Major disruptions in world events over the past year have not dented New Zealanders’ confidence in financial markets, the Financial Markets Authority (FMA) says.
The FMA’s annual survey into the public’s attitude to financial markets shows that confidence has risen significantly to 65% among all respondents, up from 56% in 2016.
Investor confidence in the markets has reached its highest level, at 69%, since the FMA started the survey in 2013, when the score was 58%. Confidence in the effective regulation of the markets has improved from 63% last year.
“Since the survey started five years ago the portion of investors who said they were not confident has shrunk from 32% to 20%,” says Rob Everett, the FMA’s Chief Executive.
“These scores show that we are starting to see a shift in the public’s historic mistrust about markets and financial services. Investors seem to have started paying attention to the presence of regulators, as well as ripples from world events, when expressing confidence.”
Confidence rose most sharply among people with investments. Investors with a superannuation scheme (81%) managed funds (80%) and shares (78%) were the most confident.
Mr Everett says that sentiment had typically been a big ingredient in these confidence scores. “Prior to 2015 confidence built quite steadily and then, with market ructions last year, it dipped. While market performance has been broadly positive this year, there’s been plenty of upheaval and uncertainty from Brexit and other international events.
“Despite these issues, confidence seems to have been more resilient. One of the factors influencing perceptions is likely to be the transformation of the regulation of financial service providers, completed in December 2016.
“We hope to see a continuing trend of investors retaining confidence in the conduct within, and integrity of the markets, even if the performance of their investments goes up and down.”
Over half of investors find the investment materials they receive helpful in making informed decisions. The scores are much higher for people investing in shares (67%) or managed funds (65%) than they are for investors in bonds (51%) or KiwiSaver (51%).
“Considering managed funds and KiwiSaver have similar characteristics and both are licensed managed investment schemes, there’s clearly some improvements that could help make KiwiSaver communication materials more useful for investors. Good conduct includes ensuring your customers are fully-informed about the risks and benefits of a product and they understand how market performance and costs impact the final outcome,” says Mr Everett.