Australian “mum and dad” shareholders are more confident about the outlook for the local stock market than they were two months ago, a new survey shows.

The inaugural Global Proxy/Melbourne Institute shareholder confidence index rose by 10.1 per cent to 106.5 index points in May, from 96.7 points in March.

The rise in the index to over 100 points indicates more respondents are gaining confidence in the share market, the compilers of the survey say.

“There are clear signs from our survey that retail shareholder confidence in the Australian stock market is returning and we think that confidence levels are likely to continue to improve,” said Professor Guay Lim of the Melbourne Institute in a statement.

“But we are certainly not out of the woods yet.

“There is a high degree of caution and experienced investors are wary of another pullback.”

The index, released for the first time on Wednesday, has been created by shareholder communications firm Global Proxy Solicitation and the university-based Melbourne Institute of Applied Economic and Social Research.

The first survey was conducted in March and the latest in the first week of May.

“This return of confidence provides listed companies with an important opportunity to engage and win the support of their shareholders given the continuing uncertainty being generated by the global economic crisis,” Global Proxy managing director Maria Leftakis said.

The confidence index is based on shareholders’ assessment of stock market returns and volatility and their trading intentions.

The indices for returns showed more respondents believed returns were improving, while the indices for volatility showed more respondents believed there will be less volatility in the future.

There were only small changes in the trading intentions indices, although the level of the index points to increased buying activity.

The index also showed that male shareholders are more confident about the stock market than female shareholders.

But shareholders with more investing experience were more pessimistic about improvements in the share market.

Each survey was conducted over the telephone and is based on 1,600 respondents aged 18 years and over across Australia who own shares in listed companies.

The survey will in future be published each quarter.