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NZ investors hording cash: ING

Wednesday 15th October 2008

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New Zealand investors are holding cash and preparing to horde more, according to the ING Investor Dashboard Survey.

Some 68% of New Zealand investors were holding cash or deposits in the third quarter and 27% said they planned to start or add to their cash in the current three months, according to the survey of investor sentiment across the Asia Pacific region. In the second quarter, 72% held cash and 26% said they planned to.

The diminished appetite for risk hasn't dented the mood of investors compared to the rest of Asia. New Zealand ranks fourth across Asia on the investor sentiment scale, with a score of 96 out of 200. Indian investors were most optimistic at 156, followed by those in the Philippines and Indonesia.

For the first time, New Zealand out-scored ING's pan-Asia sentiment measure, which fell 39% to 86 in the third quarter. Sentiment plunged in Japan, Taiwan, South Korea, Singapore, Hong Kong and China.

The shift to cash in New Zealand comes as the central bank is embarking on its steepest easing cycle since 2001, with more to come. ANZ Bank economists predict the official cash rate will be at 4.75% early next year from 7.5% now.

The bank's next rating decision is due October 23. The cuts to the OCR have driven down short-term rates. The three-month bank bill rate has tumbled 77 basis points to 7.37% in the past seven days.

The NZX 50 Index has dropped about 9% in the past 10 days and is down 26% this year. A paltry 21% of New Zealand investors were holding local stocks last quarter, down from 29% in the second quarter, according to the ING survey. Some 13% said they planned to start or add to their stock holdings in the fourth quarter.

The biggest gain was investments in pension funds, with 55% making payments to funds in the third quarter, up from 38% in the second.

By Jonathan Underhill

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