Investor confidence drops in fourth quarter

Tuesday 27th January 2009

New Zealand investor confidence slumped in the fourth quarter, luring more people to the relative safety of term deposits and bank savings, according to ASB Bank's survey.

Investor confidence sank to a net -20% in the final three months of 2008 from a net 3% in the third quarter. The fourth quarter was "one of the most volatile periods many people will have ever experienced," said Jonathan Beale, ASB's head of investment services. The advent of the retail deposit guarantee scheme probably helped lift the allure of term and bank deposits, he said.

Confidence sank in the fourth quarter top the lowest level since the ASB began the survey in 1998. In the latest three months, `18% of those polled favoured term deposits, down from 21% in the third quarter. The number who opted for bank savings was unchanged at 16% while those favouring rental properties held steady in third place at 15%, the survey showed.

Managed funds and units trusts were in fourth place on, shares were at 7% and confidence in KiwiSaver edged up to 6% from 5%.

"Investors have had a bumpy ride and may be prepared to forsake higher possible returns in some of the more volatile investments in favour of a good night's sleep and a more modest but reliable return," Beale said.

Attitudes toward shares and managed investments were "surprisingly resilient" given the turmoil in share markets in the fourth quarter, he said.

The past year there has been a 15 percentage point increase in the number of investors who view KiwiSaver as being their primary means of retirement saving, according to the survey.

"While the 2009 economic environment will be challenging, it is also important to realise that it may open up some investment opportunities to take advantage of, which could bear fruit in the longer term," Beale said.

By Jonathan Underhill

Comments from our readers

No comments yet