Market wobbles dent confidence but investors are positive about regulation

 

Media release
MR No. 2016 – 07
18 May 2016

Confidence in New Zealand’s markets fell slightly in the last 12 months to 56% this year from 60% in 2015, following a year of uncertainty and turmoil in the markets. Confidence is higher among investors, with 59% of those with investments expressing confidence in the markets.

These results are part of an annual survey into New Zealanders’ attitudes to financial markets released today by the Financial Markets Authority.

Confidence in the markets fell most among middle income earners, with 59% of respondents earning $50-$100,000 per annum saying they were confident, down from 66% last year. Despite the market volatility over the previous year, the percentage of respondents saying they were confident has increased among those earning $100,000 -$150,000 from 71%-75% over the last year.

Three out of five people, 60% of respondents, are confident that NZ’s markets are effectively regulated. Among those with investments 63% have confidence in the regulations.

Rob Everett, Chief Executive at the FMA, said, “The downturn in market confidence is not surprising given the significant turbulence in financial markets, internationally and at home, over the last 12 months. This measure does seem to be impacted by sentiment in the markets, so we have introduced a new question to find out whether people are confident about the effective regulation of the markets.

“It’s important for properly functioning markets and financial services that people can see the difference between patchy periods of market performance and poor conduct or low standards from providers.”

Effective oversight of the markets is a shared responsibility and respondents were asked if they had confidence in the FMA and the other frontline regulators including the NZX and the supervisors of managed funds and KiwiSaver. Confidence in regulation is higher when people have investments (63%) and in particular those with managed funds (80%) and shares (75%) were most confident about the effective impact of regulators.

Although KiwiSaver funds are a type of managed funds, 63% of those in KiwiSaver said they were confident in the regulations, 17% less than those with managed funds.

Mr Everett said that understanding people’s attitudes to regulation was part of a successful implementation of the Financial Markets Conduct Act. “This is an important result as we are still in the early stages of an entirely new regime. While the overall score seems a fair assessment of the effective regulation of the markets, it’s encouraging that the scores are higher among those who are aware of the regulator or who have investments.

“Whatever the performance in the markets, whether they go up or down, the FMA is most concerned that investors are treated fairly and are fully-informed about the risks, benefits and costs of the investment products they are buying.”

Half of those with investments found the materials they received about their most recent investment helpful, this score has dropped from 56% in 2015 to 50% this year.

Awareness of the FMA has remained at 4 out of 10 respondents saying they had heard of the FMA.

Full results here

Notes: The survey was conducted by Colmar Brunton with a sample of 1000 New Zealanders; fieldwork was conducted between 30 March and 6 April 2016. The margin of error for overall results n=1,000 is +/-3.1%.

Table 1.

INVESTOR CONFIDENCE IN THE MARKETS*

2016

2015

2014

2013

 

 

 

 

 

Overall confidence

56%

60%

     58%

54%

Investors’ confidence

59%

65%

61%

58%

Confidence by income

 

 

 

 

$20,000 to $49,999

57%

58%

49%

52%

$50,000 to $99,999

59%

66%

69%

56%

$100,000 to $149,999

75%

71%

70%

63%

$150,000 or more

81%

78%

93%

80%

*Percentage is given of respondents who are confident

Table 2.
 

AWARENESS OF FMA

2016

2015

2014

2013

 

 

 

 

 

Aware of FMA

39%

39%

35%

34%

Find investment materials helpful

50%

56%

53%

52%

Contact:
Andrew Park
09 967 1215
021 220 6770
andrew.park@fma.govt.nz