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Investor Optimism Drops to Nine-Month Low in June, According to UBS Index

| Media Releases Americas

Investors Say Outlook For Financial Markets Bleakest Since September

Optimism fell markedly in June to its second lowest level in history, as investors express growing concerns over the performance of the financial markets, according to the Index of Investor Optimism, a joint effort of UBS and the Gallup Organization

Currently at 72, the overall Index decreased 18 points from 90 in May. Conducted monthly, the Index had a baseline of 124 when it was established in 1996.

This month, just 38 percent of investors say they are optimistic about the prospects for the financial markets over the next 12 months, decreasing from 46 percent in May, and marking the lowest level of optimism about the financial markets since September.

Continuing a six-month trend of month-to-month fluctuations, expectations for short-term return, over the next 12 months, rose modestly to 10.3 percent in June after dipping to 9.2 percent last month.

Notably, short-term expectations among the least experienced investors, those with less than five years in the markets, are more than double the expectations of investors with the most experience, more than 20 years in the markets. The least experienced investors now expect an average of 15.9 percent return on their portfolios over the next year, compared with a 7.0 percent return anticipated by the most experienced investors.

Perhaps not surprisingly, 40 percent of investors say they find stocks less attractive now than six months ago, compared with 31 percent who say stocks are more attractive. Similarly, 36 percent believe CDs are less attractive now than six months ago, while 27 say they are more attractive.

In contrast, 59 percent of those surveyed report they now view real estate as a more attractive investment than they did six months ago, compared with only 13 percent who find it less attractive; thirty-five percent cite bonds as more attractive, while with 22 percent find them less attractive; and 28 percent believe investing in gold is more attractive now than six months ago, while 21 percent think it is a less attractive investment.

Less than half of investors, 42 percent, report they have made trades in the financial markets this past year, holding relatively steady from January 2001, when investors were last polled on the subject. Substantial investors, those with more than $100,000 in investable assets, were much more likely to have made trades in the past year than average investors, those with less than $100,000 in investable assets. Among substantial investors, 57 percent report they have made trades in the financial markets in the past 12 months compared with 33 percent of average investors.

For those investors who report they have made trades in the past year, 35 percent say they increased their overall level of holdings, 47 percent adjusted their holdings but kept them at the same level, and only 15 percent decreased their overall level of holdings.

Despite investors' dampened view of the U.S. financial markets, few reported interest in increasing their investments in foreign assets. In fact, investors say on average only 5.3 percent of their total portfolio is currently invested in the assets of foreign countries or foreign currencies. Moreover, just 13 percent of those surveyed expect to increase the percentage of foreign assets in their portfolios over the next 12 months, compared with 72 percent who expect the level to remain the same, and 7 percent who say it will decrease.

Approval for Federal Reserve policies held steady at 89 percent among those investors who report having an opinion. Moreover, nearly two-thirds of those surveyed, 63 percent, believe the Fed will hold interest rates steady over the next three months, compared with 23 percent who believe rates will be increased, and 10 percent who expect them to be cut.

In January 2002, UBS established the Index of Investor Optimism - EU 5, the European counterpart to the U.S. survey covering France, Germany, Great Britain, Italy and Spain. This month, 1,000 investors across these EU markets were polled from June 1 to June 14. Overall optimism registered at 8 in June, down from 28 last month.

For more than 60 years, the Gallup Organization has been a recognized leader in the measurement and analysis of people's attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup's current activities consist largely of providing marketing and management research, advisory services and education to the world's largest corporations and institutions.

UBS AG is a leading global financial services firm with 71,000 employees worldwide, providing a wide range of services to a client base that includes affluent individuals, corporations, institutions and governments. Headquartered in Switzerland, the bank has significant operations in all of the world's major financial centers and is comprised of four business groups; UBS Warburg, UBS PaineWebber, UBS Switzerland, and UBS Global Asset Management.

Additional information about the Index of Investor Optimism can be found at www.ubs.com/investoroptimism

UBS Index of investor optimism overall trend

OVERALL INDEX

02 June

72

02 May

90

02 April

89

02 March

121

02 February

92

02 January

115

01 December

88

01 November

84

01 October

86

01 September

50

01 August

76

01 July

74

01 June

85

01 May

90

01 April

81

01 March

82

01 February

77

01 January

96

00 December

106

00 November

130

00 October

132

00 September

147

00 August

160

00 July

143

00 June

149

00 May

155

00 April

140

00 March

150

00 February

168

00 January

178

99 December

174

99 November

148

99 October

139

99 September

160

99 August

149

99 July

166

99 June

146

99 May

163

99 April

168

99 March

151

99 February

167

98 December

141

98 September

147

98 June

160

98 March

161

97 December

151

97 September

151

97 June

152

97 February

128

96 November

125

96 October

124