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Summary
- Confidence in financial markets has risen in the last one year.
- Investors shifting to shares from term deposits.
- Investors taking more to online platforms in a DIY mode.
Confidence in financial markets has continued to rise in the last 12 months, according to a survey by the Financial Markets Authority (FMA). Due to significant rebound in the financial market, investors are shifting from term deposits to shares.
FMA’s 2021 Investor Confidence Survey has pointed out that the confidence in the financial market had seen an upsurge. Over 70% people are confident of the country’s financial market now as compared to 66% in 2020.
Shares take precedence over term deposits
According to the report, the proportion of people with investments is relatively consistent at 84% and the types of investments also remain relatively the same. Only one difference that has been observed is with regard to the term deposits. The term deposits have shown a downward trend from 34% to 28%, while owning shares have risen to 21% from 17%.
The number of people with investments have remained relatively consistent at 84%. Although the broad types of investments held by investors haven’t shifted significantly over recent surveys, in the last three years, term deposits have dwindled from 34% to 28%, while shares rose from 17% to 21%.
FMA Chief Executive Rob Everett said that the term deposits and Kiwisaver were the preferred investments of New Zealanders, but in this low-interest environment and changing preferences of New Zealanders, stocks are becoming their favourites.
Young investors taking to online mode
This is due to the fact that the investors are able to invest through online platforms and also track the day-to-day movement of their stocks. The rise of DIY, fractional, or digital share investing, has fueled the popularity of the shares with almost 60% buying shares through these platforms.
Of the respondents who bought shares themselves, a majority used online platforms and were in the age groups of 25-39 years. They were in full-time employment and have a high annual personal income of NZ$100,000 or more.
The Survey showed that the investors’ confidence in the regulation of New Zealand’s financial markets had remained steady at 67%, and almost two-thirds acknowledged the usefulness of the investment materials they receive.
These are areas that can be improved upon, the FMA report felt.
The positive about the investment scenario in New Zealand is that despite COVID-19 situations, more Kiwis made new investments or increased their existing share of investments in 2021 almost 23% as compared to 17% in 2020.
Increased investments through online platforms
New Zealanders made new investments or increased existing investments in 2021 (23% in 2021 compared to 17% in 2020). There were some that decreased their investments 9% compared to 6%. However, those who increased their investments, nearly half bought shares through an online platform.
The FMA said that it would like to understand how much the actions of the regulator can imbibe confidence in investors. FMA felt that there was a lot of work to do to make the investors understand the role of a regulator in promoting fair and efficient trading as a large number did not say anything on it.
