Wealthy Kiwis grew gloomier last quarter: ING Dashboard

Monday 19th January 2009

New Zealand private, high net worth investors became more pessimistic in the fourth quarter and expect conditions to deteriorate in the next three months, according to the ING Investors Dashboard Survey.

Wealthy New Zealanders fell into a deeper funk than their counterparts in Asia, ex-Japan, according to the quarterly survey. The New Zealand index score tumbled 35% to 62 from 96 in the third quarter and from 118 in the fourth quarter of 2007. The pan-Asia index fell 15% to 73.

"To some extent, New Zealanders may have felt insulated from the global financial turmoil until now, but as an exporting nation we feel the effects of international events more quickly and directly than other markets," said Steven Giannoulis, investor services manager at ING New Zealand, in a statement.

The survey follows a report this month showing business confidence tumbled in the fourth quarter, with companies the least confidence about their own outlook since at least 1970. Retail sales figures this week are expected to add to the picture of an economic slump, stoking the case for a 100 basis point cut in the official cash rate on January 29.

Some 23% of New Zealanders hold local stocks, according to the survey, with just 8% saying they plan to start or add to their equity holdings in the first three months of 2009, even after the NZX 50 Index declined 25% in the past 12 months. In a sign of risk aversion, 75% of those surveyed were holding cash or keeping their money on deposit in the fourth quarter, with 30% expecting to start or add to cash positions this quarter.

Some 43% of those surveyed expect conditions to worsen in the next three months, a turn-around from the 43% in the third quarter who saw a pick-up in the following three months.

Eighty-six percent of New Zealanders say they felt the pinch from the credit crunch in the fourth quarter, with 83% expecting the difficulties to endure this quarter. Some 59% said they were hurt by the US economic slump last quarter.

By Jonathan Underhill

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