Source: Radio New Zealand
Do-it-yourself retail shareholders are holding on to their shares. Supplied/123rf
Do-it-yourself retail shareholders are holding on to their shares, despite price volatility associated with the war in Iran.
The Sharesies Index, which ranks overall investor confidence on a scale from zero to 100, hit a four-year high of 64 points in early February but retreated to 45 points by the end of March, which indicated a more balanced approach to investment.
Sharesies head of data & analytics Jordan Cunningham said the drop in confidence, late in the first quarter, was to be expected given the uncertainty created by the conflict, but investors were adjusting to the volatility.
“Instead of withdrawing, some investors adjusted where they put their money. Preferences shifted between cash, funds and individual companies,” she said.
“We aren’t seeing people selling out even when there are these times of volatility. So people are making adjustments and finding the things that suit their scenario, but not retreating entirely, which I think is definitely an indication of kind of that maturity and that resilience that we’ve seen from our customers,” she said.
The deposit to withdrawal ratio peaked at the start of the quarter with deposits of $2.38 for every $1 withdrawn, though deposits dropped by the end of the quarter to an average of $1.94 for every $1 withdrawn.
Some AI and tech stocks lose favour
Cunningham said there was some diversification away from US tech stocks in favour of New Zealand gentailors Contact Energy and Genesis Energy over the quarter.
“Genesis Energy rose 15 points and Contact Energy 7 points. These shifts may be primarily due to high retail investor engagement in capital raises by these companies, with over 7500 Sharesies customers participating in each offer,” she said.
A preference for shares over savings
“This preference is likely due to the lower interest rate environment,” Cunningham said.
“However, when market uncertainty peaked, such as at the end of February at the start of the US-Iran conflict, we did see a shift back towards the perceived security of cash.”
Movements
Investment in the most widely-held companies and exchange traded funds were consistent throughout the quarter.
Air New Zealand also retained its status as the top-ranked company and second most widely held investment, despite reporting a first half loss of $59 million in February, amid an uncertain outlook as soaring aviation fuel costs and other disruptions cut into profit margins.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
