogden said respondents were less concerned about China and the US than they were last quarter.
He said the view on China had improved substantially since 2011, when chief investment officers were concerned about the risk of slower growth.
"They now see China’s resilience in the face of the European crisis as a reason for optimism," he said.
Further, Brogden said that in terms of the US, there were signs the economy had stabilised, which was helping to drive optimism in Australian and international equities.
"However Europe remains a key concern in both the short and long term," he said.
"Europe’s failure to resolve its debt problems is weighing heavily on confidence among CIOs. As a result, sentiment for international fixed income is dragging down overall sentiment."
The survey found that while the most pressing immediate concern for chief investment officers was Europe, they viewed the longer-term risk as being the impact of governments unwinding debt in Europe and the US.
