Sharp Rise In Investor Confidence

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EMBARGOED UNTIL 6AM, TUESDAY 24TH APRIL 2001

SHARP RISE IN INVESTOR CONFIDENCE

Investor confidence has rebounded sharply in the first quarter of 2001, according to ASB BANK’s latest Investor Confidence Survey.

It shows that 30% of respondents now expect better returns from investments over the next year. This has increased from 24% in the December quarter and is close to the highest level of investor confidence since the survey began in May 1998.

The net response, (the difference between those that expect better returns and worse returns from their investments in the upcoming year) has increased to 16%, up from 2% in the December quarter.

ASB BANK Chief Manager Investment Services, Roger Perry, says the improvement is a marked contrast to the sharp fall in overseas share markets that occurred during the quarter.

“The survey suggests that investors believe the worst is behind us. In comparison to previous investment cycles, investors are showing a growing maturity by developing a long-term view in their investment, rather than the knee-jerk reaction to the rest of the world that was once the case.

“Investors may also be more optimistic about investment prospects in New Zealand, which our survey history shows has been in decline. Investors may expect that gains from the rural and export sectors will flow through to the wider business economy in due course.”

Investor optimism is reflected in the share market by the increase in the number of respondents favouring New Zealand shares as the best return on investment. This has increased from 10% of respondents choosing to invest in the local sharemarket in the December quarter, to 13% over the March quarter.

Continued preference towards Managed Funds reinforces the long-term view New Zealanders are taking with their investments. 23% of respondents surveyed said this was their preferred investment for best returns, which is down only slightly from 24% in the December quarter, and 25% the quarter previous.

Such confidence has not flowed through to residential rental property, which has been in steady decline for 18 months. It now drops to the lowest level since the survey began.

“In December 1999 21% of respondents thought residential rental property was the most likely investment to give the best return. Now, just 10% of respondents favour this asset class, down from 13% in the last quarter. This drop is in spite of the decline in interest rates in the first few months of this year, and consequent pick up in activity in the residential market,” Mr Perry said.

Ends.

AD- HOC SPECIAL TOPIC: Please note: The special topic due to be released with this Survey focused on New Zealanders’ views on investment for retirement. Results of this are being finalised and will be released next week.

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