The ASB Investor Confidence Report, released this morning, shows expectations public shares will have the highest returns jumping two points to 12%.
ASB wealth advisory head Jonathan Beale said shares had surged and were clearly in the sights of investors as they sought higher yields.
''That level of confidence in return on investment from public shares has not been seen since the beginning of 2007.''
Craigs Investment Partners broker Chris Timms said money had been flooding back into the New Zealand sharemarket for the past two years, as bonds with yields of 8% or more reached full-term and investors were faced with new bond yields of 4.1%.
Demand for income was pushing people to look at shares. Five-year bonds issued at 8.5% in 2008 were rolling off, increasing the interest in the sharemarket.
''There is still nervousness around shares, and it never is a straight line investment, but we are seeing demand for a good income stream.''
Companies such as Auckland International Airport and Fisher and Paykel Healthcare provided a ''reasonable'' sense of security, Mr Timms said.
Auckland Airport was the primary entry point to New Zealand, had a massive land bank, multiple sources of income and was not carrying much debt.
F&P Healthcare had some exposure to foreign exchange but also provided good income.
Other companies, such as Sky Network Television and Mighty River Power, provided returns for investors seeking income, he said.
This week, sharemarkets around the world were flat because of the Federal Reserve meeting being held tomorrow.
Mr Timms urged shareholders to take a long-term view of their investments. Investing long-term provided additional gains. As profits went up, the share price and dividends usually increased.
Mr Beale said the ASB index fell 7% from a high of net 18% in March to net 11% in June.
The fall in optimism was ''intriguing'' as it was mainly driven by investor confidence dipping to a low of 3% in April before recovering during the remainder of the second quarter.
Net investor confidence in the Canterbury region remained stable at 20%. Second-quarter confidence had been higher in Canterbury than the rest of the country.
''The gathering rebuild momentum is clearly boosting investor confidence in Canterbury. At the same time, it is highlighting the growing gap between Canterbury and the net confidence of the rest of New Zealand, which is down seven points to 10%,'' he said.
As a reflection of the current house price concerns, nationwide rental property confidence dipped 2% to 17% and was now sharing the top spot as the most attractive investment class with term deposits, which rose 2% to 17%.
In the quarter, there was the start of a property divide between young and older investors.
Investors aged between 18 and 29 perceived KiwiSaver as offering the best returns. Support for it peaked at 17% of respondents, while their optimism for rental property fell 7% to 14%.
Investors aged 40 to 49 were more optimistic rental returns would give the best return on investment - up 9% to 28%.
The analysis was based on 778 online interviews with adults aged 18 and over throughout New Zealand.
