Investors’ confidence in returns rides high

Despite signs of an economic slowdown New Zealand investors are brimming with confidence, expecting the net return from investments to be better this year than last year, according to an ASB Bank confidence report for the first quarter.

A net 24 per cent of those surveyed expected an improvement in net returns, up 3 per cent on the previous quarter.

Only once before had confidence been so high since the quarterly survey of up to 1000 investors started in 1998, the bank said.

Residential rental property was the asset class expected to provide the best returns, according to 24 per cent of respondents.

Bank savings accounts were second-ranked by 15 per cent, up from 8 per cent the previous quarter.

Term deposits were third, picked by 14 per cent, up from 11 per cent. Confidence in managed investment returns was static at 12 per cent.

But investors remained wary of shares, with a slip in confidence from 10 per cent to 7 per cent.

ASB head of relationship banking and financial services James Mitchell said this was no big surprise given the decline in the NZSX50 over the March quarter.

First NZ capital strategist Jason Wong on Friday advised investors to sell New Zealand stocks as slowing economic growth, a higher kiwi dollar and rising raw material costs pinched company earnings.

The benchmark NZSX50 closed at its lowest level so far this year, falling 1 per cent to 3010.79. The index has fallen 1.8 per cent so far in 2005 as the Reserve Bank has raised interest rates to a four-year high, sparking concern that slower economic growth will curb profits.

But ASB's Mitchell said the medium-term prospects for New Zealand shares were good.