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Investor Optimism Dips in February, According to UBS Index

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Concerns Over Economic Growth, Short-Term Performance of Stock Market Dampen Optimism; One-Third of Investors Say Weakness of Dollar against Euro Hurting U.S. Investment Climate

NEW YORK, NY -- (MARKET WIRE) -- 02/23/2004 -- Overall optimism dropped 11 points this month, with investors citing concerns over economic growth and the stock market's performance in the coming year, according to the UBS Index of Investor OptimismĀ®, a joint effort of UBS (NYSE: UBS) and the Gallup Organization.

Currently at 97, the overall Index dipped 11 points this month, down from 108 in January, when the Index reached its highest levels since March 2002. Conducted monthly, the Index had a baseline of 124 when it was established in 1996.

Interestingly, in February, 64 percent of those surveyed remain optimistic about their ability to achieve investment targets over the next 12 months, up 1 percentage point from January and 24 percentage points a year ago. Of those polled, 63 percent report they are optimistic about the performance of the stock market in the coming 12 months, down from 67 one month ago and up from 30 percent one year ago. Notably, 91 percent of investors surveyed believe the stock market will be the same or higher a year from now. Among those surveyed, 70 percent of investors say now is a good time to invest in the financial markets, up from 68 percent one month ago and 42 percent one year ago.

Younger investors, those under age 40, are more bullish about the financial markets, with 78 percent of this group saying now is good time to invest, compared with 68 percent of older investors, those over age 40. Yet, substantial investors, those with $100,000 or more in investable assets, are more confident in the current investment climate, with 77 percent saying now is a good time to invest, compared with 65 percent of average investors, those with $10,000 to $100,000 in investable assets.

Expectations for short-term return, over the next 12 months, rose to 12.4 percent from 12.0 percent last month and 6.7 percent one year ago. This increase can be attributed to average investors, those with $10,000 to $100,000 in investable assets, whose expectations rose to 13.3 percent, compared to substantial investors, those with $100,000 or more in investable assets, who reported expectations of 11.2 percent.

According to the Index, 68 percent consider the economy to be in either a sustained expansion or recovery, compared with 67 percent last month. Investors are slightly more optimistic about the unemployment rate, up to 46 percent from 44 percent last month. However, when compared to last month, investors are less optimistic about the outlook for both economic growth, down to 57 percent from 62 percent, and also the performance of the stock market, down to 63 percent from 67 percent.

This month, investors were asked about the strength of the U.S. dollar compared with other international currencies and how this might impact the U.S. investment climate and their person investment decisions. On average, investors hold just 4.4 percent in assets of foreign companies or currencies in their personal portfolio and nearly three-quarters, 73 percent, expect that component of their portfolio to remain the same. The depreciation of the U.S. dollar against the Euro is either hurting or having no effect on the U.S. investment climate, report 70 percent of those polled. Despite that, 64 percent of investors say the weakened dollar will have no effect on their investments in foreign markets. Interestingly, more than half of those surveyed, 57 percent, say the U.S. dollar presents the most attractive investment, and 39 percent consider the Japanese Yen to be the least attractive currency in which to invest.

Investors were also surveyed about which investment sectors that offer attractive buying opportunities. Among those surveyed, pharmaceutical companies ranked first, with 73 percent saying they provide an excellent or very good investment opportunity. This is followed by defense industries, 62 percent; technology companies, 61 percent; biotechnology companies, 60 percent; energy companies, 54 percent; health care companies, 53 percent; telecommunication companies, 46 percent; utilities, 39 percent; financial services companies, 38 percent; Internet companies, 33 percent; retail companies, 24 percent; and transportation companies, 20 percent.

These findings are part of the 70th Index of Investor Optimism, which was conducted February 1 to February 15. To track and measure Index changes on an ongoing basis, new samplings are taken monthly. Dennis J. Jacobe, research director for Gallup, said the sampling included 863 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 the world's leading wealth management business. In the U.S., it is the third largest private client business with a client base of more than 2 million investors. Its American network of more than 8,200 financial advisors manages roughly 600 billion Swiss francs in invested assets and provides sophisticated services through consultative relationships with affluent and high net worth clients. In Switzerland and internationally, UBS has more than 140 years of private banking experience, an extensive global network of 164 offices and nearly 650 billion Swiss francs in invested assets. More than 3,200 client advisors provide a comprehensive range of services customized for wealthy individuals, ranging from asset management to estate planning and from corporate finance to art banking.

UBS Index of Investor Optimism overall trend


04 February 97
04 January 108
03 December 104
03 November 93
03 October 69
03 September 54
03 August 61
03 July 54
03 June 77
03 May 42
03 April 66
03 March 5
03 February 9
03 January 38
02 December 52
02 November 41
02 October 29
02 September 60
02 August 52
02 July 46
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


UBS Communications
Americas Media Relations Contact:
Jennifer Plunkett