Investor confidence remains high
Shares join residential property as the asset class investors think will provide the best returns.
Monday, October 18th 2004, 6:00AM
The mood of the country’s investors remains optimistic, with confidence as measured by the ASB Bank Investor Confidence Survey remaining in excess of a net 20% for the second consecutive quarter.
Only once in the past 10 years has confidence levels eclipsed the current net 21% level, and that was in the last quarter of 2003 when investor confidence peaked at a net 24%.
Never before has investor confidence stayed above the net 20% mark for more than one quarter.
Given the high returns that have been achieved by investors across a range of asset classes over the past 12 months, which has a natural tendency to curb immediate future expectations, this level of confidence is extremely encouraging.
It also has to be seen against the backdrop of widespread talk of a New Zealand economy about to slow and concerns about the effect of high oil prices on the global economy.
A feature of this quarter’s results is the growing confidence being shown by sharemarket investors, a trend that has been developing over the past 12 months.
The New Zealand sharemarket has been performing well and the gross return of New Zealand shares was 5.1% over the September quarter as measured by the NZX50 Index, and 24% over the 12 months to September 2004.
Of those with shares as their main investment, 67% consider shares will provide the best investment returns.
This confidence is up strongly on 2003 and now puts share investors on a par with residential property investors, with a similar number ( 67% ) remaining convinced that property offers the best return.
It would appear that the strength of the NZ economy is encouraging investors in general to look to the promising long-term prospects for New Zealand and, in particular, is encouraging property investors to look beyond the present cyclical housing slowdown and see the bright longer term outlook for housing.
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