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Investor Confidence Strongest In Two Years

8 May 2000


Statement made by Roger Perry, Chief Manager Investment Services,
ASB Bank Limited

Investor confidence reached its highest level in two years in the three months to March 2000, according to ASB BANK’s latest quarterly survey.

The ASB BANK Investor Confidence Survey, conducted shortly before the global tech-stock correction in April, shows average investor confidence rising to 20% compared with 13% in the December quarter.* This quarterly figure is the highest since ASB BANK started the survey two years ago.

While the survey may reflect a degree of ‘new economy’ euphoria which was widespread prior to April, the bank says there were still a number of other positive themes for investors during the quarter.

These include the recovery in the New Zealand economy, rising interest rates lifting returns for term deposit-dependent investors and strong returns from world sharemarkets, which rose 6.1% during the quarter.

The survey also showed that the decline in confidence in managed investments seen in the last quarter may have been a hiccup, with confidence returning to 19%. Well performing balanced funds were returning comfortably over 10% per annum after tax and fees in the year to the end of March 2000.

Residential rental property continued to vie with managed investments for first place as the investment thought to deliver the best return. In the March quarter managed funds regained the lead by three percentage points. The number of people that felt residential rental property provided the best returns fell sharply to 16% after rising to 21% in the December quarter. The decline in confidence in residential rental property is consistent with modest population growth, a static property market and rising borrowing costs.

The feeling that term deposits provided the best return rose during the quarter, from 9% to 13%, reflecting recent rises in term deposit rates and the decline in the appeal of rental property. A one-year term deposit will now pay around 7%, compared with 6% prior to Christmas.

Investors believing best returns were received from direct purchases of shares in public companies remained static at 11%.

* The investor confidence measure is based on the net difference between “better” and “worse” responses to the question: “Do you expect your net return from investments this year to be better or worse than last year?”

For further information please contact

Roger Perry
Chief Manager Investment Services
ASB Bank Limited
Telephone: 0-9-377 8930 or 025 877 468.

Released by Network Communications (Suzanne Bunny).
Telephone: 0-9-379 3154 or 025 485 755.

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