Date posted: 02/09/2019 4 min read

How confident are Australian retail investors?

84% of retail investors are confident in Australian capital markets.

In Brief

  • This is the first time we’ve surveyed investors to gauge their confidence
  • 87% of retail investors have confidence in audited financial reporting by public companies
  • Independent auditors are one of the groups retail investors trust most

Retail investors are a key part of Australia's capital markets and their confidence levels are vital to maintaining a healthy economy.

In a time where the information the public receives is being viewed with increasing suspicion, and trust and confidence are becoming harder and harder to earn and maintain, we think it's essential to understand the views of these investors.

"Auditors are ranked number 1 as the most effective entities in advancing investor protection, followed by exchanges, government regulators and oversight, and financial analysts."

For the first time, CA ANZ, with the help of the Center for Audit Quality in the United States, has commissioned research into the attitudes of Australian retail investors to find out their views on capital markets, Australian companies, who they trust and what's worrying them.

Our survey captured the views of just over one thousand retail investors in Australia and the results show that they have healthy levels of confidence in Australian capital markets and listed companies but are less confidence in global capital markets due to concerns about global political unrest.

Pleasingly, 87% of retail investors have confidence in the audited financial reports produced by Australian public companies. This confidence is driven by the trust that the investors have in independent auditors—the most trusted group for these investors—and other stakeholders in the markets such as regulators, the Australian Stock Exchange and analysts.

Recently we've seen that trust can be lost almost overnight and that it is very difficult to win back. This is why CA ANZ believes that while the results of the survey are positive, all the stakeholders in capital markets need to keep working to earn and maintain the confidence of retail investors.

CA ANZ has continuously highlighted the need for audit and reporting to evolve to deliver what the public needs to give them confidence in Australia's capital markets and for that reason we welcome the recent Parliamentary Inquiry on Audit Regulation.

We hope that the research provides useful insights to help inform the evolving discussions around financial reporting, audit and how they contribute to the health of our capital markets.