Investor confidence dips as markets stabilise

Tuesday, 18 May 2010, 1:30 pm
Press Release: ASB Bank

Investor confidence dips as markets stabilise

Investor confidence has simmered down from record high levels reached earlier this year, according to the latest ASB Investor Confidence Report.

A net 23 percent of investors are expecting a better rate of return over the next year, a fall of 7 points since the December 2009 quarter.

The Q1 2010 report also reveals that rental property has declined in popularity as the investment option that offers the best rate of returns, with other investment classes now gaining momentum.

ASB Head of Investment Services, Jonathan Beale, says that the attitudes of investors are changing as the recession fades, and as speculation mounts ahead of Budget 2010.

“Markets are gaining some stability as the doom and gloom of the recession recedes. All investment classes surveyed, with the exception of rental properties, shifted upwards in favourability as offering the best rate of return. Investors are now looking at a range of options to get the best returns they can on their capital. They are also more measured in their outlook,” he says.

Rental property investment loses its shine

“All eyes are on Budget 2010 for confirmation of expected adverse changes to tax on property investment,” Mr Beale says. “In terms of the best rate of return, rental property - at 17 percent - is now only 1 percent ahead of bank savings accounts and term deposits, both at 16 percent.”

Mr Beale says term deposits have jumped a net 4 percent in this survey, possibly reflecting the recent pick up in interest rates as the Reserve Bank of New Zealand readies itself to lift the Official Cash Rate in coming months.

Managed investments (10 percent), shares (8 percent) and KiwiSaver (6 percent) have all crept upwards as being favoured asset classes for better returns. “Managed funds have done well over the past 12 months as they recover from the slump, and investors are starting to see their value as a long term investment option,” he says.

Looking ahead to Q2, investor confidence is likely to be shaped by the sovereign debt developments in Europe, as well as some domestic certainty following the release of the Budget.

KiwiSaver at record levels

The survey reveals that current usage of KiwiSaver is up 2 points to 37 percent – the highest ever level recorded in the survey.

“More kiwis than ever have signed up to a KiwiSaver scheme to save for their retirement. We have seen this in our own KiwiSaver schemes - in the ASB KiwiSaver Scheme alone more than 235,000 kiwis have now saved more than $1 billion, making it the largest single KiwiSaver scheme in the country.”

“Its been nearly three years since KiwiSaver was launched by the Government, so KiwiSaver schemes will now have a reasonable track record on which investors can judge performance. It’s a good time for New Zealanders to take stock and review how their retirement savings are going,” Mr Beale says.

ENDS

© Scoop Media

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