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Investor confidence at seven year high

Monday 23rd April 2007

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Investors are expecting the good times to roll on with more confidence in their investments than at any time since 1999, according to the ASB investor confidence survey out today.

Overall investor confidence rose in the first quarter of 2007, up one point to a net 25%. This record level of investor confidence in the seven-year old survey has built up over four consecutive quarters, from an historical low of just 9% in the first quarter of last.

The survey, which essentially surveys whether investor think investment returns will improve or deteriorate, will be just one more reason for Reserve Bank governor Alan Bollard to hike interest rates on Thursday.

Bollard will be displeased to see that residential property was still rated the hottest asset class.

The rise in confidence was fuelled by an increase in people who expected investment returns to be better than last year, up four points to 36%. This was offset a slight increase in people who thought their returns would be worse than last year, which was up two points to 10%.

"The growing investor confidence we saw throughout 2006 has carried on into 2007," said ASB head of investment services, Jonathan Beale.

"Given that confidence levels were at record lows at the beginning of 2006, it's a remarkable turnaround."

Residential rental property remains the highest ranked asset class, up slightly to a net 21%; however this result is still some way short of its record high of 25% back in 2000.

Managed funds maintained their position as the second most popular type of investment, holding steady at 14%.

Diversity of investment appears to be the key, with continued growth in confidence in residential rental returns, said Beale.

The continued strong performance of the sharemarket, both in New Zealand and overseas, has led to managed funds holding steady in number two position, he said.

"While the jitters caused by the wobble in China during February may have translated into the slight decrease in confidence in shares, down 1%, that impact has not flowed through to managed funds."

Awareness of the Government pension scheme, KiwiSaver, was rising ahead of its July 1 launch with 77% of respondents reporting awareness, up from 72% last quarter.

Click here to view rentals statistics.

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