Investors expect more information in Covid environment
Investors are looking for additional disclosure in the investment environment, new research shows.
Friday, July 10th 2020, 6:00AM
Amir Ghandar
Chartered Accountants Australia and New Zealand's latest investor confidence survey showed about three-quarters of New Zealand investors had some or quite a bit of confidence in capital markets and in investing in listed companies, almost unchanged from last year’s survey.
That was based on a belief that the New Zealand economy will recover well from Covid-19, faith in the NZX’s history of bouncing back and confidence in the Government.
Those who were worried were concerned about the impact of lockdown measures, concerns about the economy and market volatility.
"This level of investor confidence and buying activity is more than surprising in the face of what the OECD has described as the most severe economic recession in nearly a century," said Amir Ghandar, CA ANZ’s reporting and assurance leader.
"A sense of optimism has clearly been growing as the nation weathered the pandemic, but uncertainty remains as to the speed and depth of an economic recovery."
But Ghandar said investors were not ignoring risk. More than half (53%) are expecting "a great deal" or "quite a bit" of additional disclosure in financial statements in the Covid-19 environment, focusing on operations and results.
"Investors are also interested in the impact on liquidity and business outlook, changes in demand for products and services, the impact of travel restrictions and the impact to employees.
"A reality check may be due later in 2020, with around half of investors saying companies and auditors flagging 'material uncertainty' will have a possibly significant impact on their confidence. Auditors and the XRB have both recently pointed to a likely increase in the prevalence of such disclosures in upcoming reports."
Ghandar said he anticipated shareholders will focus on financial reports more than ever this year, giving them a new prominence. "They will still be looking at explanations from chairs and CEOs, but also probing whether what they’re hearing aligns with the financials in terms of going concern uncertainties, asset carrying values and other assumptions."
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