Investing down but not out

Ōtautahi – National independent economist Tony Alexander finds Kiwi investors are not discouraged by tough economic conditions, with most keen to keep investing.

Each month, he surveys more than 28,000 Kiwis to find out what they’re investing in and how they’re investing in it.

He then analyses their responses and reports on how investment preferences are changing over time. This gives us a look into people’s thoughts on different shares, types of property, active vs passive fund management, whether to use an advisor or an app, which countries to invest in, and much more.

Heightened volatility and a general downturn in most asset classes have not put investors off, with more planning to add to their portfolios over the coming year.

Results from this month’s survey shows 71 percent of investors are still keen to invest—despite the looming threat of a recession, low business and consumer confidence, a cost of living shock, and rising interest rates. That’s up from 69 percent of respondents last month.

Responses fall from 88 percent saying yes in September 2021 to 69 percent in June 2022, before rising to 71 percent in July 2022.

Plans to buy residential property have snuck back up over the last three months, which could be an early signal of a housing market recovery.

On the other hand, fewer investors are likely to buy shares in companies with exposure to residential property, possibly reflecting the challenges faced by many businesses in the construction sector.

Shares bought directly or through a managed fund or ETF (exchange-traded fund) remain the favourite portfolio investment choice.

The surging interest in resource sector stocks seen in May’s report appears to have faded. This coincides with the recent pullback in commodity prices as concerns of a global recession grow, which would likely drag down demand—and therefore prices—for resources like minerals and metals.

Investors seem to be taking the doom and gloom-tinged cloud over the Kiwi economy in their stride, with respondents’ preference for New Zealand-listed shares edging up to its highest level in several months in July.

This might’ve come at the expense of Australian-listed shares, with investor interest easing slightly alongside the pullback in resource prices.

The uptick in preference for conservative funds seen in May and June has noticeably fallen away this month. Growth and aggressive funds remain the most popular investment style by far.