Investor sentiment in Australia had fallen to a seven-year low, below levels plumbed during the global financial crisis (GFC), CoreData's most recent quarterly survey showed.
Market research consultancy CoreData's fourth-quarter Investor Sentiment Report showed a confidence rating of -22.4, notching below -22.3 in the first quarter of 2009 when the GFC began to bite in earnest.
"We're not likely to see a turnaround in the first half of the year," CoreData head of advice, wealth and super Kristen Turnbull said.
The Investor Sentiment Index gauges the confidence of 843 people nationwide across demographics, ranging from those with no investments to high net worth individuals. The survey was conducted during the two weeks to 5 December 2011.
The latest result is the lowest since CoreData began measuring investor sentiment in 2005. It also marks a seventh straight quarter of negative readings, which it said highlighted the prolonged effect of the GFC on investor confidence levels in Australia.
The results signalled a relatively glum view of cash.
The percentage of people who believed cash would perform worse than in the previous quarter came in at 29 per cent, outweighing the 25 per cent who believed it would perform better than it did in the third quarter.
"At this point, the perception is that interest rates are more likely to go down than up, and this would obviously affect the performance of their cash," Turnbull said.
"I think it's really interesting that, despite this, it's actually still the asset class people are rebalancing towards."
Twenty-seven per cent of respondents said they would look to rebalance their portfolios to cash this quarter.
Sentiment towards equities improved slightly to -18.8 per cent from -27.9 per cent in the previous quarter, and sentiment towards property softened to -15.5 per cent from -14.9 per cent in the third quarter of 2011.
"It was a marginal decline," Turnbull said of sentiment towards property.
"Investment markets are being impacted by the debt crisis in Greece and what's going on in Europe. This is having a flow-on effect across the board."
