Concerns over the Australian economy are driving investors to seek opportunities in Asian markets, new research reveals.
Data from the Certitude Global Investing Intentions Index found that increasing numbers of Australian investors believe they need more international assets in their investment portfolio to off-set any underperformance in domestic investments.
Certitude chief investments officer, Craig Mowll, said the index had seen demand for international investments had reached an all-time high of 186 out of 200, while demand was even stronger among high net worth investors (197).
“What is really interesting is that the record demand for overseas assets this month coincides with the Australian dollar hitting a five year low against the greenback,” he said.
“This appears to be contradictory at first glance, because one would expect a weak Aussie dollar to constrain, rather than increase, investment in overseas markets.
“However, when investors were asked about the most appealing international markets, it became clear that they are taking the effect of exchange rate movements into account. Demand for US investments fell sharply among those who intend to invest overseas, from 53 per cent to 45 per cent this month, as did demand for assets in Western Europe, from 25 per cent to only 18 per cent. On the other hand, the attraction of investments in Asia rose significantly (from 13 per cent to 18 per cent), as the Aussie dollar performed better against the renminbi.
“Australian investors evidently want more international assets generally, but are considered in their decisions about the international markets they choose, incorporating expectations around exchange rates into research about which overseas markets offer the best value.”
