The annual Chartered Accountants Australia and New Zealand (CA ANZ) Investor Confidence Survey has revealed a drastic drop in investor confidence in local and international capital markets.
The survey, which was completed by more than 1,000 retail investors holding more than $10,000 in shares, revealed that 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.
According to CA ANZ, the number of investors citing global political unrest as the biggest risk to the domestic economy has jumped by 10 per cent since last year now representing a quarter of investors.
In addition, retail investor confidence in capital markets is tumbling, with those reporting high confidence in both the domestic (39 per cent) and international markets (24 per cent) down by 10 per cent on last year.
“This drop in confidence begs the question, how can we provide more certainty and confidence for retail investors?” CA ANZ assurance and reporting leader, Amir Ghandar said.
“Obviously, market conditions are a factor. Another thing that investors have clearly stated is they want better, more simplified and tailored reporting as part of the solution – and they want this done digitally.”
When it comes to investing in crypto-assets, the survey showed that younger and older investors have polarised views.
Namely, 71 per cent of the 18-44 age group said they are confident to invest in crypto-assets, almost as confident as they are investing in the capital market (79 per cent). Conversely, only 26 per cent of the 45-64 age group said they would put their trust in crypto-assets.
“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,” Mr 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 survey also found that auditors remained the most trusted player of those that have roles in helping to advance investor protection, followed by stock exchanges, analysts and government regulators.
“In the good times, investors might be more likely to make choices based on advice from the media, friends, family and other advisors,” Mr Ghandar said.
“But when markets become volatile, as they currently are, investors are prone to stick with safer investment options and look for more credible and robust forms of information.”
