Capital Markets: Good reasons to be confident

The FMCA will continue to transform the financial environment, says Simon Power. Photo / Dean Purcell

But investors need to re-evaluate their situation often, says Simon Power.

Last year in this report we talked about consumer confidence being up and business confidence sitting at a 20-year high. While we have now come down from that peak, confidence levels in New Zealand remain high.

This is on the back of another strong year for the New Zealand economy, where we saw growth of 3.3 per cent over 2014. Much of the growth we are seeing, unsurprisingly, is centred on Auckland and Christchurch. A key part of that growth in Auckland is driven by the increasing house prices.

This is much more pronounced than any previous cycle over recent times. We think some of this may be attributed to a "leapfrog effect" - that is, after the last property cycle during the period 2003-2006, in which Auckland grew at a slower rate than the rest of the country, we are now watching prices jump up again through this growth cycle we are currently experiencing. As for Christchurch, while the residential earthquake re-construction is maturing, there's more to go in CBD rebuild, which we expect will continue to fuel growth for some time.

The digital revolution continues to impact on our lives. It is changing the ways we can interact and do business, opening up new opportunities.

One growing digital disrupter is the industry of crowd funding. While our economy continues to grow, many new businesses struggle to raise sufficient initial capital to get off the ground.

Crowd funding is providing a platform that matches a new business venture with a collective group of people willing to invest or contribute funds to that business.

New sources of funding can promote new business in ways we have not seen before.

Growth has also been reflected in Kiwis' investment balances representing 2,487,780 KiwiSaver members as at March 31, 2015. The FundSource Retail Managed Funds report for March Quarter 2015 shows the total amount invested in managed funds in New Zealand is now at $52 billion. This trend is seen most strongly in the increase of funds within KiwiSaver schemes, which make up more than $27 billion, (according to that same report) of the total pool of managed funds. Westpac recognises the strategic importance of New Zealand having a strong long-term savings platform.

As one of the four major KiwiSaver providers, it is proud to be appointed by the Government as a Default Provider, and rated Platinum - the highest rating awarded by the Australian research house, SuperRatings - for the Westpac KiwiSaver Scheme.

Importantly, this advance in investment balances is helping to transform the New Zealand investment and capital markets by developing a deeper, more liquid investment base, which in turn provides opportunities for our companies looking to grow and raise capital.

During 2014 and 2015 we have seen a plethora of new share market listings in New Zealand and Australia. This further illustrates the high levels of confidence in the economy and across the market generally.

However, Westpac recently completed its 2015 Grow New Zealand survey across small and medium sized businesses, the first conducted since 2011. The latest survey did confirm that confidence is high, but it also highlighted that many out there have a heightened awareness of the importance of balancing work and lifestyle - and of having a retirement/exit strategy. Our market continues to evolve under the watch of The Financial Market Authority (or FMA).

The Financial Markets Conduct Act 2013, now being implemented, will continue to transform the investment industry. One of its key drivers is to deliver consumer benefits. As a result we can expect to benefit from new regulations designed to provide greater transparency and confidence in both our investment markets and the investment advice an investor can expect.

Fundamental to delivering the highest quality investment advice, personalised and clearly understood, is ensuring the investor has all the information he or she needs to make an informed decision.

Westpac's commitment to the capability and expertise of their people is demonstrated by having one of the largest authorised financial adviser teams in New Zealand, as well as a wide-reaching national footprint, designed to deliver outcomes that meet clients' investment goals and aspirations, wherever they are in life.

For Westpac, that means investing in the capability of its people every step of the way. For investors, that means seeking quality advice to help you understand what your specific goals are and having the discipline to hold to them.

It is important to not only take good financial advice, but to make sure it is updated on a regular basis. And it's not just markets that can change - it's also personal circumstances. Assessing long-term objectives is a key part of anyone's plan to securing your financial future.

Maintaining the focus, re-assessing in line with your personal goals and objectives on a continuing basis is a necessary component in staying on track - no matter where the New Zealand and world economies are at in terms of their growth cycles.

• Simon Power is GM Business Bank & Wealth for Westpac.