Investors stay calm as confidence edges up

Wednesday 9 November 2011, 7:53AM

· Investor confidence climbed slightly over Q3, amid overseas market volatility.
· Term Deposits and Rental Properties both fall in popularity.
· KiwiSaver shrugs off Budget 2011 gloom to soar to new record highs.

Investor confidence has ceased its six-month downward slide to edge up over Q3, according to the latest ASB Investor Confidence Survey.

“The ASB Investor Confidence Index climbed three points to the end of September 2011 to a net 6 percent, despite turbulent news from overseas markets,” says ASB Head of Private Banking and Wealth Management, Jonathan Beale. “It appears that Kiwi investors have stayed calm amid the threat of European government defaults and a European banking crisis. It remains to be seen whether the evolving situation in Europe will impact local investor confidence in the coming months.”

Term Deposits were the most popular investment class for the sixth consecutive quarter, with a total of 18 percent of respondents believing that they would give the best returns. “Investors are still behaving cautiously, with many looking to the traditionally lower risk option of Term Deposits as their investment of choice. This comes even though the Reserve Bank has signalled that interest rates are likely to remain low until next year.”

KiwiSaver reached second equal place with Rental Property, with 13 percent of respondents saying they offered the best returns.

“This is the highest ranking KiwiSaver has achieved since the survey began,” Mr Beale says. “KiwiSaver has recovered from its fall last quarter, shrugging off the Budget 2011 announcements and returning to its earlier popular trend. Our results also show that almost half of respondents, a record 47 percent, are currently using KiwiSaver. Out of those using or intending to use KiwiSaver, a total of 64 percent say it will be their primary source of retirement – again the highest level we’ve seen in this survey.”

Rental property has now reached its lowest level of popularity since Q3 2002. “The effects of the property slump still appear to be taking the shine off rental property investments, despite the current low interest rates,” Mr Beale says.

Meanwhile Bank Savings Accounts edged down to fourth on 10 percent, equal with Managed Investments. Public Shares was last out of the six asset classes, level on 8 percent.