German investors became even more pessimistic about their country's economic outlook, and now look for their investments to be safe more than anything else, according to a survey published today by Union Investment.
German investors became even more pessimistic about their country’s economic outlook, and now look for their investments to be safe more than anything else, according to a survey published today by Union Investment.
Although most German investors (55%) expect stock markets to rise modestly or remain constant over the coming six months, only 8% say profit is now the most important aspect of their investments. Almost two thirds (61%) want security first.
“The high need for safety among investors at the moment is absolutely understandable. However, when investing they should not lose from sight real rates. With guaranteed funds or a few conservative products for wealth management, investors have the possibility of making a return above the rate of inflation,” said Giovanni Gay (pictured), managing director at Union Investment.
“The mood towards the equity markets is very nervous at the moment,” Gay said.
Union polled 500 German investors in the first week of November for its study.
Younger Germans feel more pessimistic about equities, than Germans overall. Only 12% of people aged between 20 and 29 expect share markets to rise over the coming six months. In the third quarter of 2011, 28% expected this.
Additionally, one in every two people aged between 20 to 29 believe Germany’s financial situation will become worse over six months
This compares to 42% of all the respondents expecting Germany’s situation to get worse, up from 33% last quarter.
Among all respondents to Union’s survey, only 8% said Germany’s financial situation would improve over the coming six months. In the third quarter, 20% held this view.
However, Germans seem to have different opinions on their own financial situation.
Two thirds of respondents to Union said they expected their own financial position to remain constant over the coming six months, while 20% actually expect it to improve.
Perhaps as a result, most (55%) say they will put the same amount aside each month as they did last year.
Gay encouraged investors not to lose courage. “They should orientate their investment decisions fundamentally to the long term, and not let themselves be distracted by the ephemeral political and economic uncertainties. Those who want to build their wealth in the long term cannot pass up equities.”
Germans also seem concerned about the potential for inflation, with 85% saying they expect mildly or sharply rising prices over six months. The proportion holding this view was roughly the same last quarter.
Gay expects a significant relaxation of prices over the coming year, to bring the figure within reach of the European Central Bank’s 2% target rate. He counselled investments in real assets such as property, or inflation-linked bonds, for those nevertheless concerned about inflation.