Investor confidence plunges lower than pandemic levels

The results from Chartered Accountants Australia and New Zealand’s (CA ANZ) latest Investor Confidence Survey revealed investor confidence in local and international capital markets is lower than it was in the peak of the COVID-19 pandemic.

The survey respondents, including over 1,000 retail investors with more than $10,000 in shares and other investments such as managed funds and superannuation, highlighted sharemarket drops, global political tension, inflationary pressures and general economic uncertainty as they key reasons for the dip in confidence.

“Investor confidence in local and international capital markets is at the lowest levels we’ve seen since this survey was launched four years ago,” Amir Ghandar, CA ANZ Assurance and Reporting Leader, said.

“The quadruple whammy of the pandemic, turbulent market conditions around supply chains, inflation, and national and international interest rate increases have put investor confidence on the ropes.”

The results also showed the opposing attitudes towards cryptocurrency between generations, with 71 per cent of those aged 18 to 44 confident in investing in crypto assets – almost as confident as they are investing in capital markets (79 per cent).

This is comparable to the 26 per cent of the 45 to 65 age group that are confident in investing in cryptocurrency.

“Younger investors say they believe in the buzz around crypto – what they’re hearing about it on the news, social media and from friends – ultimately they believe in the technology,” Ghandar said.

“Older investors are spooked by crypto’s volatility and they perceive a lack of regulation and transparency.

“In a sense both are right – blockchain has enormous potential to revolutionise integrity and transparency – but cannot yet replace all the key roles for regulation and traditional market and information integrity mechanisms.”

The number of investors who believed global unrest is the biggest risk to the domestic economy has also jumped by 10 per cent since last year’s survey, now representing one quarter of investors.

“This drop in confidence begs the question, how can we provide more certainty and confidence for retail investors?” Ghandar said.

“Investors need a clear view out the front windscreen to make well-informed, considered decisions, so that they can keep their finances on the road.”