Australian Share Traders Just Picking up in Confidence Before Wave of Market Volatility HitBy Cmc Markets, PRNE
Saturday, March 19, 2011
SYDNEY, March 21, 2011 - The findings of the latest CMC Markets (www.cmcmarkets.com.au/)
Share Trader Insights Survey have just been released, providing a window
into share traders' behaviour in a time of market-moving global and local
events.The field work examining the preferences and outlook of over 500
active Australian equity traders was conducted in February 2011, just prior
to the recent tumultuous market movements following events in Japan. CMC
Markets has overlaid market expert opinion on its February findings to
ascertain where Australians who engage in share trading
(www.cmcmarkets.com.au/trading-platforms/share-trading) are currently
For further information and to access the research charts, please visit
Expectations of Australian share market performance
In February 2011, share traders
(www.cmcmarkets.com.au/trading-platforms/share-trading) expected the
Australian share market to perform better over the next six months. Sixty
percent of traders predicted positive growth. No doubt, fears and uncertainty
around the evolving global market volatility from the crisis in Japan will
have an impact on this positive sentiment reading.
"Optimism of traders is clearly influenced by the overall movements of
the market, which is why we have seen an increase in the herd mentality in
recent months. I think that the situation in Japan, although impossible to
predict, should serve as a reminder to traders that trades should be based on
their strategy and not their perception of what the rest of the market is
doing, "says David Land, Head of Analysis and Education at CMC Markets
The survey found that share traders' intentions for the coming months are
to be much more proactive than they were six months ago. In July last year,
33% of traders stated that their intention was to "do nothing and wait and
see what happens to their investments", but in February 2011, this figure had
decreased to just 18%.
Mr Land emphasises that traders should not base their trading decisions
on where they think market sentiment is headed.
"From previous surveys, it has become apparent that the further the
market runs in either positive or negative territory then the more positive
or negative sentiment becomes. However, this does little for traders' ability
to effectively time their entry and exit into and from their trades. The
underlying lesson must be that traders need to have a concrete plan in place
and not rely purely on their perception of market sentiment," says Mr Land.
Top 5 stock picks
A clear pattern continued with BHP (1), RIO (2), CBA (3) and ANZ (4)
being the top four stock picks. Interestingly, NAB (5) replaced WBC as the
fifth most popular stock pick.
Commenting on the movement towards Australian resource stocks, Mr Land
says, "While the view of the resources boom remains positive, I think we will
see the market focusing heavily on the big-name resources companies. As to
the banks, I think that these complete the list of 'household names' that
tend to attract investors and traders on a consistent basis."
More traders believe that materials will be the best performer over the
coming months (32%), an increase from six months ago when25% of investors
nominated materials as their number one sector pick. The banking sector has
seen a slight drop in confidence -at 16% in February from 22% in July 2010.
AUD: where to from here?
In this survey, 41% of investors expressed a belief that the AUD will
appreciate against the USD.
"The AUD has been so strong based on the strength of the commodity
markets and Australia's high interest rate differential relative to the rest
of the world. At the same time, the currency tends to be impacted very
quickly as part of the broader 'risk-off' trade that occurs when overall
confidence levels are damaged," said Mr Land.
Preferred investment vehicles
Focusing on coming months, traders stated that Australian equities will
continue to be the most popular asset choice, though it had fallen in
popularity from 80% in July 2010 to 73% in February. Previous less popular
assets such as corporate bonds and structured products had increased over the
"We had been seeing an improving economic situation led by improved
results coming out of the US, which has proved to be a strong driver of
sentiment for the overall market. This has now been blunted by the tragic
events that we have seen coming out of Japan. What always needs to be
considered is that markets are trying to price in future events, and the
threefold disaster in Japan makes this much more difficult. Once the nuclear
crisis in Japan has been resolved, the market can begin pricing in its future
implications combined with the rebuilding effort," said Mr Land.
About CMC Markets
The CMC Markets Group, a leading independent financial services provider,
offers a range of investment products and investment tools including shares,
options, listed managed investments, warrants, interest rate securities and
Contracts for Difference (CFDs). Through our partnerships we can also provide
access to managed funds and margin lending execution. In 2007 CMC Markets
launched its broking service with the acquisition of Andrew West Stockbroking
and CMC Markets Stockbroking is now one of the only non-bank aligned, online
stockbrokers in Australia. CMC Markets' institutional partner Goldman Sachs
owns a 10% stake in the company.
CMC Markets is a pioneer of CFD trading in Australia and a world leading
CFD provider. With offices in London, Frankfurt, Dublin, Madrid, Vienna,
Sydney, Tokyo, Toronto, Beijing, Auckland, and Singapore, CMC Markets
represents clients in over 70 countries. The company was founded in 1989 and
is regulated by ASIC in Australia. CMC Markets Stockbroking is a participant
of the ASX Group.
For more information on CMC Markets please visit
David Land; +61-(0)2-8221-2161; D.Land at cmcmarkets.com
Tags: Australia/Oceania, Cmc Markets, March 21, Sydney