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Asia Pacific Investor Confidence Drops

Fuseworks Media
Fuseworks Media

Wellington, April 15 NZPA - The global credit crunch and sub-prime crisis in the United States saw investor confidence decline in the Asia Pacific region in the first quarter of 2008, according to an ING investor survey.

Excluding Japan, Australia and New Zealand investor confidence in the Asia Pacific region fell 7.4 percent.

The drop was most severe in developed nations such as Hong Kong (down 27.7 percent), Singapore (33.5 percent), Australia (32.1 percent), Japan (15.5 percent) and New Zealand (23.7 percent).

Fast-growing markets China and India had the highest levels of confidence, up 3 percent and 0.9 percent respectively.

ING general manager of investor services Steven Giannoulis said the results were not a surprise and showed the region was not insulated from global markets.

"The reality is that markets around the world are linked and the Asia Pacific region is therefore not spared the effects of the credit crunch and slowdown in the US economy."

Investors in developed markets were more affected by global volatility because of their exposure to global equity funds, he said.

"Although investors in markets like China and India appear more optimistic, it tends to be because their economies are less dependent on global market demand and they have a `young' investor base which tends to be more positive in its investor outlook."

The survey also highlighted that New Zealand investors were looking to diversify the countries they invest in.

New Zealand investors currently invest in Australia (60 percent) the US (49 percent) and the United Kingdom (26 percent) predominately.

The ING survey predicted a fall in investments in these countries, especially the US (down to 28 percent), and an increase in investment in China (up 8 percent to 25 percent), Canada (up 6 to 15 percent), India (up 10 to 13 percent) and Germany (up 4 to 13 percent).

The free trade agreement with China "shone a spotlight" on the market, Mr Giannoulis said.

"Amidst fears of a US recession, across the region there are fewer investors who plan to invest in the US market in the very near future. This seems to have led more investors looking towards Asia."

Global uncertainty was driving investors towards low risk investments and many were developing a cautious approach, the survey showed.

Fifty-four percent of investors favoured low risk investments compared to medium risk (47 percent) and high risk (38 percent) investments.

In New Zealand, 47 percent believed in a conservative investment strategy, up from 44 percent in the last two quarters.

"Our survey shows that most investors in Asia have been moving towards holding cash and deposits and gold during the first quarter."

Most Asian investors were "cautiously optimistic" about the long term and Mr Giannoulis said Asia's economies were likely to remain "robust".

The New Zealand arm of the Dutch financial group ING sparked controversy last month when it suspended withdrawals from two funds worth $521 million, affecting 8000 investors, because of the global credit market turmoil.

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