Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Kiwi investor confidence rises before the latest turmoil

Kiwi investor confidence rises before the latest market turmoil

• Investor confidence rose slightly over the third quarter from nett +16% to +19%
• Belief that rental properties provide the best return has fallen to lowest level in four years
• In Auckland, the view of personal home providing the best return has surpassed rental properties for the first time since 2016
• KiwiSaver is viewed as the best bank product for return on investment, overtaking term deposits

Confidence amongst Kiwi investors lifted over the third quarter, following a significant decrease in the June quarter.

The latest ASB Investor Confidence Report showed nett investor confidence, the difference between those who thought return on investment would improve in the year ahead and those who thought it would get worse, had risen from +16% to +19% in the three months to September.

Sentiment for the third quarter was the same as the third quarter of 2017, however overall sentiment was still significantly higher than the +3% low seen at the start of 2016.

For the third quarter of the year, investor confidence rose in every region across the country, except for Canterbury where it dipped slightly from 19% to a still-high level of 18%.

“There are a huge number of things going on for investors to think about at the moment,” ASB senior wealth economist Chris Tennent-Brown says.

“During the third quarter, the sharemarket was strong, interest rates were low, and there was a lot of uncertainty about the property market, so it was good to see a high level of confidence despite this.

“As we have seen in the fourth quarter, this confidence doesn’t always translate into positive market conditions, and the last couple of months have been challenging for investors with exposure to declining sharemarkets,” Tennent-Brown says.

Despite sharemarket volatility and potential changes in the property market, respondents were increasingly positive when it came to their investments. Some 29% expected returns from their investments in the next 12 months to increase compared with 27% last quarter, and 42% expect returns to stay the same compared to 40%, while 10% thought it would decrease.

Best returns
Personal homes continued to be viewed positively with 23% of respondents viewing their own homes as the best investment for good returns, unchanged from last quarter. This was followed by rental properties with 16%, according to the report, the lowest level in more than four years.

“The changes to rules regarding property (including the bright-line extension, the Overseas Investment Amendment Bill, and other potential changes) are targeting investments rather than the main family home, and that is a logical reason for the divergence we are seeing between confidence in owner-occupied and rental properties,” Tennent-Brown says.

In Auckland, perception of respondents’ own homes providing the best return on investment has increased to surpass rental properties for the first time since Q4 2016.
Perceptions of term deposits also recovered slightly, with 11% viewing this asset as the investment giving the best returns, up from 9% in the previous quarter.

For the first time in more than four years, KiwiSaver was viewed as the best bank product for return on investment with 13%, up from 9% last quarter.

“This result was pleasing to see, given how low the returns on term deposits are these days, and how well some KiwiSaver funds have performed over recent years, including the year ending September 30,” Tennent-Brown says.

An eye on the fourth quarter of 2018
The survey was taken over the third quarter, prior to the current period of sharemarket volatility. Accordingly, it will be interesting to see how perceptions change in the survey period over the current quarter, Tennent-Brown says.

“We had a similar period of sharemarket volatility in February, but that didn’t lead to a collapse in confidence over the subsequent quarter.

Nonetheless, the survey did show a decline in nett investor confidence from one quarter to the next (from 21 in Q1 to 16 in Q2). There can be significant volatility in sharemarkets from time-to-time, and it’s important that investors can focus on the long-term gains rather than the short-term ups and downs at times like this.

“Periods of market volatility often aren’t a great time to switch well-planned investment strategies, but are a good time to take stock of why you’re investing, your time frame, and tolerance for some inevitable ups and downs,” Tennent-Brown says.

“In addition, when there are new uncertainties stemming from new rules, regulations and potential tax changes like we are seeing with property, it highlights the importance of seeking out good advice from professionals.”

ASB reports covering a range of commentary can be accessed at our ASB Economic Insights page:

@ASBBank @ASBMarkets


© Scoop Media

Business Headlines | Sci-Tech Headlines


Grey Power: Is Disappointed To Learn Of More Bank Closures

Many older people are being left without essential services because of cost cutting and the march of modern technology. It is now expected that most banking transactions can occur via the internet or telephone. Jan Pentecost, President of the Grey Power ... More>>


Economy: Supply Chain On Brink Of Overload Says National Road Carriers

The New Zealand supply chain is on the brink of overload and it looks like the upcoming peak imports season may push it over the edge says National Road Carriers Association (NRC) CEO David Aitken. “Worldwide supply chains are in disarray,” says Mr Aitken. ... More>>

Retail: Supermarkets Announced As Government’s Second Market Study

The Government has today launched a market study to ensure New Zealanders are paying a fair price for groceries. More>>


Statistics New Zealand: Retail Sales Recover In The September 2020 Quarter

Retail sales values recorded the largest September quarter rise since the series began in 1995, Stats NZ said today. Spending on major household items, vehicles, and groceries contributed to the strong 7.4 percent ($1.8 billion) rise in total ... More>>

Kea Aerospace: New Zealand Flies Into The Stratosphere

Development has started on a solar-powered, unmanned aircraft that can fly in the stratosphere continuously for months at a time. The zero-emission aircraft will carry a suite of imagery equipment that will be game-changing for many industries, vastly ... More>>

Stats NZ: Births And Deaths: Year Ended September 2020

Births and deaths releases provide statistics on the number of births and deaths registered in New Zealand, and selected fertility and mortality rates. Key facts For the year ended September 2020: 57,753 live births and 32,670 deaths ... More>>


Forest & Bird: Kākāpō Wins Bird Of The Year 2020

The nation has voted and Aotearoa New Zealand has a new Bird of the Year. New Zealand’s moss-colored flightless parrot has climbed to the top-spot for the second time in Forest & Bird’s annual Te Manu Rongonui o Te Tau/Bird of the Year competition. ... More>>