Confidence is shares boosts investor sentiment
Investor confidence was down slightly in the first quarter of 2004, but remains strong thanks to a growing faith in sharemarket returns.
Monday, April 26th 2004, 6:23AM
"The stellar returns in the share and property markets in the last year have shaped people’s expectations," ASB Bank Head of Relationship Banking and Financial Services James Mitchell says.
"Investors are very positive because these returns have been high. However, it is only natural that doubts are starting to surface about bettering the returns gained in 2003." "While we’ve seen a slight drop off in confidence overall, and specifically in residential property investment, it appears that people are beginning to trust in the strength of sharemarkets." The survey shows that in the "confidence in your main investment" measure, there was a dramatic increase in confidence amongst those investing shares, up 20 points to a net 59%. This optimism is in line with performance of the New Zealand sharemarket, which has risen by more than 30% in the last 12 months as measured by the NZSX50 Gross Index. Confidence amongst those with residential property as their main investment was down 17 points to a nett 14%. "Investors are acknowledging the changing dynamic in the relationship between investment in residential property and shares," Mitchell says. "The good news about local and global sharemarkets is encouraging increased confidence in equity returns, as people’s expectations are no longer built on the pain of the recent bull markets." "Conversely, some reservations about returns from residential property are creeping in but, for now, overall confidence remains high." Mitchell says the survey indicates momentum may be moving towards a more balanced approach to investments. “There has been a massive focus on the housing market over recent years and less focus on the importance of diversification. Hopefully, we are now seeing less reliance on the success of one asset class by investors.”
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