Investor confidence plummets to 3-year low

Investor confidence plunged to a three-year low, according to the ASB Investor Confidence report today.

Only a net 9 per cent of those surveyed expect returns this year to improve on the previous year. That compares with 16 per cent in the last quarter and 12 per cent in the September quarter.

Investor optimism for even higher returns than had been achieved in recent years had been surprising in previous quarters, said ASB's head of investment services, Jonathan Beale.

"A more pessimistic outlook from investors is probably a reflection of the general market sentiment that we are experiencing a slowdown in the economy."

"The double-digit performance seen in many asset classes over the last few years couldn't go on forever."

Residential rental property fell 4 percentage points to 20 per cent as the preferred investment for investors while managed funds gained 7 points to 16 per cent.

Confidence among investors with managed funds as their main investment surged 18 points to 57 per cent. Those in rental property fell one point to 60 per cent.

Me Beale said there had been a surge in confidence among investors in managed funds. The survey was taken before recent changes to tax rules that improve the position of managed funds.

The changes would further improve the competitiveness of managed funds, Mr Beale said.

He noted the New Zealand dollar began its drop against major currencies in the last quarter, while local and international equities performed well, increasing the desirability of managed funds.

Higher interest rates, slowing growth in house prices and an increase in the number of days it took to sell a house had affected yields and capital gains for rental properties, Mr Beale said.

- NZPA