Chief investment officers in Australia are slightly positive this quarter, which is an improvement on the negative outlook last quarter, according to the latest Financial Services Council (FSC) CIO Index.
FSC economist James Bond said "the patient is not dead" and the outlook for the next quarter to December would "depend on whether Europe's contagion did not spread".
"At the moment, positive political rhetoric is keeping the euro together," Bond said.
"Italy, Greece and Spain will have to refinance, and there's been a fair bit of brinkmanship from northern Europe."
A year ago, China was dominating CIO sentiment, but now it was Europe, with China coming back on the radar by December, he said.
Even if China's growth slowed, he said, "this is not the end of the mining boom".
"Resources are still very strong in Australia due to prices, construction yet to be done and exports," he said.
He cited Australian Bureau of Statistics March quarter engineering construction activity figures, which showed predictions "that the mining boom is over are exaggerated".
"Five years ago, the lines for construction yet to be done were like the Himalayas. Looking back now, they look like molehills. This shows that things are positive in Australia," he said.
The FSC CIO Index is measured on a scale of -100 to +100, and the September quarter is now at +5, up from -2 in the previous quarter.
All the CIOs surveyed were negative about global and local fixed income, with most pessimism surrounding global fixed income.
Bond said that was driven by very low yields for government bonds. "There is a view that central bank purchases of bonds may continue as they seek to stimulate demand through quantitative easing," he said.
"As a result, 75 per cent of CIOs expect international fixed income to perform poorly, with the remainder expecting no growth."
In contrast, the CIOs are equally bullish on local and overseas equities, and on Australian property, followed by international property.
