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Index of Investor Optimism

NewYork | | Media Releases Americas

INVESTOR OPTIMISM UP SLIGHTLY FOR DECEMBER Investors Remain Pessimistic about the U.S. Economy; Worries over High Energy Prices and Residential Real Estate Continue

Investor optimism gained slightly in December rising 6 points to a level of 50 according to the UBS/Gallup Index of Investor Optimism. This marks the 2nd lowest level for the Index this year and is 40 points below that of December 2006. The Index is conducted monthly and had a baseline score of 124 when it was established in October 1996.

Most of the improvement in December's Index can be found in the Economic Dimension of the Index, which measures investors' feelings about the direction of the overall US economy. The Economic Dimension increased 5 points from -12 in November to -7 in December. Despite this uptick, 78 percent of investors describe the current U.S. economy as being in a slowdown or recession - essentially unchanged from the 79% who felt this way in November and up from 68 percent who felt this way in October.

Investor sentiment towards their own investments remained basically unchanged with the Personal Dimension of the Index, which measures Investors' optimism about their individual investment portfolios, increasing 1 point to 57 from its level of 56 in November.

"The Fed's latest efforts have helped prevent an outright recession, but only time will tell if the deteriorating housing market deals the economy a lethal blow," said Maury Harris, Chief US Economist, UBS Investment Bank.

Energy prices continue to plague investors with 75 percent saying they believe energy prices are hurting the current investment climate "a lot," up 15 points from the 60 percent who felt this way in October.

Housing and real estate remain second only to energy prices as an investor concern, with 62 percent of investors saying 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 56 percent who felt this way in November and the highest level of concern voiced by investors about this area since measurement began in October 2005.

Investor skepticism towards the housing and real estate markets continues with 78 percent of investors saying they believe economic conditions in the national residential real estate market are getting worse not better. Those polled cited feeling the effects of the credit crunch with 53 percent of investors saying the consumer credit crunch is hurting the investment climate "a lot." In addition, 67 percent feel it is harder for Americans to get credit now than it was three months ago.

These findings are part of the 117th Index of Investor Optimism, which was conducted December 1-16, 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

50

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