Almost 70% of middle-income earners are now confident in New Zealand’s markets, an increase of 13 percentage points since 2013, according to the Financial Markets Authority survey of New Zealanders’ attitudes to financial markets.
Overall confidence has risen five points to 59% from 54% in 2013.
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Three-quarters (75%) of those surveyed hold an investment product, either through shares in the stock market, KiwiSaver, managed funds or bonds. This is up slightly from 72% last year.
Rob Everett, chief executive, FMA, said "these are encouraging signs for our financial markets given the focus on New Zealand’s equity markets in the last twelve months, with the recent partial floats of three state-owned enterprises."
"The fact those earning between $50,000 and $100,000 per year are a lot more confident points to broader participation in share markets and financial markets more generally. This reinforces the increasing importance of KiwiSaver, as people watch their balances grow."
However, only half (53%) of those with investments said the materials they received about their investments were helpful in making an informed decision about whether to invest or not.
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By GlobalDataEverett said: "While it’s disappointing that half of investors didn’t find investment materials useful, this is consistent with other feedback we’ve received."
Under the new Financial Markets Conduct Act 2013, these materials will become simpler and easier for retail investors to read and understand. Investor materials in this context include the new product disclosure statements (PDS) which will replace the current prospectuses and investment statements.
The new PDS are retail, point of sale materials that provide the relevant information investors need to make decisions about investing in shares or in other financial products.
The requirement for simplified documents coming into effect this year should have a positive impact on confidence scores in future said Mr Everett. "The surveys we’ve done make it clear to the financial services industry that investors want clear and simple materials, in plain English, to help them make more informed decisions.
"The regulators and the industry need to work together to provide documents that help investors rather than solely protecting issuers" he said.
The survey also shows that those with investments are more likely to express confidence in financial markets (61% compared with 52% of those without investments). Additionally, 24% of investors said their confidence had increased since last year compared with 15% of those without investments.
Everett added: "It’s the second year we’ve polled the public about their attitudes to financial markets and it’s encouraging to see confidence improving year on year. However, it’s vital to distinguish between confidence in the way markets are performing and confidence about the way investment markets and products are understood and used by investors."
"As a regulator, FMA is focused on promoting fair, efficient and transparent markets. We want to ensure the infrastructure around the markets delivers a robust system that’s well-regulated and protects investors from wrong-doing. With increasing confidence in the infrastructure and its regulation we’d hope people become more confident about participating in the markets while understanding that markets move in cycles and positive outcomes are not guaranteed."
Key Findings in FMA’s 2014 survey of attitudes to New Zealand’s financial market
- Overall confidence in financial markets now at 59% up from 54% in 2013
- 75% of those surveyed hold some form of investment, up slightly from 72% in 2013
- Middle-income earners’ confidence increased to 69% from 56% in 2013
- 61% of those who invest are confident in the markets, up slightly from 58% in 2013
- Even among those who do not invest, 52% are confident, compared with 41% in 2013
- Those with an investment are more likely to report an increase in confidence over the last year – 24% compared with 15% for those without investments.
- 53% of investors say the materials received about their most recent investment were helpful in making an informed decision, consistent with 52% in 2013
