Volatile financial markets and slumping share prices caused by the Covid-19 pandemic do not seem to have dented investor confidence to any degree, according to a survey by the Financial Markets Authority, but a dose of reality may be coming.
Photo: RNZ / Rebekah Parsons-King
The annual survey, taken during the lockdown, showed 66 percent of respondents confident in markets, fractionally higher than last year.
FMA chief executive Rob Everett said a there were likely a couple of reasons why confidence has held up.
"The survey was done after the markets bounced back towards their pre-Covid levels ... and also New Zealand looked pretty good compared to the rest of the world in terms of Covid and I think there was possibly a bit more optimism around at that time."
An investor confidence graph from the Financial Markets Authority survey in 2020. Photo: Supplied / FMA
Everett said it may be that messages of reassurance and action taken by various agencies also helped to calm investors, although he noted the level of distrust in markets did increase, and more than half of those whose confidence had waned cited the virus as the reason.
He said it was possible that sentiment would turn sour as strongly rebounding markets face up to the pandemic's economic consequences.
"There's a number of features keeping the markets at what many call artificial highs, there's the lack of anywhere else to put money given where interest rates are and are likely to be for some time, and governments are pumping money in and keeping market high."
"But I would anticipate, unless we're all very wrong about the economic impacts of Covid, that the gap between where markets are and where the global economy is going to be will narrow," he said.
An investor confidence graph from the Financial Markets Authority survey in 2020. Photo: Supplied / FMA
The survey also showed about 82 percent had some form of investment with KiwiSaver the most widely held investment, ahead of term deposits.
Nearly half of those surveyed had made some sort of investment over the past year ranging from making or considering new investments, through to signing up for KiwiSaver, while buying shares or into managed investment funds were the most favoured assets.
Awareness of the FMA's job as regulator was marginally higher at 37 percent, with more than 68 percent confident in effective regulation of the country's financial markets.