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Investor expectations surge

Concern among Australian investors has dropped to a 40-month low, with many expecting to increase their share investments, according to Investment Trends data.

The January 2013 Investor Intentions Index is based on the responses of more than 800 investors per month and found half of investors plan to increase their exposure to Australian shares in the next month, up from 37 per cent in December 2012.

“Up until the end of 2012, this decline in fear levels had not translated to an increase in investors’ 12 month market return expectations, which have been hovering around the 3 per cent to 4 per cent mark (excluding dividends) since the beginning of 2012,” said Investment Trends Senior Analyst Recep Peker.

“Now, for the first time, we have seen a big spike in investors’ market return expectations.”

The average investor was expecting a 5 per cent stock market rise (excluding dividends) in December but this increased to 7 per cent in January, the report found.

Peker said although these expectations don’t predict actual returns, they do predict investment activity, making this a significant development. “January is the most positive we have seen investor return expectations in the last 20 months,” he added.

This jump in appetite for direct shares represents the first time since the study began that there were more investors who intend to reduce rather than increase their exposure to term deposits, Peker said.