Investor confidence bounces back from two-year low

Investor confidence has bounced back from a two-year low with a lifted sentiment for more stable markets, and greater faith in KiwiSaver schemes.

The number of investors who thought the rate of return on investments would improve over the next year lifted to a net 19 percent in the September quarter, from the previous quarter's net 16 percent, an ASB Bank survey showed.

The increase marks a return to the same level as a year ago.

"During the third quarter, the sharemarket was strong, interest rates were low, and there was a lot of uncertainty about the property market, so it was good to see a high level of confidence despite this," ASB senior wealth economist Chris Tennent-Brown said.

Confidence in the investment value of the personal home remained strongest and unchanged at 23 percent, but confidence that the best returns are from investment properties fell to the lowest level in more than four years.

"The changes to rules regarding property - including the bright-line extension, the Overseas Investment Amendment Bill, and other potential changes - are targeting investments rather than the main family home, and that is a logical reason for the divergence we are seeing between confidence in owner-occupied and rental properties," Mr Tennent-Brown said.

He said an improvement in the confidence over KiwiSaver schemes suggested that the educational message for investors to get to know the costs and the risks of their schemes was getting through.

Mr Tennent-Brown said he did not think the volatility in financial markets of the past couple of months would unduly hurt investor confidence.

"We had a similar period of sharemarket volatility in February, but that didn't lead to a collapse in confidence over the subsequent quarter... There can be significant volatility in sharemarkets from time-to-time, and it's important that investors can focus on the long-term gains rather than the short-term ups and downs at times like this."