6 Mar 2020

Coronavirus sends investor confidence plummeting

10:05 am on 6 March 2020

Investor sentiment has nose-dived deep into bearish territory in the past week, with financial markets expected to languish well into the middle of the year, according to a new survey.

New Zealand's sharemarket has immediately fallen two percent after opening after the Waitangi Day closure. Global markets have been left reeling in the biggest one-day fall on Wall Street since 2011.

File photo. Photo: RNZ / Rebekah Parsons-King

The survey by the Shareholders' Association and Canterbury University's business school shows the rising concern and impact of the Covid-19 coronavirus dealt a major blow to confidence last week.

Optimistic or bullish sentiment peaked at the end of the January at 70 percent of those surveyed against 13 percent bearishness.

In the last week of February that had changed with opinion split roughly equally between bullish, bearish and neutral sentiment.

However, that turned around last week, with 62 percent negative and only 17 percent positive.

The University's Moritz Wagner said the new index will help understand investor behaviour better.

"The index gauges overall changes in price and value perceptions, and can signal infliction points and provide early signs of bubbles and associated corrections and ultimately helps to make better-informed investment decisions."

Investors are most optimistic about the outlook for the healthcare and property sectors, but strongly negative about consumer, industrial and financial companies.

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