Investors' confidence has been knocked back to pre-pandemic levels, as rising inflation and the end of loose monetary policy wreaks havoc on global financial markets.
Investors were concerned about global stability. Photo: 123RF
The Financial Markets Authority's annual investor confidence survey shows 66 percent of respondents were confident in New Zealand's financial markets, compared with 72 percent in 2021.
"It is no surprise that overall market confidence fell back in the last 12 months, given the volatility we have seen," FMA chief executive Samantha Barrass said.
"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 significant shifted market sentiment, both at home and abroad."
Men (72 percent) were more confident than women (61 percent) in New Zealand's financial markets and older New Zealanders tended to be more pessimistic than their younger counterparts.
Households that had an average income of over $150,000 a year were the most bullish, while those who made less than $50,000 were the wariest.
The survey also highlighted that investors tended to be more confident than non-investors in local financial markets.
Confidence declined across a range of investment types, with managed fund investors the most optimistic, while sentiment was lowest among KiwiSaver members.
The number of respondents who felt the FMA promoted fair and transparent markets fell sharply, from 50 percent to 43 percent, as did the number of people who thought the regulator promoted trust and confidence in New Zealand's capital markets.
The survey found that for the first time, more respondents had invested in shares (24 percent) than term deposits (20 percent), while 10 percent of people owned cryptocurrencies.
"Building on last year's trend, term deposits have continued to decline, while investments in shares and managed funds continue to rise," Barrass said.
"This represents a notable shift in investor preferences, as we have traditionally seen New Zealanders choose more conservative assets."
Fewer investors reported receiving investor materials compared with last year and there was also a drop among this group who found the information of use.
"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."
However, among investors who found the materials helpful, there was a large increase in the number of people who found them clear, concise, and effective.
