INVESTMENTS: Investors At Odds Over Valuations
Recent Western Cape Business News
Cape Town - The March 2010 results of the Sanlam Investment Management (SIM) Investor Confidence Index (ICI) showed improved confidence among some local investors on almost every aspect measured. Very noticeable though, was that these improvements came predominantly from the financial advisors surveyed rather than from the institutional investors.
Frederick White, head of asset allocation and macro research at SIM says the results showed that financial advisors expect the market to close higher over all periods measured, from one month to one year. “Furthermore they expect this performance to be evenly spread through the year and in 12 months’ time they expect the market to close almost eight percent higher than the current level. Institutional investors on the other hand, were much more pessimistic on the outlook for market returns, expecting the market to stay near current levels for at least another six months before it starts rising and then for the market to close less than six percent higher in 12 months time.”
White says in addition to the improved return outlook from financial advisors, they have also turned decidedly more positive on the market’s valuation. “Although a mere six percent believed the market to be too cheap (up from four percent in February), there was a marked increase in the percentage of respondents who believed the market offers fair value (58 percent of respondents – up from 43 percent in February). These came mostly at the expense of those who thought the market was too expensive (35 percent - down from 52 percent in February). Again the institutional investors did not agree with the improved assessment of market value. Among this group no one thought the market was too cheap, while 60 percent still considered it too expensive” says White.
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