MR No. 2022 – 15
Confidence in New Zealand’s financial markets has slipped back in the past 12 months, after last year’s record score, but overall, two-thirds of investors remain confident.
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko 2022 Investor Confidence Survey shows 66% of investors remain confident, compared to 72% in 2021. This year’s score is consistent with investor confidence levels recorded in 2019 and 2020, and has been impacted by the most recent COVID-19 uncertainty and global events.
FMA Chief Executive Samantha Barrass said: “It is no surprise that overall market confidence fell back in the last 12 months, given the volatility we have seen. The prolonged impacts of COVID-19 on supply chains, the end of quantitative easing by central banks around the world, and the return of inflation internationally, have significantly shifted market sentiment, both at home and abroad.”
Investor confidence in effective regulation is stable at 65% of investors surveyed, slightly down, but within the margin of error, from 67% in 2021. “While market sentiment has impacted investor confidence it is pleasing that confidence in the regulation of the markets has held up and more investors have confidence that they are provided protection, and are fairly treated,” said Samantha Barrass.
This year the confidence of non-investors in both the markets and effective regulation has increased considerably, suggesting there is an increasingly positive sentiment towards investments, even from the sidelines.
For the first time share investors outnumber term deposit holders
One quarter of those surveyed now hold shares they bought themselves, (up to 24% from 21% last year), compared to 20% holding term deposits (down from 28%). Managed funds have also risen to their highest level at 17%, and in another first, 10% of respondents said they invested in cryptocurrencies.
“It is the first time, since 2016, that the FMA survey has recorded more investors in shares than term deposits. Building on last year’s trend, term deposits have continued to decline, while investments in shares and managed funds continue to rise. This represents a notable shift in investor preferences, as we have traditionally seen New Zealanders choose more conservative assets.”
Investors continue to find materials helpful
Fewer people recalled receiving investment materials compared to last year, (down from 80% to 70%), and there was a small drop among this group who found the materials helpful, now at 59% (from 63% in 2021). However, encouragingly, among those who found materials helpful, there was a large increase in the investors who said the materials were clear, concise and effective, up from 74% to 85%, this year.
“The usefulness of investment materials is an important focus for the FMA as we want investors to make well-informed decisions. There is an onus on providers to make sure materials are easy to understand. Clear disclosure makes an essential contribution to acting in the best interests of clients.” Ms Barrass said.
Those surveyed who are aware of the FMA are much more likely to say that the FMA helps promote trust and confidence, integrity, and fair and efficient, transparent markets. These scores also tend to be higher among older men, with higher incomes.
“The FMA’s mandate is now expanding from investors to consumers of all financial products. Our surveys will start to reflect this evolution in our mission to the promote the fair treatment of all customers of financial services,” Ms Barrass said.
Overall, the survey showed that consumers had a reasonable experience with their providers, but doubts remained among around a third of respondents: