Investor confidence continues downward trek, KiwiSaver takes a hit

Investor confidence continued to decline over the three months to June, according to the latest ASB Investor Confidence Survey.

The index fell by seven points to a net 3%, suggesting those who believe their investment returns will get better or worse are almost evenly split, ASB’s head of Private Banking and Wealth Management Jonathan Beale says.

“Overall the index has fallen in the second quarter, but looking at a month-by-month breakdown we can see that confidence levelled out to an average net 3 percent after taking a plunge in March following the February quake,” he says.

Mr Beale said the strengthening local economy could create more optimism among investors in the coming months - but that the recent uncertainty around the US and Europe may mean that investors continue to look to perceived safer investment options.

Caution reigns amongst investors
A total of 21% of investors said term deposits offered the best value of all investment types, up 2 points from last quarter. Rental property climbed one point to 16%t, followed by bank savings accounts steady on 12%. KiwiSaver dropped 3% to 9%, equal with managed investments / unit trusts / superannuation. Shares climbed 2 points to 8%.

“The results indicate investors are incorporating their desire for security into their assessment of best returns, and are still turning to Term Deposits and Rental properties over other investments. The attitudinal shift was driven by respondents in Auckland, where investor favour moved back to Term Deposits, up from 17 to 22 percent, ahead of rental properties which fell from 19 to 14 percent. This could well be due to changes to tax on property investments announced in Budget 2010, which came into force on April 1 2011. However the rest of the country did not share this sentiment, with rental property climbing 3 points to 16 percent and Term Deposits climbing just 1 point to 20 percent," Mr Beale said.

KiwiSaver popularity stalls
The changes to KiwiSaver announced in Budget 2011 appear to have shifted investor perceptions of KiwiSaver. The swing in attitude can also be seen in the 6 percent drop in the number of people that think KiwiSaver will encourage New Zealanders to save for their retirement, from 75 percent to 69 percent, he said.