Investors confident in the face of a slowdown

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Although the economy is destined for a slow-down of unknown magnitude investors are confident that they will be able to generate good investment returns.

Monday, January 23rd 2006, 6:37AM

According to the latest ASB Investor Confidence report there has been a rise in the number of people who think their returns will be better this year than last.

It says a net 16% of those surveyed expect the return from their investments to be better this year than last year. This is up 3% on the previous quarter's survey.

"While this is below the net 24% reported 12 months earlier, this level of expectation still points to a group of generally optimistic investors," ASB says.

While the Reserve Bank is trying to jawbone down the property market New Zealanders still see residential rental property as the asset that is most widely expected to provide the best return.

Term deposits were ranked second on 13% (up 1%). Thanks to the 7% plus rates on offer term deposits had a strong end to the year and look to be closing the gap on residential rental property.

Shares were rated third on 10%, followed by managed investments on 9%.

Those in the top of the North Island and South Island continue to prefer residential rental property ahead of managed funds. Those in the lower North Island, who had previously held a more neutral position with the two asset classes had a major reversal in the fourth quarter with a 18% change leading to a 20% preference for residential rental property (from 2%).

One of the big changes in the latest survey was amongst those commenting on their main investment.

Confidence amongst those with residential rental property as their current main investment decreased 2% to 61%. Conversely, confidence amongst those with equities as their main investment leapt 23 points to 67%.

"A word of caution is still appropriate. This latest report has thrown up some more volatile results than we normally see, perhaps as a result of the confusion between forecasts for future results and current asset performance," ASB economist Anthony Byett says.

"There was also some slippage in confidence over the quarter."

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