Investor confidence hits two-year high

FIONA ROTHERHAM
Last updated 13:00 13/11/2012
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HEADING UP: More Kiwis expect housing prices to keep rising in the year ahead.
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Rents are surging

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Investor confidence has returned to its highest levels in two years, according to the latest ASB Investor Confidence Survey.

The confidence index jumped five points to a net 13 points over the three months to the end of September, with investors feeling less risk averse given a settling global economy and the kick-off of the long-awaited Christchurch rebuild.

“The European Central Bank's actions and the stable outcome from the second Greek election have reduced the number of bad news stories that were dominating the media earlier in the year and this appears to have improved the attitude and outlook for New Zealand investors,’’ said ASB head of wealth advisory Jonathan Beale.

The return of investor confidence to levels not seen since the end of 2010 means investors are taking a less defensive stance on where they place their money and are once again considering higher risk and higher yield investment classes, he said.

Rental property has returned to historically high confidence levels and regained its top position as the most attractive investment class in Auckland. It's second elsewhere in the country just behind term deposits but has jumped five per cent outside of Auckland in the past quarter.

In Auckland, one in four investors think property will offer the best returns in the next year, given interest rates remain at such low levels and housing demand outstrips supply. Confidence in investment property is the highest for the past three years with Aucklanders optimistic about the opportunity for capital gains.

“The continuing strength in investment property and lift in managed investments appears to have come at the expense of less risky investment classes such as terms deposits, both of which recorded small declines in confidence over the quarter,” said Beale.

“There are early indications that previously defensive investors are gaining more of a risk appetite and are starting to focus on higher potential yields instead of defaulting to the more secure options for their money.”

Survey data also indicated Kiwi investors were still cool on the stockmarket. Only 7 per cent of investors surveyed believed the sharemarket will offer the best returns over the next 12 months. “New Zealand investors are continuing to look at the share market as a whole as the least attractive investment option which is at odds with the broad public interest shown towards some recent blue-chip investment offerings," Beale said.

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The cautious view by investors may be due to a historical perception of relatively high risk, he said.

Investors also seemed to prefer managed funds over a self-managed share portfolio.

The survey involved 796 online interviews of adults nationwide.

- BusinessDay.co.nz

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