Confidence among investors in equity markets has bottomed and many now believe it will reach higher levels over the next few months
nvestor confidence rose strongly in March, according to a survey by JPMorgan Fleming Asset Management.
The study, comprising a randomly selected sample of 500 private investors throughout Great Britain, shows that investors who believe that the UK stock market will be higher in six months' time has risen from 37% to 48% in the past month. The group also carried out a parallel survey in March among a sample of 100-plus intermediaries, asking them the same question ' 71% thought it likely markets will be higher versus only 9% who said unlikely.
The remaining 20% believe markets will be more or less at current levels. This is a fall in confidence among advisers, as 83% in January though the market would be higher and 76% in February, to 71% in March. There has been a corresponding increase in those taking a neutral stance.
Peter Brewster, head of marketing research at JPMorgan Fleming Asset Management, said: 'More people have come off the fence in this month's survey and are taking a more positive view about prospects for shares.
'Apart from last month's blip, when investor confidence fell slightly, we have seen a V-shaped recovery in investor confidence, with the low point in August and September of last year.'
JPMF's index of confidence is at a score of 99, just one point below the base figure of 100 when it first established the index in April 2000. Back then the FTSE 100 index stood at 6,300, which was some 1,000 points higher than it is now, said Brewster. 'At the time, private investors were reasonably confident that stock markets would recover quickly but this proved not to be the case. As the UK stock market started retreating, investor confidence fell with it, finally reaching a low point in August/September 2001.
'Since then, investor confidence has recovered steadily despite the FTSE 100 being stuck in a 5,000 to 5,300 trading range for almost six months now.' While private investors are increasingly more confident that the stock market will be higher in six months' time, Brewster said he expected many will want to see concrete evidence of a rally in share prices before getting back in.
'Investors traditionally have a large proportion of their portfolio invested in the UK, and since the end of 1999, when markets peaked, we have seen the FTSE 100 index fall 10% in the year 2000, followed by a further 16% fall in 2001. Investors have witnessed the longest bear market since the early 1970s combined with a large fall in technology stocks, which were a popular investment in 1999.
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