Investor sentiment recovering

The share market recovery combined with improving property prices has prompted Australians to become more bullish about their finances, according to the latest ING Investor Dashboard Sentiment Index.

What is more, Australians have the highest expectations of any nation in the Asia Pacific.

The quarterly survey of over 1,340 affluent investors in 13 countries across the Asia Pacific showed that investor sentiment had improved across the region as a number of Asian economies enjoyed improving economic and financial conditions.

It said Australian investor sentiment improved by a healthy 23 per cent over the quarter, with the investor sentiment score increasing from 116 to 143.

The analysis said this was the first sign of optimistic sentiment by Australians since the survey began in December 2007.

It said Australia was ranked the sixth most optimistic country out of 13 Asia-Pacific nations in the third quarter compared with its ninth ranking in the second quarter.

The analysis said a key driver of this improving sentiment had been the surge in the Australian share market, with the S&P/ASX 200 up 20 per cent in the third quarter.

“The survey revealed that Australian investors placed a greater emphasis on the performance of their local stock market than recessionary factors, or the condition of the US economy, in terms of how these factors influence their investment decisions,” the analysis said.

Commenting on the index, ING Investment Management’s head of distribution and deputy chief executive, Martin Donnelly, said the rising share market had clearly been the biggest driver of sentiment and, as a consequence, more money was being allocated back into riskier assets.

The index analysis also noted that Australian investors’ perception of their local economic situation during the third quarter was one of the strongest, with 76 per cent reporting an improvement, up from 46 per cent in the second quarter.