Investor confidence holds up despite COVID-19 market volatility

Investor confidence has remained steady for the third year running, in spite of the volatility caused by COVID-19, a Financial Markets Authority (FMA) survey has found.

The markets regulator today released its annual Investor Confidence Survey, which was conducted between 5 and 14 May, during Level 3 lockdown. The survey found two-thirds of investors (66%) were confident in New Zealand’s financial markets, in line with 65% of investors last year.

This year the proportion of investors saying they didn’t know about confidence in the markets shrank from 15% – 8%, indicating that New Zealanders are taking more interest to form a view.

The proportion of investors very confident is now at an eight-year high of 10%.

While overall investor confidence held up, those who were not very confident has risen from 16% – 22%. Of these people, four in ten said that COVID-19 was the main reason for their lack of confidence.

Investor materials

The survey also found that investors are feeling better informed. Among the 80% of investors receiving materials for their most recent investment, the proportion rating them as helpful has risen steadily from 50% in 2016 to 62% in 2020.

Effective regulation

There was a strong increase in the proportion of investors who are confident that markets are effectively regulated, rising from 60% last year, to 68% in 2020. The rise in confidence in effective regulation has been driven by a steep increase in confidence levels among KiwiSaver investors over the last two years, up from 56% in 2018 to 67% in 2020.

Rob Everett, FMA Chief Executive said: “It’s pleasing to see confidence remaining steady over the past 12 months given the market conditions. Further, the level of confidence in regulation shows people are reassured that New Zealand is a good place to invest their money, and that there are protections for investors.”

For those who increased their investments in the past year, buying shares or managed funds were the most popular. Confidence scores across the survey are highest among those with these investment types.

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