Chris Tennent-Brown: ASB Senior Wealth Economist on investor confidence dropping to the lowest level since Covid

New Zealand investor confidence has dropped to its lowest level since Covid.

ASB's latest survey shows sentiment is weakest in the lower North Island and among those over 60, with under 40s being more optimistic about their situation.

Senior Wealth Economist Chris Tennent-Brown told Francesca Rudkin global uncertainty and the weak housing market have made the last six months challenging.

He says it's not quite as bad as during the depths of despair during the pandemic.

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Episode Transcript

Speaker 1 (00:00):
So investor confidence has slumped back to pandemic levels and
ASB survey out this morning shows confidence it's just one
percent for quarter two of twenty twenty five. That's the
lower since twenty twenty though we're still well above the
negative twenty five percent seen. Then, half of investors say
they're very worried about global issues hurting returns. ASB Senior
wealth economist Chris tinant Brown joins me, Now, thanks for

(00:23):
your time, Chris.

Speaker 2 (00:24):
Oh, good morning, Thanks for having on.

Speaker 1 (00:26):
So why is confidence so low? What's impacting it?

Speaker 2 (00:30):
I think there's two or three things going on. One
is that offshore uncertainty. Investors are feeling a bit rattled
by what they're seeing overseas, but it's important to also
note that that hasn't necessarily translated into bad investment returns
for people that are invested in global markets. The other

(00:50):
things are the housing market I think is surprising many
that it hasn't picked up the way you'd expected with
all the reductions and mortgage rates that we've seen. And
there's a bit of mirroring of the weakness we're seeing
in consumer confidence within this investor confidence survey as well,
with people just not that confident in the overall economy

(01:13):
and outlook.

Speaker 1 (01:14):
Is confidence different around the country.

Speaker 2 (01:17):
It is. It's interesting to see that confidence in Auckland
is the highest area, whereas the Lower North Island, which
of course includes Wellington, is the lowest, even though a
lot of the drivers are similar across these areas. But
again we see the same thing in consumer confidence. Wellington

(01:39):
consumer confidence is weaker than Auckland consumer confidence at the moment.

Speaker 1 (01:43):
Okay, were they any areas we're confidence did lift?

Speaker 2 (01:48):
Yeah? I think the one thing that's really pleasing is
that confidence in managed funds is holding up and likewise,
with key we save us. So hopefully, although people are
feeling rattled by those global events, they're not chopping and changing,
and if they've stayed the course through the first half
of the year, they will have seen a recovery from

(02:11):
those April jitters, and I think that's helping the mood
for investors that are using those products.

Speaker 1 (02:19):
Chris, how do we do deal with that disconnect that
you mentioned there before, whereby you know, we have this
lack of confidence and investment in marketing, but actually investments
are doing quite well.

Speaker 2 (02:28):
I think the key thing there is it just highlights
the importance of getting advice when you're feeling nervous and
sticking with well thought out plans. People are saving for
retirement with key we Favor, for example, this won't be
the last time that we see a bit of global
volatility influencing the mood. But if people stay the course,

(02:49):
hopefully they'll be able to achieve their longer term goal.
So I think that importance of getting advices is highlighted
by the survey.

Speaker 1 (02:56):
What impact does low investor confidence have on the economy?

Speaker 2 (03:00):
I think the first places in the housing market at
the moment. Housing is very important for key we psyche,
So for people that are investing in the property market
and they're seeing houses go house prices go sideways, it
contributes to this lower level of activity that we're seeing
in the housing market. For other areas of the economy,

(03:24):
hopefully people just carry on using products like managed funds
and key we Savor for their longer term savings goals.
So the other area of the economy which is impact
I think is the overall picture of these lower interest
rates that we've got within the economy.

Speaker 1 (03:41):
Yeah, I mean, it's not hugely helpful for the government,
isn't it When they're focuses on economic growth and investment.

Speaker 2 (03:47):
That's that's that's right. I mean, the confidence is so
important for activity, particularly when you're looking at consumer confidence
and invest in business confidence. For investor confidence, I think
when we see it at these sorts of levels, it's
just really important for them for individuals and then in

(04:08):
turn for the overall economy, for people just to stick
with those longer term plans that they've got.

Speaker 1 (04:12):
Yeah, no panicking. Can we predict when we're going to
see investor confidence improve?

Speaker 2 (04:18):
I think it's going to vary from asset class to
asset class. If people have got housing as there as
their main investment, and that's why they're feeling low at
the moment, then we should see monetary policy work. We
think the housing market will eventually pick up. It's just
taking longer than it would normally expect it times like now,

(04:40):
and for things like Keyy, Savor and managed investment funds,
I hope that those that those returns just keep on
slowly boosting confidence and and and people pick up somewhat
from the from the doldrums that we've been in at
the moment.

Speaker 1 (04:56):
In the Slates survey, Chris, thanks so much for your time.
That was ASP Senior Wealth economists Chris Tenant. For more
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