Investor confidence grows despite rate rises

Investor confidence interest rates

About half of Australian retail investors remain undeterred by successive interest rate rises and will continue to ramp up their investment activities in 2023/24.

Despite worries about consecutive interest rate hikes, half of retail investors intend to upscale their investments in the Australian market over the next year, according to a survey conducted by Chartered Accountants Australia and New Zealand (CAANZ).

The 2023 CAANZ Investor Confidence Survey canvassed the thoughts of more than 1000 Australian retail investors, primarily with investments surpassing $10,000 in the stock market along with managed funds, property and superannuation portfolios.

“After a rough 2022 where confidence plunged due to fears around a continuing pandemic and ongoing political unrest, this survey shows there’s a ray of light shining on both local and overseas markets,” CAANZ reporting and assurance leader Amir Ghandar said.

The survey also revealed investors consider the increase in interest rates to be the biggest threat to the Australian economy, surpassing concerns about global political instability, cyberattacks and pandemic issues.

“Investors now see rising interest rates as the biggest risk to the domestic economy, with 23 per cent saying it’s their main concern, up 13 per cent on last year, while fears around global political unrest and ongoing pandemics have both fallen by 6 per cent,” Ghandar said.

“Investors feel it’s a little bit easier to plan for rising interest rates than snap lockdowns and international crises and the unknowns they bring.

“We’re not quite back to pre-pandemic levels, but across multiple indicators, investor confidence is holding steady or lifting.

“This increase in confidence comes down to a change in risk.  Fears of ongoing pandemics and global political conflict have dropped away to be replaced by concern about rising interest rates, which in comparison is a much more contained issue.”

He highlighted that survey participants showed more confidence investing in local markets and publicly listed companies, as opposed to overseas markets, due to their strong trust in the established institutions and processes within the domestic investment landscape.

“We can also see that investors are looking to invest in those trusted markets where there’s transparency and reliable audited information,” he stated.

“Eighty-five per cent of respondents say they have confidence in investing in local publicly listed companies and 73 per cent say they have confidence in the overseas capital markets.

“Confidence in Australia’s audited financial reports has remained solidly around 90 per cent throughout the four years this survey has been running and auditors remain the most trusted intermediary when it comes to protecting investors’ interests, followed by regulators and analysts.”

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