How does the survey work?

Survey

Participants sign up here on our website and a survey is sent once a week at 8am Friday for completion by 5pm the same day.  Questions are asked regarding the view of participants on financial markets with responses consisting of bullish, bearish or neutral.  The same set of questions are asked using different time frames of one month and six months e.g. what is your view of the NZX 50 over the next one month? What is your view of the NZX 50 over the next six months?

Respondents complete the survey on Fridays and the data are analysed over the weekend.  The results and analysis are sent to participants in a compact report format at 9am Monday morning.  The results are then made public on Tuesday.

In addition, a variety of ‘one-off’ questions may be asked that reflect current investment and market conditions (for example the recent exit of Britain from the European Union, or tightening of lending requirements by banks).

Index construction

The index construction follows a straight forward methodology.  For each question/market, answers selected with bullish are assigned a value of 1, answers with bearish are assigned a value of -1 and answers with neutral are assigned a value of 0.

The sentiment for each market is the sum of total answers, equally weighted by the number of respondents.  Therefore, the upper bound of the index is 1 meaning the full sample of participants are bullish, the lower bound is negative 1, meaning the full sample of participants is bearish.  A value of 0 represents a neutral opinion where the sample of participants are neither bullish nor bearish.

This method allows an easy interpretation of sentiment for a certain market.  A positive value represents an overall bullish sentiment in a market, a value close to zero represents neutral sentiment and a negative value represents overall bearish sentiment.

For example, a survey question reads: What is your view of the NZX 50 over the next one month? 100 participants answer this question and 67 answer bullish, 20 answer bearish and 13 answer neutral.  The NZX 50 one month sentiment index would be calculated as 0.47 -  [(67x1)+(20x-1)+(13x0)]/100 meaning investors are optimistic (bullish) about the NZX 50 over the next one month.