Overall confidence in investment returns continues to decline in the ASB BANK Investor Confidence Survey for the September quarter.
Respondents expecting their investment returns to improve in the year ahead fell to a net 7% compared with a net 15% for the June quarter.
ASB BANK Chief Manager Investment Services, Roger Perry, says a combination of international and local factors contributed to the slide in investor confidence, since what appears to have been a turning point in April.
“The NASDAQ Index fell by 15.6% in April, brought about by the sharp decline in the value of the internet stocks. It continued to fall a further 11.9% in May. At about that time it also became clear that there was a loss in confidence in New Zealand’s immediate economic prospects.”
“In the September quarter we have witnesses further unsettling influences on investment markets. Oil prices rose above US$30 a barrel, and the New Zealand dollar dropped below US 40cents.”
The survey, which canvasses almost 800 investors nation-wide, showed confidence in managed funds returns continued to strengthen. The September quarter showed that 25% of respondents favour managed funds as most likely to give the best returns in the year ahead, a rise of 2% over the quarter.
“Despite the unsettling economic influences over the last few months, confidence in managed fund investments has continued to strengthen, from 18% of investors a year ago, to 25% in this last survey. We are observing that managed fund investors are becoming increasingly aware that their returns will experience occasional fluctuations, and are prepared to stick by an investment strategy” said Mr Perry.
Confidence in residential investment property returns stabilised after two quarters of steep decline. 15% of respondents said they had confidence in the returns from this sector compared to 13% in June. Term deposits were also recovering slightly, with 11% saying they would consider them for investment, compared with just 9% last time.
Confidence in shares in public companies slipped from 14% to 11% in the wake of the turbulence in the Forestry and Telecommunications sectors.
“Overall the findings of the September survey are not surprising,” said Roger Perry.
“It mirrors the mood of the country and the local share market, especially when this is combined with the impact of higher petrol prices and a weak New Zealand dollar. Despite all these disturbances, its encouraging to note that investor confidence remains positive, if only just”
For further information please contact
Chief Manager Investment Services
ASB Bank Limited
Telephone: 0-9-377 8930 or 025 877 468.
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Telephone: 0-9-306 5808 or 025 485 755