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Managers bearish on NZ

Investment professionals may have remained perky over global economic prospects, but they are feeling downright gloomy about things at home.

Tuesday, July 10th 2007, 8:44AM
Funds managers were bearish on most New Zealand asset classes in June, compared with how they felt three months earlier says David Iverson, head of consulting Russell Investment Group in New Zealand.

The findings come from Russell's quarterly survey of fund managers throughout the world.

In New Zealand's latest qualitative results Iverson said the eight funds managers surveyed believed New Zealand's equity market was overvalued and 38% felt the outlook was weak over the coming 12 months.

However, some thought the introduction of KiwiSaver and increased corporate activity could prevent further declines.

On cash, while bearish compared with March, 50% of managers still saw some upside and thought the kiwi would weaken despite continued low employment and the Reserve Bank's tightening bias. Fully hedging offshore exposure had been a positive contributor to many funds' performance, Iverson says.

Not one fund manager was bullish about fixed income. The domestic bonds market had been made difficult too by a continued inverted yield curve and lack of liquidity.

Property also got a pounding with managers pointing to increasing interest rates starting to have an impact on the domestic sector. Managers were also bearish on listed property trusts (50% bearish and 25% bullish).

"Overall the June survey results show a bearish outlook on the part of funds managers," Iverson says. "While they remained bullish on prospects for the global economy, this survey was done prior to the recent sell-off in global equity markets and concerns regarding the US sub-prime mortgage markets."

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AIA 4.55 2.55 2.69 2.79
ANZ 4.44 2.89 3.25 3.39
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BNZ - Mortgage One 5.15 - - -
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China Construction Bank Special - 2.65 2.65 2.80
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HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 1.99 - -
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Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
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Westpac Special - 2.29 2.69 2.79
Median 4.54 2.79 2.99 2.96

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