Kiwis ditch houses for shares

Housing unaffordability may be having an unexpected spin-off: Young Kiwis shut out of the property market are increasingly looking to invest in overseas share markets.

Industry experts say this, combined with a slowing local economy and advances in technology, is beginning to usher in a shift in the way New Zealanders are approaching investing.

Julius Jiang, director of Snowball Securities, an internet-based broker operating in New Zealand, says he has noticed a significant growth in the number of New Zealanders (including millennials) inquiring about investing in international share markets.

Tradtionally Kiwis invest in housing - recent Stats NZ figures show this sector represents almost a third of all investments - but technology is now making it easier for people to work their money anywhere in the world.

In particular tech-savvy millennials - those now aged between 25-39 years - are fast catching on to the benefits of investing their money in ways other than property.

Snowball, incorporated in New Zealand as SNB Finance Holdings, provides clients with an online trading platform enabling investors to buy and sell shares listed in places like China, the United States, Hong Kong, Japan and in big international companies like Microsoft and Google.

"With the property market a bit flat and signs the economy is slowing, investing internationally can offer people an opportunity to invest in much larger markets where economic performance may be stronger," Jiang says.

"New Zealand is no longer an isolated country and technology now gives ordinary people the opportunity to think globally, become global players, enjoy the benefits of diversification and not end up with all their eggs in one basket."

Jiang says millennials make up an increasingly large percentage of the online investor market in the US and recent reports suggest the same may be happening in New Zealand.

A survey undertaken by Deloitte and highlighted in this month's NZ Herald Capital Markets report, showed this generation are not looking towards traditional investment routes but are taking advantage of technology-based investment opportunities.

And the report also quoted findings by Asset Management company BlackRock which shows the millennial investor is using social media and other tech-based apps to do research on where to invest. They are also spending as much as 18 per cent in investment compared to 11 per cent for Baby Boomers.

A report released in the US this year conducted jointly by Canadian media company Visual Capitalist and Morning Brew, a business briefing newsletter owned by media giant Forbes, showed millennials who trade in stocks prefer to do so online.

The report, based on a survey of 9800 people aged 18-35 in North America and Europe, also showed that nearly half prefer to invest in technology (49.7 per cent) compared to energy (11.5 per cent) and real estate (9.9 per cent).

Jiang says while not all people who invest in shares within New Zealand also do so internationally many industries are not represented on the New Zealand share market – automotive and computer manufacturers being examples – and investing offshore as well as here offers an opportunity to diversify.

Being exposed to a single economy can leave investors exposed especially if the New Zealand economy takes a major hit and causes local shares to drop.

But Jiang says there are also risks with investing offshore and it is important people are aware of these.

"Unexpected events can impact on shares. These could include issues like Brexit, the US-China trade war, currency issues, sudden political changes, economic developments; there are many cycles and variables occurring all the time and it pays for people to keep abreast of what is going on."

He says if investors hold shares in a number of different countries and one suffers a downturn or disaster, it won't greatly affect an investment portfolio because one country's boom can offset another's downturn.

Jiang says it is important to stress that Snowball does not give financial advice. "We offer people the opportunity to trade online internationally but we encourage them to conduct their own research, draw their own conclusions and make their own investment decisions, we are not financial advisers.

"We recommend investors carefully consider their objectives, the risks involved, trading costs, tax implications, currency fluctuations and other factors before acting," he says.

Jiang says while the company recommends online trading for experienced investors they - and those new to the concept - are encouraged to "meet with us to ask questions about how online trading works."

He says Snowball's service is fast, convenient, efficient and low cost: "We are like a one-stop shop and through us people can trade electronically in a wide variety of products worldwide."

For more information on Snowball Securities their services and fees go to: www.snowballsecurities.com