Kiwis’ appetite for sharemarket growing

AUCKLAND: New Zealanders are learning to trust investing in the sharemarket despite the Covid19 pandemic setting off the most volatile trading in recent history, according to a Kiwi Wealth survey.

Every February, investment firm Kiwi Wealth runs its State of the Investor Nation survey to better understand New Zealanders’ perceptions of wealth and investment strategies.

At the time, the survey found the impact of coronavirus had not yet had any impact on economic confidence. This quickly changed when Covid19 reached New Zealand and Kiwi Wealth ran a followup survey in June to measure how the pandemic had affected results.

It found the virus had accelerated a trend of New Zealanders saving more and investing more widely.

In Kiwi Wealth’s June report, 84% of the 1081 respondents said they had savings and investments, up from 80% of the 2105 people surveyed in February.

‘‘Most likely that’s because people were spending less during lockdown so have more discretionary money to put towards savings or investments,’’ said Melissa Vasta, Kiwi Wealth’s general manager of retail and product.

The survey also found younger New Zealanders were increasingly open to putting their newfound cash into shares. The proportion with investments in equities rose to 19% in June, from 15% in February.

Even then Kiwi Wealth noted a trend towards investing in the equity markets, with Kiwis more likely to have investments in equitybased assets and be more open to the idea of it.

‘‘This indicates New Zealand investors are regaining trust in financial markets, which has traditionally been a key barrier to investing,’’ the February report said.

Last year, 18% of respondents said they would not invest in the sharemarket. In February of this year, that proportion fell to 15% as low interest rates made leaving savings in a bank account an unattractive option.

When the pandemic introduced extreme volatility into financial markets, these riskseekers rushed into the fray. Huge numbers of firsttime investors bought into what appeared to be cheap stocks through online trading platforms such as Sharesies and Kiwi Wealth’s own platform, Hatch.

About 75,000 investors joined Sharesies in the wake of the Covid19 outbreak and Hatch, which gives New Zealanders access to US stock markets, almost doubled its user base during lockdown.

While some investors were warming up to riskier investments, others only discovered risk when the downside hit them.

In Kiwi Wealth’s February report, one in five people said they did not know what type of KiwiSaver fund they were in.

The June survey found 26% (usually the change annually) of KiwiSavers made risk profile changes after the March market collapse. — BusinessDesk