Investor confidence takes off again

Investor confidence bounced back to near record levels in the second quarter of 2004, thanks to a predominance of positive economic news, says the ASB Bank survey out today.

Results show a net 21 per cent of respondents believe investment returns will be better this year, up two percentage points from the first quarter of 2004.

ASB's head of relationship banking, James Mitchell, said confidence was relatively stable.

"This reflects the general sentiment that a lot of the surprise and volatility expected by investors has been priced into markets and investors believe the economy is in robust shape.

"While factors like rising oil prices and the threat of terrorism are of concern to investors, the international equity markets have performed well, and New Zealand companies continue to report strong results."

Confidence in residential rental property remained stable in the second quarter, although the gap between this and the other investment types measured has closed over recent quarters.

At the peak of the recent property cycle the survey showed twice as many respondents thought residential rental property provided the best return compared with the next highest investment type.

"Although we have not seen the widespread fear of a residential property downturn realised, we are seeing the gap in confidence between residential rental property and other investment alternatives, such as managed funds and term deposits, slowly narrow," said Mitchell.

Confidence in managed funds as a main investment jumped 13 points.

Mitchell hoped the investors would diversify their portfolios more, with fewer investors taking more risk than necessary by relying on the success of a single asset class.

Overall, 31 per cent of people expected their net returns from investments to be better this year than last year, unchanged from the first quarter of 2004.

Only 10 per cent believe their net returns from investments will be worse, down 2 per cent on the first quarter. Close to half of those surveyed believe their net returns will stay the same.

- NZPA