NZ investors see deteriorating economy; sentiment improves

Tuesday 15th July 2008

New Zealand investors expect the economy will deteriorate in the next three months as inflation accelerates though a growing number say their own situation may improve, the ING Investor Dashboard Survey shows.

Investor confidence rose 9% from the previous quarter to 98 points out of 200, indicating sentiment is still about neutral. The survey showed 53% of the investors expect the economy to weaken over the next quarter and 52% predict New Zealand stocks will extend their decline.

The benchmark NZX 50 Index has declined about 24% this year, as a global credit squeeze and soaring costs eroded profit margins and consumer confidence. The economy shrank 0.3% in the first quarter, heading for its first recession since 1998.

"We have seen New Zealand investors being weighed down recently on several fronts including falling house prices, high interest rates, rising inflation and oil prices," said Steven Giannoulis, ING New Zealand Investor Services Manager. "It is likely that investor sentiment will continue to be affected in both New Zealand and the Asia Pacific region."

The survey showed 37% of investors said their return on investment rose in the second quarter and the same percentage predict an improvement in the next three months. Some 44% see their personal financial situation improving while 24% expect it will get worse.

By Jonathan Underhill

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