FMA: Investor confidence research 2018

Confidence in New Zealand’s financial markets has remained stable since 2017, despite uncertainty around a potential trade war, volatile global markets and a focus on the culture and conduct of major financial institutions in Australia and New Zealand.

The Financial Markets Authority released its annual survey into the public’s attitude to financial markets.


Results


66% of investors said they were confident in New Zealand’s financial markets, slightly down from 69% a year earlier. The score remains higher than the surveys carried out from 2013-2016.


Confidence in New Zealand’s financial markets and effective regulation was highest amongst investors who have a managed fund or shares at 82% and 77% respectively.

The main reason given for being confident in New Zealand financial markets was the stability of the markets and/or the economy.


Rob Everett, Chief Executive of the FMA said, “Investor sentiment and market performance have typically driven some of the scores in this survey. It is heartening to see that confidence, while dipping slightly, has been broadly stable in the event of significant issues both offshore and in local financial services.”


People most likely to be more confident in the markets and in its regulation are those in managed funds or shares, who are older, more experienced investors and male. They are also more likely to be aware of the FMA and its role in supporting market integrity.


KiwiSaver


Almost 80% of respondents aged 18-29 have a KiwiSaver investment. However, the survey suggests this age group is among the least knowledgeable or confident. The FMA recently focused on women in this age group as part of a targeted campaign around KiwiSaver annual statements.


45% of KiwiSaver members had no other investments.  These investors were more likely to be unsure about whether investment materials they received were helpful.


KiwiSaver-only investors were less knowledgeable about investment principles like diversification, or the risk-return trade-off. One KiwiSaver investor criticised the materials offered by their provider, “A pamphlet/booklet with banking jargon is not helpful”.


Investor understanding


The survey highlights that the least understood investment types are those associated with high risk.


New Zealanders are more knowledgeable about the risk level associated with term deposits, residential property and KiwiSaver funds than investments like hybrid bonds, property syndicates and equity crowdfunding.


CONTENT CREDITS: FMA. Download the full report here.



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