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Index of Investor Optimism

New York | | Media Releases Americas

INVESTOR OPTIMISM REMAINS DOWN IN NOVEMBER Investors Pessimistic about the Economy; Worries Surge about the Dollar, Energy Prices and Housing Market

Investor optimism plummeted in November, falling 26 points to 44, less than half its level of 103 in January and the lowest point since Hurricane Katrina in September, 2005, according to the UBS/Gallup Index of Investor Optimism. The Index is conducted monthly and had a baseline score of 124 when it was established in October 1996.

The majority of the decline in sentiment this month can be attributed to the Economic Dimension of the Index, which measures investors' feelings about the US economy. The Economic Dimension plunged 20 points in November to -12, indicating that investors went from being somewhat optimistic about the US economy in October to somewhat pessimistic in November.

The Personal Dimension of the Index, which measures Investors' optimism about their individual investment portfolios, also dropped in November, tumbling 6 points to 56. This is the lowest point for investor optimism regarding their own portfolios since August 2006 when the Personal Dimension stood at 54.

Seventy-nine percent of investors describe the current US economy as being in a slowdown or recession - up from 68 percent who felt this way in October. These concerns may bleed into holiday spending with 30 percent of investors saying they plan to spend less on Christmas gifts this year than last.

The declining value of the US dollar also contributed to the sharp drop in the Index with 47 percent of investors saying that they believe the value of the dollar is hurting the current investment climate "a lot." This is up eight percentage points from the 39 percent who felt this way in October and is the highest level of investor concern about the dollar registered by this poll since tracking began in March 2004.

"The current slump in the economy will not right itself until we see an ease in the consumer credit crunch and some substantial improvement in the housing sector, "said Maury Harris, Chief US Economist, UBS Investment Bank.

Surging energy prices continue to top the list of investor concerns. With current oil prices exceeding $90 a barrel and gas prices at the pump exceeding $3 a gallon, concerns about higher energy prices jumped 11 percentage points in November with 71 percent of investors saying they believe energy prices are hurting the current investment climate "a lot."

Housing and real estate worries remain second only to energy prices as a concern with 56 percent of investors saying that they believe the potential "for a housing or real estate crash in some local markets" is hurting the investment climate "a lot." This is up from the 51 percent who felt this way in October and the highest level of concern voiced by investors about this area since measurement began in October 2005. Investors continue to see no bottom in sight for the national housing and real estate markets with 80 percent saying they believe national real estate conditions are getting worse not better.

The credit crunch continues to squeeze consumers with 64 percent saying it is harder for Americans to get credit now than it was three months ago, and 47 percent of investors saying the consumer crunch is hurting the investment climate "a lot."

These findings are part of the 116th Index of Investor Optimism, which was conducted November 1-14, 2007. To track and measure Index changes on an ongoing basis, new samplings are taken monthly. Dennis J. Jacobe, Chief Economist for Gallup, said the sampling included 804 investors randomly selected from across the country. For this study, the American investor is defined as any person who is head of a household or a spouse in any household with total savings and investments of $10,000 or more. Nearly 40 percent of American households have at least this amount in savings and investments. The sampling error in the results is plus or minus four percentage points.

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 is one of the world's leading financial firms, serving a discerning international client base. Its business, global in scale, is focused on growth. As an integrated firm, UBS creates added value for clients by drawing on the combined resources and expertise of all its businesses.

UBS is the leading global wealth manager, a top tier investment banking and securities firm, and one of the largest global asset managers. In Switzerland, UBS is the market leader in retail and commercial banking.

UBS is present in all major financial centers worldwide. It has offices in 50 countries, with about 39% of its employees working in the Americas, 33% in Switzerland, 16% in the rest of Europe and 12% in Asia Pacific. UBS's financial businesses employ more than 80,000 people around the world. Its shares are listed on the SWX Swiss Stock Exchange, the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE).

Additional information about the Index of Investor Optimism can be found at:

UBS Index of Investor Optimism Overall Trend

month

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

December

90

79

79

104

52

88

106

174

141

151

November

44

93

50

69

93

41

84

130

148

125

October

70

79

47

62

69

29

86

132

139

124

September

68

74

34

74

54

60

50

147

160

147

151

August

73

53

61

77

61

52

76

160

149

July

87

55

58

88

54

46

74

143

166

June

89

58

54

95

77

72

85

149

146

160

152

May

95

64

50

71

42

90

90

155

163

April

74

63

52

73

66

89

81

140

168

March

78

79

74

85

5

121

82

150

151

161

February

90

80

82

97

9

92

77

168

167

128

January

103

93

76

108

38

115

96

178