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Investor confidence jumps in September quarter

Tuesday 28th October 2003

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The booming property market has helped to boost investor confidence by seven percentage points in the September quarter, according to the latest ASB Bank investor confidence survey.

The bank says that it’s the biggest jump in overall investor confidence New Zealand has seen since the rebound after the September 11 terrorist attacks.

The renewed confidence is also due to a more stable global environment and good returns from key world markets, ASB Bank head of relationship banking and financial services James Mitchell says.

"Confidence in returns from residential rental property is at its highest recorded level since we began the survey five years ago but how long it will continue remains questionable," he says.

The results show that confidence in returns from residential rental property at 22% continue to soar above other investment types and are double the next most favoured investments; banking savings, term deposits and managed investments.

Confidence in returns from managed investments edged up slightly from 10% to 11% of respondents believing managed investments provide the best returns, following a period of decline.

"What’s driving the improvement in investors’ confidence in returns from managed funds is strong performance in major sharemarkets and hence better returns from managed funds. Major sharemarkets are performing well, particularly the NZX the FTSE 100, while the DOW and ASX have also produced solid results for the year. Over the past year the MSCI World returned 24.3%.

"If performances of this type continue in sharemarkets, we should see improved confidence in both shares and managed funds, particularly after the property market inevitably peaks.

"If you combine term deposits and bank savings accounts, then bank investments were the second most popular category of investment with 18% of respondents believing these will provide the best returns," Mitchell says.

"For now New Zealanders continue to favour the booming housing market. However, investors should be wary of over-investing in one category.

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