The Investment Trends Intentions Index for December, which tracks the market outlook and intentions of investors, indicates that Australian investors expect a fairly flat market over 2019.
The study revealed that retail investors expect the All Ordinaries Index to grow by 0.3 per cent over the course of the next 12 months, excluding dividends.
“In other words, investors expect local stocks will close 2019 at virtually the same level as current prices,” Investment Trends research director Recep III Peker.
“These expectations are well below what we saw at the end of 2017, where investors expected capital gains of 4.8 per cent for calendar year 2018.”
Mr Peker said Q4 2018 stands out as investors’ most bearish quarter since the GFC, with the average investor closing the year expecting no capital gains from domestic shares in 2019.
“Despite this, they still believe in the income potential of Aussie shares, expecting a yield of 4.1 per cent over the next 12 months,” said Mr Peker.
“Investors’ return expectations were being dragged down by their mounting concerns with the current state of the world’s financial markets. On a scale of 0 to 10, where 10 is extremely concerned, the latest readings placed the average investor concern level at 6.6 – the highest level since February 2012.”
The top concern was tension between the world’s major economies with 55 per cent citing this as a concern, up from 40 per cent in October. This was followed by the current White House administration, 53 per cent, up from 46 per cent and a slowdown in China’s economy, 41 per cent, up from 32 per cent.
From a domestic perspective, 30 per cent are worried about property prices, on par with concerns of share market volatility.
“The last few months has seen investors take an increasingly global perspective when considering what factors may affect their portfolios. Recent market falls have helped confirm their fears, dragging down the average investor’s outlook for 2019,” said Mr Peker.
“Where some are fearful, others see opportunity, with nearly a quarter expecting strong returns from domestic equities in 2019. Financial services firms and advisers can help retail investors better understand the current climate in order to make more informed decisions.”
