Domestic shares to benefit from improving sentiment

Investors are more likely to pour new money into existing investments now than in the last quarter of 2010, with domestic shares to become the biggest beneficiary of the improved sentiment, according to CoreData.

CoreData’s Investor Sentiment Research Report found pressure had significantly eased on Australians with household finances, causing a more positive investor mood.

Australian shares appear to be the biggest beneficiary of the improved investor sentiment, with a quarter of investors looking to rebalance into the domestic share market, up from one in five over the past three quarters.

“Interestingly, this positive sentiment also flows to international equities – 9.6 per cent from 8.4 per cent previously,” the report stated.

The report found the sentiment towards Australian equities in general remained high, while expectations have significantly decreased for cash, down to 36 per cent from 45 per cent in December 2010.

Improved circumstances in employment, steady income and better debt management were the key reasons for the positive sentiment this quarter, according to CoreData managing director, Andrew Inwood.

“However, while household finances improved, sentiment towards the Australian economy remains static and hasn’t changed from 2010 with respondents on average believing the economy will neither outperform or underperform,” Inwood said.

Almost 900 investors participated in the study, which was carried out between 22 February and 8 March, 2011.