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War fears keep investors out of the markets

Fears over war with Iraq and job insecurity are the primary factors deterring more than a third of investors from re-entering stockmarkets, according to the AITC.

Research by the AITC has found that 15 per cent of investors would be tempted back into the markets if the threat of war with Iraq were to recede while 19 per cent would feel more confident of investing if their job security improved.

However, the research of 2,000 UK investors also found that 27 per cent of respondents feel more optimistic about committing new money to the markets than at any other time during the past 12 months despite increased volatility.

Eleven per cent of respondents said they would be encouraged to reinvest by financial advice while 9 per cent admitted they are waiting for the FTSE 100 index to break the 5,000 barrier before considering dipping their toe in the water again.

But just 4 per cent said they were seeking signs of improvements in company reporting before they re-invest, dispelling fears that the Enron and WorldCom scandals have been among the main factors denting investor confidence.

Director general Daniel Godfrey says: “Investors have been waiting for a long time for a silver lining to emerge from the gloom cast by volatile markets and it is encouraging to see that confidence is starting to return. The message is clearly getting through that equity investment is for the medium and long term.”

Regency Financial Management partner Bryn Walker says: “When the threat of gunfire is around I cannot blame investors for wanting to wait and see. But, as with job insecurity, you have to bite the bullet at some point and start investing again.”

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