The deep cuts to the share market last week, ongoing global political unrest and associated broader economic issues all led to the very concerning results in the survey conducted from 10-15 June 2022.
The annual Chartered Accountants Australia and New Zealand (CA ANZ) Investor Confidence Survey – usually a source of trend data – last week occurred after the Australian interest rate rise and with the market plummeting.
What it therefore showed was unprecedented dire sentiment among retail investors.
The survey was completed by more than 1,000 retail investors holding more than $10,000 on the share market, in addition to other investments such as managed funds, property and superannuation portfolios.
“Investor confidence in local and international capital markets is at the lowest levels we’ve seen since this survey was launched four years ago,” CA ANZ Chief Executive Officer Ainslie van Onselen said.
“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.”
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%) and international markets (24%) 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?” Ms van Onselen said.
“Obviously, market conditions are a factor. Another thing that investors have clearly stated they want better, more simplified and tailored reporting as part of the solution – and they want this done digitally.”
Some of the key findings in relation to digital reporting included:
- 77% of the responding investors view financial reports as “somewhat to very” difficult to understand
- 86% believe digital financial reporting would improve this
- 70% “support or strongly support” mandating digital reporting in Australia.
“Investors need a clear view out the front windscreen to make well-informed, considered decisions, so that they can keep their finances on the road.
“They don’t currently have what they need. A substantial majority of retail investors see today’s financial reports as overly complex and difficult to understand.
“That’s why CA ANZ has been pushing for mandated, consistent digital reporting, as well as simplified reporting overall, to enable a better view into company performance and prospects.”
Perhaps unsurprisingly given recent market movements, the Survey also found confidence in cryptocurrency is low, with 60 per cent of investors reporting very little or no confidence at all investing in cryptocurrency, digital coins or non-fungible tokens.
The investors cite volatility, a lack of regulation and a perceived lack of transparency topping their list of concerns for cryptocurrencies.
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,” Ms van Onselen 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 – often including a Chartered Accountant.”