Wednesday 24th July 2019
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Asians are far more confident in New Zealand’s financial markets than Pacific Islanders and Maori while the confidence levels of most ethnicities eased a little in the Financial Markets Authority’s latest annual survey.
Men are also more confident in financial markets than women and the higher a respondent’s income, the more likely they were to express confidence.
The survey, the seventh by the FMA and the second conducted online using Buzz Channel’s research panel, buzzthepeople, found overall confidence in New Zealand financial markets steady at 65 percent compared with 66 percent in last year’s survey.
The survey, conducted between April 23 and May 7, included 1,037 people over 18 and weighted by age, gender, region and ethnicity to ensure the results were representative of the New Zealand population. It has a 3 percent margin for error at the 95 percent confidence level.
However, most respondents’ confidence levels were fairly lukewarm with 56 percent describing themselves as “fairly confident”, only 9 percent choosing “very confident” and 15 percent choosing “don’t know.”
“While investor confidence has been stable over the past two years, it’s encouraging to see that it has steadily improved since we first started the survey six years ago,” FMA chief executive Rob Everett says.
The “very confident” respondents have increased from 4 percent in 2013 when the “fairly confident” were 54 percent.
Those who are not at all or not very confident fell to 20 percent in the latest survey, compared with 32 percent in 2013.
“Not surprisingly, investor confidence can be impacted by factors such as market volatility or global events, so we expect to see investor confidence move around from year to year,” Everett says.
“What’s more important is the longer term trend which clearly shows investor confidence on the rise.”
Those who are clearly more active investors, "people have made a conscious decision" to invest, tend to be more confident, Everett says. Of those in managed funds, 19 percent are "very confident" and 66 percent "fairly confident." Of those whose only investment is KiwiSaver, only 9 percent are "very confident" and 55 percent "fairly confident."
The latter result is one reason the FMA has put so much effort into KiwiSaver, encouraging providers to help ensure their members are making appropriate choices rather than sitting in default funds, Everett says.
"We have made a lot of effort in the last couple of years. We've been trying to get providers to drive more engagement and some of that is beginning to work. We still feel most providers could do more."
Everett says the FMA is aware that some people tend to have long memories, particularly about disasters such as the 1987 share market crash and the more recent collapse of many finance companies - the FMA website shows 51 finance companies have gone bust since 2006.
The survey shows Asians were the most confident with 67 percent expressing confidence compared to only 48 percent of Pacific Islanders and 49 percent of Maori. Pakeha/New Zealand European respondents came in at 60 percent while other Europeans were at 52 percent. The latter and Maori showed the largest falls from 2018 when confidence among other Europeans was at 61 percent and at 57 percent among Maori.
About 57 percent of female respondents expressed confidence compared with 65 percent of men.
Of those with personal incomes of more than $100,000, 82 percent expressed confidence, while only 46 percent of those earning less than $20,000 were confident in financial markets.
About 86 percent of those surveyed had investments, with the most common being KiwiSaver for 66 percent, term deposits for 34 percent, shares for 17 percent and managed funds for 14 percent.
Only 14 percent owned residential property as investments and only 12 percent had superannuation other than KiwiSaver. For 32 percent of those surveyed, KiwiSaver was their only investment.
Reserve Bank figures show investors accounted for 17.6 percent of new mortgage lending by banks in May, the latest available data, down from 23.7 percent a year earlier. Mortgage borrowing by investors has been declining in recent years because of the central bank's requirement that they hold higher deposits.
About 60 percent of those surveyed this year said they are confident that New Zealand’s financial markets are effectively regulated, although only 56 percent said they were aware of the FMA. Four in 10 agree that the FMA supports the integrity of New Zealand’s financial markets.
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