A string of negative consumer and business surveys has raised concern the recession faced by New Zealand is intensifying.
The quarterly ING Investor Dashboard Survey for the fourth quarter of 2008 was released yesterday and revealed New Zealand investor sentiment had dropped from being the fourth most confident market in the region to become eighth out of 13 markets.
Release of the ING survey follows hard on the heels of last week's New Zealand Institute of Economic Research report, which heaped doom and gloom on the business community, delivering its worst result in 40 years, with domestic trading activity expectations at their lowest levels.
ING New Zealand investor services manager Steven Giannoulis said that to some extent New Zealanders might have felt insulated from the global financial turmoil, until now.
"As an exporting nation, we feel the effects of international events more quickly and directly than other markets," he said in a statement yesterday ABN Amro Craigs broker Peter McIntyre said the latest survey would be of no surprise to investors, who had faced a "barrage of bad news" for the past nine months and were "feeling shell-shocked" by losses sustained in the equities markets.
"[However] it is invariable that at time like this it is the best time to buy, as stocks are undervalued by historical standards," he said.
Forsyth Barr broker Peter Young said the United States economy was having a "huge sentimental effect" on New Zealand investors and, with America still showing signs of deterioration, investors were extremely cautious about what they were investing in.
"A lot of clients are reviewing portfolios with a conservative view, but on the flip side a lot of astute, educated investors also know that there are some very cheap stocks on all markets at the moment," Mr Young said.
They were taking positions with a longer-term view, knowing that eventually the markets would turn and they would see some good capital growth, he said.
Amid the survey, investor sentiment declined sharply across Asia Pacific in the fourth quarter of 2008, with New Zealand dropping 35% to score 62 out of 200.
Each market covered by the survey is assigned an investor sentiment score ranging from 0, being the least optimistic, to 200, being the most optimistic.
Mr Giannoulis said New Zealand private, high net worth investors recorded a 35% drop in confidence for the surveyed quarter, highlighting the continued impact of the global financial and economic crisis on the market.
New Zealand investors expected the economy and personal situation to deteriorate in the next quarter and, looking ahead, 45% of them expected the general economic situation to worsen in the present quarter, compared to a much more optimistic outlook in the third quarter of 2008 when 43% projected that the economic environment would improve during the last quarter of 2008.
"Now only 27% are taking an optimistic outlook for the general economy in the first quarter of 2009," Mr Giannoulis said.
The global credit crunch and deterioration of the US economy continued to weigh heavily on investors as they remained cautious in their investment strategies, with 86% of New Zealand investors saying they were affected by the credit crunch during the past quarter and 33% indicating the impact was considerable.
Mr Giannoulis said 83% reported they would continue to be affected by the credit crunch this quarter.
"However, while the recession in New Zealand may be prolonged due to the global slowdown, overall we expect the Asia Pacific region as a whole to be in better shape than US or Europe in the year ahead," he said.
One sign of optimism among New Zealand investors was that 32% believed the National Government's policies would have a favourable impact on their investments.
"This is almost double the figure recorded in the previous quarter, before the election. However, the majority of investors (56%) consider the new government will have no impact on their investments," he said.
In New Zealand, 54% expected the US economy to deteriorate further in this quarter, while in Australia 59% expected to see a continued decline.
Mr Giannoulis said the news was not all doom and gloom and many investors had viewed both the New Zealand and US elections as a positive step towards economic recovery.
The survey was across 13 markets in the Asia Pacific region: Hong Kong, China, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan, Australia and New Zealand.
