AMP to cut investments in NZ as economy slows

AMP Capital Investors said yesterday that it would continue to cut its New Zealand equity investments, as warnings of a slowdown in the economy intensified.

AMP is the country's biggest fund manager, with more than $10 billion invested.

Chief investment officer Tore Hayward said the sharemarket performed well in the June quarter, but present valuations did not reflect the slowing economy and severe capacity constraints.

The NZSX-50 gross index has piled on 15 per cent in the past eight weeks, on the back of takeover and merger activity, to trade at record highs around 3330.

AMP has ridden the wave, with its New Zealand Equities Strategic Fund returning 6.12 per cent for the June quarter and 22.41 per cent for the June year.

"Overall it was a strong quarter for the New Zealand sharemarket, for property and for bonds," Hayward said.

"In a quarter where oil hit $US60 a barrel, and there were signs of slowing economic growth - globally, and in New Zealand - the markets proved resilient."

But the latest poor economic data, including a weak GDP number, declining business confidence and a fall in retail sales, meant AMP planned to lessen its exposure to the local market.

The fund manager will shift 2 per cent of its asset allocation from the New Zealand market into global shares.

Hayward said AMP expected the New Zealand economy to underperform in the coming quarter, but was loath to say "recession".

AMP also plans to lift its exposure to the local property market, through unlisted commercial property investments, to take advantage of strong rents.

It will shift 5 per cent of its investments from global to local bonds; 1 per cent from global listed property to global equities; and reduce its hedging as the New Zealand dollar trends down.

AMP's low, medium and high equity diversified funds returned 3.33 per cent, 4.02 per cent and 4.74 per cent respectively during the June quarter. For the year to June 30 they returned 10.06 per cent, 11.14 per cent and 14.56 per cent.

Global property returned 12.10 per cent for the quarter and 39.08 per cent for the year. Its New Zealand Property Fund returned 5.06 per cent and 15.36 per cent respectively.

- NZPA