Investor concerns over flood crisis unjustified: Gillham

Investors are becoming increasingly worried about how the Australian share market might react to the flood disaster in Queensland, but their concern might not be justified.

That is the view expressed in Wealth Within executive director Dale Gillham’s weekly report, which looked at investor attitudes versus the actual state of the Australian share market during the flood crisis.

Gillham said that the Australian market stopped the falls of the past two weeks to move back up, just as the Queensland floodwaters were reaching their peaks. He said he believed that the Australian market was no more or less risky than it was before the floods began.

“That said, I have found when it comes to ordinary investors emotions generally override logic, which leads to poor decision-making,” Gillham said in his report.

The inevitable recovery from the floods and the rebuilding of the state might in fact present opportunities for investors rather than a reason to pull out, according to the report.

“What we know is that reconstruction will soon start on roads, rail, residential and commercial buildings to name a few areas, which for smart investors may present an opportunity to buy into companies that will prosper from the cleanup,” he added.

Gillham predicted that stocks in the materials and industrials sectors were likely to rise between 10 per cent and 15 per cent over the coming months as flood-affected areas in Queensland begin their recovery.