Record turnaround in sentiment as investor confidence hits a two year high: ASB Survey

Friday 6th November 2009

ASB's quarterly investor confidence survey puts overall investor confidence at its highest level in nearly two years, but at the same time there remains a great deal of uncertainty as to what form of investment will give the best return in the year ahead.

"In the September quarter a net 14% of people surveyed expected a better return on their investment in the coming 12 months," said Nick Tuffley, ASB Chief Economist.

"This is a turnaround of a net 25 points in the space of only three months, the largest change in quarterly confidence in the survey's 11-year history.

"There has been a huge reversal in confidence since March 2009 with a dramatic net 39% improvement being recorded. This rise in confidence has been greater than the level by which it fell following the world economic collapse in late 2008 (a 28% fall in six months)."

Lack of clarity continues about where the best returns will come from

Nick Tuffley said that the latest survey captured the mood of investors at a crossroads.

"Investors believe that things will get better, but there is no consensus as to where the best future returns will be achieved.

"While an appetite to accept a little more risk has come with this return in confidence in the economy, people are still weighing up their options."

He said that the traditional safe havens in uncertain times - rental property, bank savings and term deposits - still headed the list of where investors thought returns will be best, although all had ebbed in popularity in the last three months.

Rental property remained marginally ahead of bank savings as the most popular form of investment (net 16%) but its appeal has tracked down in the last 3 months. Of those who do have rentals as their main form of investment, 57% believe it will offer the best return in the coming 12 months.

"While bank savings, at 15%, is the second most popular investment, of those people who held bank savings as their main investment, only 32 percent felt it would offer the best returns over the next year."

"Conversely, while overall only 6% of respondents currently felt shares offer the best returns, 62% of those who held the majority of their investment in shares were confident shares will offer the greatest return."

KiwiSaver investors increasingly positive

Investors with KiwiSaver as their main form of investment were also increasingly positive about the future, with 41% believing KiwiSaver will give the greatest return in the next 12 months.

"In times such as this, when investors are seeking direction, previous experience shows a greater proportion seek professional advice from their trusted advisers rather than rely solely on their own decision making."

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