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 . . . Steven Giannoulis
Investor confidence in New Zealand slumped 23.7% in the three months ended March, as investors remained cautious when they considered the outlook for investment markets.
The latest ING investor confidence index, which tracks investor sentiment against a range of investment behaviour across 13 Asia-Pacific markets, highlighted that the region is not insulated from global market uncertainty.
Australia, Singapore and Hong Kong also had significant falls in investor confidence.
ING New Zealand investor services general manager Steven Giannoulis said it was not surprising that investor sentiment had fallen over the last two quarters.
"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 a slow down in the US economy.
"What we are seeing is that investors in the more developed markets are being impacted by the volatility of the global market due to their exposure to global equity funds.''
Although investors in markets like China and India appeared more optimistic, it was because their economies were less dependent on global market demand and they had a "young'' investor base which tended to be more positive in its investor outlook, the said.
The index also highlighted that New Zealand investors were increasingly looking to diversify their investment portfolios across international markets as well as different investments.
The top three overseas markets for New Zealanders in the three months to March were Australia (60%), the US (49%) and the United Kingdom (26%).
China (8%) and India (10%) were becoming increasingly popular destinations.
"For New Zealand investors, the recently signed free trade agreement with China may have shined a spotlight on this market,'' Mr Giannoulis said.
A quarter of those New Zealanders who were considering investing overseas in the next three months indicated they would consider investments in China within their portfolios.
Fewer investors planned to invest in the United States, leading more investors to look towards Asia to ensure they were operating diversified portfolios in an attempt to limit their exposure to individual market fluctuations, he
said.
