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Fiscal policy spurs investor confidence: Citi

The continued supply of fiscal stimulus and the expectation of more stimulus has sparked a vote of confidence in fund managers and investors across Australia and New Zealand.

Nearly 80% of the delegates at the Citi Australia Investment Conference believe the terminal rate for the Reserve Bank of Australia will be 10 basis points, with just 30% believing there will be negative rates.

However, 69% of investors believe New Zealand will have negative rates in the first half of 2021.

Citi Australia's head of investor sales Mark Woodruff said: "It is clear that investor confidence is underpinned by the continued supply of fiscal stimulus and the expectation of further monetary stimulus in both Australia and New Zealand."

"During his speech, the RBA governor clearly outlined his willingness to do more with monetary policy and we have seen a significant market reaction in kind."

Around 70% of delegates think the S&P will be more than 5% higher by the end of September 2021.

Furthermore, 38% of respondents have their portfolios positioned for a democratic sweep and 32% of investors thought US-China relations will deteriorate following the US election with more protectionist policy was put in place, though 42% think it would remain stable.

But more than half the delegates believe better political leadership or policy certainty was will ensure Australia makes the most of the industrial transition happening globally.

"The question of record low rates and expansive fiscal policy permeated all discussions, and it's interesting to see the poll results indicating increased confidence of a Democratic sweep, and in turn a majority of respondents looking for equity markets to be higher in a year despite the uncertainty of the recovery due to COVID-19," Woodruff said.

Read more: New ZealandCiti Australia Investment ConferenceMark WoodruffReserve Bank of AustraliaS&P
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