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Investor News Wrap: June 2021

Page last updated: 30 June 2021

Investor News Wrap

News from the month that Kiwi investors should know, including new laws and regulations, fraud and scams, independent reports and offshore developments.

'Finfluencers' warned about financial advice 

Online financial influencers AKA ‘finfluencers’ have been warned not to be too specific when discussing investments online – and consumers urged to be wary of their advice.

The FMA has published a guide to talking about money online, prompted by concerns some influencers may be straying into 'regulated' financial advice. 

“When you start getting into recommending particular products, like specific funds, stocks or insurance, or telling individuals what to do, that’s probably regulated financial advice,” said FMA chief executive Rob Everett. 

The rise of financial influencers has occurred alongside increased use of DIY investment platforms over the past 18 months, and the FMA’s guidance follows similar moves by regulators in Australia and the UK.

Debt-to-income limits on the cards 

Debt-to-Income (DTI) ratio restrictions have been added to the list of potential tools the NZ Reserve Bank can use to steady house prices.

The RBNZ has advised that such restrictions are “likely to be the most effective additional tool… to support financial stability and house price sustainability”, and “would impact primarily on investors and higher-income owner-occupiers”.

Finance Minister Grant Robertson has agreed in principle to approve debt serviceability restrictions, “on the condition that any implementation is designed to avoid impact, as much as possible, to first home buyers.”

Survey sees rise in DIY and crypto investing

One in six Kiwis (16.7%) are using or have used DIY investing platforms, according to new research by the Financial Services Council (FSC).

The CoreLogic survey of just over 2,000 people found DIY investing apps were more popular with men than women (18.9% versus 14.7%), and those aged under-50.

Almost one in 10 said they currently hold investments in cryptocurrencies – triple the number who did so a year earlier.

“The ease of access that tech provides makes investment more appealing for people who previously didn’t really consider it as an option,” said FSC CEO Richard Klipin.

Younger Kiwis more risk-averse during COVID

Younger people dominated the higher level of KiwiSaver fund-switching that was seen during the height of COVID-19 market panic last year, according to latest KiwiSaver data.

Research by PwC for the FMA found 3.9% of members switched fund types (eg from growth to conservative) from February to April 2020 – almost triple the amount year-on-year. Most (70.5%) moved to lower-risk funds, while 18.5% opted to go higher-risk.

Those aged 26 – 35 switched funds five times more than usual, and were responsible for 31% of all moves into lower risk funds, despite only constituting 23% of the sample. 

New stock exchange gets greenlight

A new public stock exchange that will allow the trading of securities in businesses too small to list on the NZX has been approved to open from 21 June.

Catalist Public Market is seen as a new 'stepping stone' market for companies and other issuers such as fund managers with an initial market capitalisation of under $60 million.

The FMA granted an exemption that lets listed issuers offer equity securities, debt securities, and registered managed investment products, worth up to $20 million per year.

Issuers will hold auctions at periods of their choosing, which could be monthly, quarterly, or yearly, and once they reach a market capitalisation of $100 million they will need to transition off the platform.