Australia’s investor sentiment rises to 105 for Q2 2008 from 89 for Q1 2008, in contrast to an overall decline in Asia
Survey results suggest investors in Australia are cautiously optimistic about Q3 2008
Data shows Australian investors are not as affected by inflation as other investors in Asia

ING, the global financial services group, today released data from the quarterly ING Investor Dashboard survey which shows a significant increase in Australia investor sentiment for Q2 2008, in contrast to an overall decline in investor sentiment in Asia.

Australia’s investor sentiment rises 18% to 105 for Q2 2008 from 89 for Q1 2008. Even though the sentiment index sees a considerable jump, it remains in the neutral range of the sentiment zone. The ING Investor Dashboard Sentiment Index for Australia registered 131 for Q4 2007 and 125 for Q3 2007; those scores were in the optimistic range.

Elsewhere in Asia, the overall ING Investor Dashboard pan-Asia sentiment index falls for the third consecutive quarter to 109 for Q2 2008 from 125 for Q1 2008 as internal and external economic factors and domestic political developments weigh on investors in Q2 2008. This is the first time the pan-Asia sentiment index has moved into neutral sentiment from optimistic sentiment since the introduction of the investor sentiment index in Q3 2007.

The ING Investor Dashboard is the first quarterly survey in the Asia Pacific region that provides a pan-Asia (ex-Japan) investor sentiment index. The survey is conducted quarterly across 13 markets* in Asia Pacific, and not only provides market insights on investor attitude and outlook but also allows each market to be benchmarked and tracked against the overall investor sentiment across Asia using the pan-Asia index.

Australian investors appear more optimistic about Q3 2008

The index results suggest that Australian investors appear cautiously optimistic about the economy and the stock market in Q3 2008.

The survey found that:

28% of respondents say the economy improved in Q2 2008, while 56% feel it deteriorated in that period
and looking ahead, 31% expect to see an improvement in the local economy in Q3 2008 while 42% forecast it will deteriorate

According to Mr. Eric Siegloff, Chief Investment Officer, ING Investment Management, Australia: “The world backdrop is one of slowing economic growth, and in this context, Australia's GDP growth is expected to slow to 2.5% over 2008, quite robust when measured against developed economy peers. The export sector should continue to be supported by strong global demand for raw materials and food, with Asian demand continuing to play its pivotal role notwithstanding expected moderation in economic growth.”

On the U.S. economy, the survey found that:

17% of Australian investors believe it will improve in Q3 2008, a rise from just 6% the quarter before
and 54% of investors expect their investment decisions to be impacted by the U.S. economy in Q3 2008, compared with 74% of investors surveyed in Asia (ex-Japan)

Other key findings of the survey include:

36% of Australian investors think the local stock market will rise in Q3 2008, while 30% expect it to decline; this is a slightly more optimistic view from the last quarter when 27% of respondents expected the stock market would improve and 54% said it would decline
33% of investors surveyed say their return on investment increased in Q2 2008 and looking ahead, a higher number, 46%, say they expect their return on investment to increase in Q3 2008
33% of investors say their personal financial situation improved in Q2 2008 and a slightly higher number, 38%, expect that to improve in Q3 2008

Inflation expected to rise but Australia remains the least affected among the Asia Pacific markets

The ING Investor Dashboard survey shows that across Asia, inflation remains a key concern. 61% of Asian investors (ex-Japan) expect to see rising inflation in Q3 2008 and 81% anticipate their investment decisions will be impacted by inflationary pressures.

In Australia, 61% of investors expect inflation to continue rising in Q3 2008 while a lower number, 50%, expect it to have an effect on their investment decisions in the coming quarter.

Commenting on the inflation issue, Mr. Siegloff said: “Capacity constraints have been a feature of inflation pressures in the past year or two. This feature is likely to remain for the balance of 2008. The Reserve Bank of Australia has already responded by raising official interest rates and it is likely to hold to this higher rate structure going into 2009.”

The survey also revealed that:

38% of Australian investors are adopting a wait-and-see-approach to deal with inflationand 42% are considering reallocating their portfolios and/or investing more for higher returns to beat inflation and the top two popular investment tools for them are cash/deposits and stocks

“Our portfolio positioning has been defensive, given that ‘capital preservation’ has been our key investment theme for 2008. We are cautious currently, but expect good opportunities for raising risk appetite again during the second half of 2008,” added Mr. Siegloff.

Australians also appear to be looking for more investment opportunities overseas:

65% of those who invested or will invest overseas say they plan to invest in Asia in Q3 2008 compared to 57% half a year ago
and most notably in India - 20% of those who invested or will invest overseas say they are considering investing in this market compared to only 7% half a year ago

For detailed (high-resolution) data charts on the ING Investor Dashboard Sentiment Index, please download the results presentation from: http://www.ing.asia/investor_dashboard

* The survey was conducted across 13 markets in Asia Pacific including Hong Kong, China, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan, Australia and New Zealand. The pan-Asia investor sentiment index includes all Asia markets and excludes Japan, Australia and New Zealand

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