Global and domestic pressures have impacted investors. (File photo) Photo: WANG ZHAO / AFP
Global financial turmoil triggered by US tariffs and trade uncertainty spooked investors sending confidence to its lowest level in nearly five years, according to a new survey.
ASB Bank's quarterly measure of investor sentiment for the three months ended June fell to a net 1 percent believing their returns would improve in the coming year from nine percent in the previous survey.
That was the lowest level since the third quarter of 2020 as the Covid-19 pandemic struck.
ASB senior economist Chris Tennent-Brown said a mix of global and domestic pressures were cited for the slide.
"It's been a challenging six months, with markets affected by uncertainty around tariffs and global issues, alongside concerns at home, such as the housing market which hasn't bounced back the way people expected it to.
"This has led to a more pessimistic tone in overall investor confidence, which seems to be suffering from the same weak sentiment we're seeing in consumer confidence."
Sharemarkets plunged, currencies weakened, and gold soared in the aftermath of the "Liberation Day" announcement of US tariffs, which flowed through to local investors' Kiwisaver balances.
The survey showed about half of respondents were "very concerned" about the effect of global instability and uncertainty on their investments, with close to 40 percent slightly concerned.
Similar levels of worry were caused by international conflicts such as Ukraine, and global trade conditions.
More people were "concerned" about instability in New Zealand, Australia and the Pacific rather than "very concerned", although put together the overall concern level was more than 80 percent.
Age and place
Tennent-Brown said the further north and the younger investors were the less concerned they appeared.
Sentiment fell across all regions, but in Auckland it held the best easing to 10 percent expecting better returns from 13 percent in the previous quarter.
In the lower North Island confidence plunged to a six percent pessimism level, expecting worse investment returns, from 12 percent optimism in the previous survey.
Younger investors, classified as those under 39 years, had the highest confidence, while those over 60 were the least optimistic.
"This [is] in part a reflection of where the different age demographics tend to hold their assets and where they are in the investment life cycle," Tennent-Brown said.
However, the survey did not show any widespread moves to change investment strategies to minimise paper losses as financial markets dipped.
Only 13 percent said they had made adjustments in their investment approach and much of that was to improve their financial literacy and information about markets and monitor their investments more closely.
"The second quarter highlighted the importance of sticking with long-term strategies and savings goals, rather than chopping and changing to try and time markets," Tennent-Brown said.
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