Investor Confidence Hits New Highs

Tuesday, 24 April 2007, 10:23 am
Press Release: ASB Bank

§ Overall investor confidence at record levels

§ Confidence in residential rental property continues up, managed funds stable

§ Knowledge of KiwiSaver steadily increasing

New Zealand investors are expecting the good times to continue, with more confidence in their investments than at any time since the ASB survey began in 1999.

When asked: Do you expect your net return from investments this year to be better or worse than last year?

Overall investor confidence rose in the first quarter of 2007, up one point to a net 25%, the highest rating on record. This record level of investor confidence has built up over four consecutive quarters, from an historical low of just 9% in Q1 2006.

The rise in confidence was fuelled by an increase in people who expected their investment returns to be better than last year, up four points to 36%. This result was also offsetting a slight increase in people who thought their returns would be worse than last year, which was up two points to 10%.

“The growing investor confidence we saw throughout 2006 has carried on into 2007,” said Jonathan Beale, Head of Investment Services, ASB. “Given that confidence levels were at record lows at the beginning of 2006, it’s a remarkable turnaround.

When asked: What type of investment gives the best return?

Residential rental property remains the highest ranked asset class, up slightly to a net 21%; however this result is still some way short of its record high of 25% back in 2000.

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Managed funds maintained their position as the second most popular type of investment, holding steady at 14%.

“Diversity of investment appears to be the key, with continued growth in confidence in residential rental returns. The continued performance of the share market, both in New Zealand and overseas, has led to managed funds holding steady in number two position.” said Jonathan. “While the jitters caused by the wobble in China during February may have translated into the slight decrease in confidence in shares, down 1%, that impact has not flowed through to managed funds.”

When asked: Are you aware of KiwiSaver?

Knowledge of KiwiSaver continues to increase as its 1 July introduction date looms closer, with 77% of respondents reporting awareness, up from 72% last quarter.

“Awareness of KiwiSaver has been steadily increasing, which is not suprising given the extensive media coverage it has been receiving,” said Jonathan. “The question now is do most people yet have the knowledge to make the right saving decisions taking into account both their current situation and their long term goals? We expect people’s level of knowledge to increase as the KiwiSaver fund providers step up their activities, and the IRD kicks off its education campaign.”

Question of the Quarter: Do you intend purchasing shares in the next 12 months where you will personally decide what shares to purchase?

16% of respondents claim they intend purchasing shares within the next 12 months, with a few (5%) undecided.

“While it’s encouraging that a number of Kiwis are looking to choose shares to buy in the next year, the number is still low by international standards. For example, the ASX reports that 23% of Australians directly own of shares. When you include indirect ownership through managed funds, more than 50% of Australians hold shares.” said Jonathan.

Ends

Note: Results Graphs Follow

For further information:

Jonathan Beale, Head of Investment Services, ASB. ph: 021 962119

Released on behalf of ASB by Network PR (Ian Bonnar), ph: 021 121 1620 www.networkpr.com

Chart 1

Chart 1 shows the difference between the “better” and “worse” figures, giving an overall picture of net investor confidence on a quarterly basis. Overall confidence increased to +25%.

Chart 2

Chart 2 shows the results when respondents are asked what type of investment gives the best return.

Chart 3

Chart 3 breaks down by region the respondents who feel managed investments and residential rental property give the best return.

Top North Island Lower North Island South Island SiIsland

The ASB Quarterly Investor Confidence Survey is a nationwide survey, which has been undertaken every quarter since May 1998. A sample of this size has a maximum margin of error of ±3.65 at 95% confidence. There were 720 respondents.

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