Bank Austria Investment Barometer:
High inflation clouds depositors’ expectations for the future
- Slight increase in scepticism towards securities, capital guarantee particularly in demand
- Roughly EUR 175, or 10.3 per cent of monthly net income, saved each month
- Inflation GarantieAnleihe 2008–2011/2 starts on 14 July
Increasing commodity prices and subsequent higher inflation rates are taking their toll. More than half of all Austrians believe that they will now be able to save less than they could three years ago. This is indicated by the current Bank Austria investment barometer, a representative survey performed by the market research institute FESSEL-GfK and commissioned by Bank Austria. According to the survey, only 42 per cent of those surveyed think that they can currently save more or at least the same amount as they could three years ago. Last year it was 56 per cent.
“Depositors also have a decidedly less optimistic vision of their investment future. Well less than half think that by 2011 they will be able to save as much as or more than they can now,” says Werner Kretschmer, Bank Austria’s director for Private Banking and Asset Management. In concrete terms, it is now 43 per cent, compared to 52 per cent three years ago. At the same time, the number of people who believe that they will be able to save less in three years than they can now has risen significantly. In particular, women, people over fifty and those with medium-level education hold a pessimistic view of their future investments.
More caution towards securities
Although interest in investing in securities has generally remained stable since 2005 – about 22 per cent of those surveyed have often considered it – less people view the current environment as attractive for new commitments. In concrete terms, it was 31 per cent in 2005 and now it is only 17 per cent. “Only professional investors believe that low or declining market prices can offer an attractive opportunity to make investments. The average Austrian is currently more cautious when it comes to securities,” says Kretschmer. As a result, less of those surveyed consider securities to have more earning power than savings accounts, namely 44 per cent in comparison to 54 per cent.
Investor scepticism is also reflected in the features currently being demanded from banking products. “A capital guarantee is the most important criterion in deciding which products to choose. This holds true for people who use traditional savings products and also for those who own securities,” says Bank Austria director Werner Kretschmer. High returns, low risks and the availability of funds at all times are rated equally, with 14 per cent each. Customer demand for investment products with a capital guarantee is accordingly high.
“How would you manage EUR 10,000?” In response to this question, almost half of those surveyed confirmed that they have the utmost confidence in their personal advisor at their main bank. Some 22 per cent make use of various sources of information and 21 per cent solicit offers from multiple financial institutions.
New investments will be down in 2008
The rather negative frame of mind among Austrian savers at the moment is accompanied by a declining savings ratio. “With a slight decrease in the savings ratio despite weakening consumption, we are expecting a decrease in new investments from EUR 191 to EUR 175 per Austrian and month in 2008,” says the deputy chief economist at Bank Austria, Stefan Bruckbauer. The value is at a similar level to the values for 2004 and 2005. However, at 10.3 per cent of disposable income, the acquisition of new financial assets in relation to disposable income remains significantly lower than it was over the last five years (on average, 11.6 per cent).
Currently, Austrians are showing a strong tendency towards savings deposits in their investment choices. “More than half of new investments in Austria in 2008 will again be in savings accounts, amounting to over EUR 100 per Austrian and month,” says Bruckbauer. Life insurance policies will take second place once again, with EUR 40 per month, and bonds will take third place, with an expected EUR 17 per month. New investments in stocks and funds will be fairly moderate as a result of the development of financial markets over the last few months and because of attractive interest rates. These investments are expected to amount to EUR 5 per month, EUR 3 of which will be for funds. Although EUR 3 appears to be a very small amount, Bank Austria’s economists expect a reversal in the trend for the second half of the year following the outflow of capital from investment funds during the first half of the year.
Bank Austria product recommendation:
For the medium-term investment of a sum of EUR 10,000, Bank Austria recommends Inflation GarantieAnleihe 2008–2011/2. This guarantee bond has a fixed interest rate of 4.5 per cent during the first year. During the next two years, earnings are based on the development of the European consumer price index. The higher the inflation rate, the greater the interest on the bond. The term is three years and there is a full capital guarantee.
For long-term investment, Bank Austria recommends S.M.I.L.E.-Garant. This is an investment with a capital guarantee, inflation compensation, additional earnings opportunities (index basket) and capital-gains-tax-free earnings.
Enquiries: Bank Austria Press Office Austria
Alexander Tröbinger, Tel. +43 (0)5 05 05 ext. 52809;
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