According to new research from ASB, investor confidence has fallen to its lowest level since the days of the Covid-19 lockdowns.
Confidence among New Zealand investors has dipped to its lowest level since the COVID-19 pandemic as a flat housing market, sharemarket volatility, and global uncertainty weigh on views about returns for the coming year.
The latest ASB Investor Confidence Survey showed nett investor confidence, especially the difference between those that think investment returns will improve versus worsen in the coming year, has fallen from nine percent in Q1 to only one percent for the three months to June.
Sentiment fell across all regions in the first half of the year, with the lower North Island experiencing the biggest drop from nett 12 percent in the three months to January to negative six percent this quarter, an 18 percent decline. Aucklanders were the most positive, with nett 10 percent expecting returns to improve in the coming year.
ASB senior economist Chris Tennent-Brown said the survey reflects a range of global and domestic pressures.
“It’s been a challenging six months, with markets affected by uncertainty around tariffs and global issues, alongside concerns at home, such as the housing market which hasn’t bounced back the way people expected it to. This has led to a more pessimistic tone in overall investor confidence, which seems to be suffering from the same weak sentiment we’re seeing in consumer confidence,” said Tennent-Brown.
“Sentiment is the weakest in the lower North Island, and in contrast, in Auckland the mood is more positive, even though the region faces some of the same challenges.”
The survey showed general confidence is highest among those under 39-years-old, with those over 60 the least optimistic. Tennent-Brown said this was in part a reflection of where the different age demographics tend to hold their assets and where they are in the investment life cycle.
Of those surveyed, 51 percent said they were very concerned about the impact of global political instability or uncertainty on investments. Forty-seven percent felt this way about international geopolitical tension and conflict and 43 percent about international trade policies, including tariffs. Half of those who had concerns had made, or considered making, changes to their investments as a result.
“These global issues were really impacting many investments around April in a negative way, but subsequently, markets have improved a lot and are now knocking around record highs in the case of the US share market. Understandably, global issues are still weighing on Kiwi investors’ mind,s and there is still a lot of uncertainty both here and abroad. However, it was pleasing to see confidence in managed investments lift over the quarter, although confidence in KiwiSaver did ease within the survey when investors were asked which investment they expect to provide the best return,” he added.
“Volatility in investment markets is always a challenge. The ups and downs of investment values can help investors understand their tolerance for taking risks, and ability to ride out negative periods in financial markets. The second quarter highlighted the importance of sticking with long-term strategies and savings goals, rather than chopping and changing to try and time markets.”
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