Kiwi investor confidence leap strongest across Asia-Pacific

Friday 16th October 2009

The mood of New Zealand's high net worth investors has taken a major leap according to ING's Asia-Pacific dashboard survey.

NZ investors have now moved into an optimistic zone for the first time since the ING dashboard was introduced two years ago, rising 41 points to 125 (out of 200). High net investors are defined as those with disposable assets or investments of US$100,000 or more outside their own home.

The upturn in Kiwi sentiment was the highest across 13 countries in the region, though average Australian investor score is higher at 143. ING's report said that the positive scores from NZ investors throughout the survey point to strong expectations that the economy, both locally and globally, is on the road to recovery for 2010.

"New Zealand is recovering from five consecutive quarters of negative growth, and the improvement in investor sentiment is consistent with the optimism being shown in consumer and business surveys," said ING NZ investment strategist Stuart Millar.

"There is a risk that investors will now become overly optimistic, increasing the possibility of disappointment. It appears that equity markets both locally and across Asia are now priced for a V-shaped economic recovery, despite the fact that many economists expect a long and slow recovery as consumers continue to reduce their debt burden.

"We have already seen stock markets rally in anticipation of a resumption in earnings growth and so disappointing corporate earnings announcements or weakened economic dataflow over the coming months could lead to a period of consolidation."

Millar said investors will be looking for company earnings in the next quarter to lift, matching their own optimism that the national and global economy is truly back on an upward track. Investor sentiment often ran ahead of the actual performance of a company he said. Any negative data emerging in the next three months could easily produce a negative sentiment.

Compared to their Asian counterparts, NZ investors are still taking the most conservative approaches to their investment strategies.

According to the research, 53% of NZ investors continue to take a conservative, long-term cash preservation strategy when investing, with 45% maintaining a balanced approach, and only 3% adopting an aggressive strategy with a shorter investment horizon.

In Australia by comparison, 25% of investors have adopted a conservative strategy, 65% a balanced strategy and 10% an aggressive strategy.

Businesswire.co.nz

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