The latest findings of the BOV Asset Management Investor Sentiment Index were presented by Mark Vella, Head Business and Marketing at BOV Asset Management Limited during a breakfast meeting held at Xara Lodge, Rabat. The results show that investors are optimistic vis-à-vis future prospects as the index went up to 101.47 from 101.14. On the other hand, the reading for the current investment sentiment dropped slightly to 98.32 from 99.33.
This Investment Index, which was launched for the first time a year ago, addressed a gap on the local market, serving as an important tool to both investors and practitioners. Conducted by MISCO International, the index is reviewed every six months by means of phone interviews among local investors. The latest reading was the result of interviews conducted during the months of May and June 2018.Whilst presenting the latest findings, Mark Vella said, “The latest exercise shows that the Maltese investor has a clear preference for local investment within a conservative investment environment.” Elaborating further, he added, “Since the last reading more investors are moving towards having a mix of local and foreign investments, and a balanced stance of attaining income and growth concurrently.”
A closer look at the profile of the Maltese investor as projected through this survey shows a clear preference for local government among the 56 year old plus segment, while shares are more likely to be selected by aggressive and more experienced investors. Over the past months, a slight increase was registered in collective investment schemes. This is more significant among the middle age group (35-55 year olds). In this regard, Mr Vella explained that, “Those who have a preference towards investing in collective investment schemes, do so for diversification and liquidity purposes.”
The Index also shows that 50% of Maltese investors have been investing for over a decade. However, the last ten years have seen younger investors (18-35 year olds) joining the capital market. The group of more experienced investors, defined as investors who allocate more time to investment, is dominated by investors who are 56 years old or older.
Maltese investors continue to use either banks or financial consultants to channel investments, as is witnessed by 85% of the respondents. Only one in seven of the Maltese investors feel sufficiently confident to decide and make investments on their own.
The survey reveals that investment objectives range from income generation to capital growth. Having said that, it is interesting to note that whereas in June 2017, 52% of Maltese investors engaged in investment activity to generate an additional source of income, the latest reading registered greater balance in objectives.
Mr Vella noted that, “Unfortunately, very few investors invest solely to grow and increase their capital. The Index goes on to show that investors having a preference for growth are more likely to look towards foreign investment opportunities.”
With regards to the frequency of reviews, the Index indicates that younger individuals (18-35 year olds) and aggressive investors are more likely to follow their investments closely and review it on a monthly basis. On the other hand, investors who would describe themselves as conservative are less likely to review their investments on a regular basis.
In his concluding remarks, Mark Vella said, “The European Central Bank announced the ending Quantitative Easing by the end of 2018 and it will be keeping interest rates on hold up until summer 2019. It will be interesting to see how confidence plays out in the face of this scenario in a year’s time.”
Mr Mark Agius, Executive Head at BOV Asset Management Limited, said that, “The BOV Asset Management Investor Sentiment Index is now in its second year. Over the past months, we have already witnessed a slight change, and there is a divergence between current and future sentiment among local investors.” He continued by saying that “BOV Asset Management Limited is committed to keep this Index alive, as it gives a snapshot of what the local investor is thinking and his response to the market influences.”