Date posted: 02/10/2020

Are Australian and New Zealand retail investors still confident in 2020

The confidence that retail investors have in our capital markets is crucial to maintain both the effectiveness of those markets and the health of our economy.

In brief

  • The world has been changed by COVID-19 and it’s important to understand how investor confidence has been impacted
  • Confidence in financial reporting by public companies has increased slightly
  • Independent auditors remain one of the groups retail investors trust most and that trust has grown

This is the second year that Chartered Accountants Australia and New Zealand (CA ANZ), with the help of the Center for Audit Quality in the United States, has commissioned research to find out the views of Australian and New Zealand retail investors on capital markets, public companies, who they trust and what issues are impacting their trust and confidence.

Since the first survey, the world has been changed by COVID-19, making it even more important to understand how those changes have impacted retail investors’ confidence and their view of markets and financial reporting, particularly to help inform discussions on how to navigate beyond the pandemic.

Our research captured the views of over fifteen hundred retail investors in Australia and New Zealand and the results show that, despite COVID-19 causing a small decrease, they still have healthy levels of confidence in capital markets and listed companies. However, they are concerned about the ongoing impacts of the pandemic on both local and international economies.  

Pleasingly, retail investors’ confidence in the audited financial reports produced by public companies has increased slightly from last year. This confidence is still anchored by the trust that investors have in independent auditors—who remain the most trusted group—and other stakeholders in the markets such as regulators, analysts, audit committees and stock exchanges.

However, to maintain that trust, investors are also expecting companies to communicate openly about the impacts of the pandemic in their financial reports. Over 90% of investors expect more disclosures to be made with over 50% expecting “quite a bit more” to “a great deal more”.

CA ANZ has always advocated for audit and reporting to respond to the needs of users and the public interest. Clearly the role of financial reporting and audit are vital to navigating complicated economic impacts and CA ANZ will continue to support necessary change.

We hope that the research provides useful insights to contribute to the discussions about financial reporting, audit and financial markets as they evolve.