Investor sentiment at its lowest level since the financial crisis: Manulife poll
TORONTO – Manulife’s Investor Sentiment Index has dropped to +16, the lowest point since the financial crisis when the index hit +11; the all-time high was +34 reached in 2006. Along with eroding investor sentiment is the feeling among Canadians that they are in a worse financial position than they were two years ago (26 per cent).
Canadians are increasingly viewing housing as a less attractive investment having dropped three points in the last year. The two largest drops were in British Columbia (13 point decrease since November 2014) and Ontario (decreased six points in the same time period). Canadians are also less likely to prioritize investing in their home in the near future (falling five per cent in the last six months).
“Canadian investors are facing a long list of uncertainties, including tremendous volatility in both oil prices and the value of the Canadian dollar. The outlook should become more clear over the course of 2016,” said Frances Donald, Senior Economist, Manulife Asset Management. “What is most interesting from the survey is the ongoing decline in the Canadian appetite to invest in their own home.”
In the last six months, Canadian investors lost confidence in mutual funds (down eight points), ETFs (down seven points), and balanced mutual funds (down seven points, the lowest it’s been since 2011). Fixed income stayed the same (+3 on the index).
Index Ranking Across Canada
Investors in Ontario and the Atlantic provinces were the most optimistic ranking +20 on the index. Quebec ranked lowest at +9 and Alberta ranked second lowest at +14 (dropping five points since May 2015 and 11 points since November 2014).
Cash Preference by Province
Investors in Ontario (+20 points), Atlantic Provinces (+18 points), and British Columbia (+10 points) prefer cash. Albertans are focusing on their homes and then cash for investment purposes. While Investors in Quebec (-5 points) believe that now is a bad time for cash.
Almost half (48 per cent) of Canadians believe that interest rates will stay the same for the next 12 months. While 77 per cent of Canadians say interest rates will not have an impact on their investment strategy.
“The Bank of Canada has been suggesting that interest rates are on hold or may even fall further over the coming year,” said Donald. “Yet, interestingly, 40 per cent of Canadian investors still expect interest rates to rise, highlighting the ongoing uncertainty around the interest rate outlook.”
Online banking activities
In a new line of survey questions, 82 per cent of Canadians used an online channel to manage their finances. And affluent investors are more likely to go online to access financial services and look after their finances (94 per cent). Desktop and laptop are still the most common tools to manage finances online (90 per cent of Canadians on average); however Canadians are more likely to use a smartphone to deposit funds to their accounts (36 per cent). Just under half of Canadians (47 per cent) still feel it is unsafe to bank on their smartphones.
The most common online financial activity for investors is checking the performance of their investments, 75 per cent doing so at least once a month or 34 per cent doing so weekly.
For more information and historical data, visit Manulife.ca
About the Manulife Investor Sentiment Index
Now in its 16th year, the Manulife Investor Sentiment Index is a semi-annual measure of investors' views on a range of asset classes, and savings and investment vehicles, as well as their confidence in these areas. The general population data is representative of all Canadians and is based on an online survey of 1,001 respondents who were at least 25 years old. Data from affluent respondents was compiled from an online survey of 1,251 respondents who were household financial decision-makers 25 years and older, with a household income of at least $75,000, and investable assets of at least $100,000. The survey was conducted in December 2015 by Environics Research.