Investor confidence lowest since 2003

Confidence among New Zealand investors has dropped across most asset classes, although residential rental property is still expected to provide the best return, according to the ASB Bank's Investor Confidence report for the second quarter.

Just 10 per cent of respondents expected their net return from investments this year to be better than last year, compared with 24 per cent in the first quarter.

The ASB said it was the lowest level of investor confidence since the second quarter of 2003.

The latest results pointed to a general cautiousness among investors, who were realistic about their chances of improving on what have been generally good returns over the past few years across most asset classes, said James Mitchell, head of ASB's Relationship Banking and Financial Services.

Mitchell said there appeared to be a realisation that investors' expectations of even greater returns in the year ahead might have been overly ambitious.

The main reason for the drop in confidence was predominantly that people who had previously stated they expected their returns to get better, were now saying they expected their returns to be the same, Mitchell said.

The number of people who felt their returns would be worse rose only slightly.

Residential rental property remained the asset class that was most widely expected to provide the best return (over an indeterminate horizon), at 21 per cent.