Financial advisers’ sentiment towards the state of the global economy turned negative in Q2 across all regions surveyed, with confidence levels falling to a below average score of 4.9 out of 10. This is the lowest score recorded in the last 12 months, according to the International Adviser Confidence Barometer conducted by Skandia International, the offshore business of Old Mutual Wealth Management.
The Eurozone crisis resulted in European and UK advisers both reporting a sharp drop in confidence levels, with those based in the UK noting the biggest decline, averaging a score of just 4.8 out of 10 – down from 5.5 last quarter.
Europe and UK also reported below average confidence in their local economies compared to advisers in Asia who are significantly more confident in their local economies than the global economy. Advisers in Singapore report the highest confidence levels with a score of 6.8 out of 10.
This sentiment is reflected in advisers’ confidence in asset classes with Emerging Asia Equities being most likely to deliver the best investment returns over the next year. Other Emerging Markets Equities was the second most popular investment sector followed by North American equities.
Continuing volatility and the unpredictable behaviour of the global stock markets in Q2 also affected investor behaviour with over half the financial advisers surveyed reporting that their clients had become more risk averse and invested less during the period. As in the previous quarter, the European Debt crisis was cited as the biggest threat to economic growth with almost three quarters of advisers sharing this view. Rising unemployment and government spending cuts were considered the next most likely factors to contribute to further stalling economic growth.
Phil Oxenham, marketing manager at Skandia International, comments on the findings:
“Overall, these findings reflect the current subdued state of the world’s major economies. However, it is encouraging to see that advisers in Singapore remain upbeat about the prospects of their economic region. Clearly, the fears of global contagion and the continued instability within the Eurozone are troubling investors far and wide, including in Singapore - despite the healthy state of their region. However, it is important to recognise that depressed markets create investment opportunities which can reward those willing to accept some short term volatility.”