ASB says big lift in investor confidence, but still negative

Investor confidence lifted strongly but remained negative in the second quarter, ASB says.

Overall, investor confidence improved a net 14 points, from -25 per cent to -11 per cent, the first positive move for the measure since the third quarter of 2008.

While 8 percentage points of the improvement was recorded in June, ASB head of investment services Jonathan Beale said the first few 'green shoots' started to appear from mid-March.

Equity markets began to show signs of recovery as a sense started to take hold that the global recession would not get much worse, he said.

"This 'could have been worse' factor has no doubt contributed to the growing drop in pessimism seen over the quarter."

The latest ASB investor confidence report published today found 17 per cent of the sample thought bank savings accounts gave the best return, down from 21 per cent in the previous quarter but remaining well regarded.

Beale said that with early signs of more stable financial markets it was likely a wider range of investment categories may now regain favour.

"House prices have continued to remain high relative to incomes, despite having dropped over the last year, and with mortgage rates being low confidence in rental property investment has started to come back into favour," he said.

Confidence in term deposits lifted a net 1 per cent over the quarter to 14 per cent, countering recent falls which happened as deposit rates fell in line with the plunging official cash rate.

In the most recent quarter interest rates edged up as competition for retail deposits continued to heat up, ASB said.

Managed funds attracted relatively lacklustre support from respondents, moving down a net 1 per cent to 9 per cent, although the monthly figures showed a late sprint in June with confidence increasing to 13 per cent from May's 5 per cent.

People saying they either used KiwiSaver or intended to do so had risen steadily since first being measured in June 2007, with nearly a third of respondents now saving with KiwiSaver.

Confidence that KiwiSaver would be enough to support respondents in retirement increased by 3 points to a net 23 per cent, but the vast majority of respondents still saw the need for some form of supplementary retirement support.

- NZPA