Kiwi investment bosses get bullish on shares

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Government bonds are falling out of favour, but the world's sharemarkets are looking more attractive to New Zealand's investment managers.

Russell Investments, in its quarterly survey of investment managers, completed late last month, found nearly 70 per cent of managers were bullish about equities - and none were bearish. The rest were "neutral".

Alister Van der Maas, senior manager investment consulting for Russell Investments New Zealand, says this is interesting given that equity markets have already significantly rebounded since the troughs of March this year.

"The overall sentiment seems to be that the NZ market remains undervalued," said Van der Maas.

Cash and bonds were not very popular, with two thirds of the managers bearish about their prospects, particularly government bonds.

Less than half were bearish about these investments last quarter.

"This is no surprise given the large weighting of the NZ bond market to government bonds, a sector of the bond market viewed with pessimism given the significant bond issuance by governments globally," said Van der Mass.

"Russell's US survey, for example, found 83 per cent of managers bearish on US Treasuries, while at the same time 66 per cent were bullish on high yield bonds and corporate bonds."

The NZ managers forecast another quarter of negative growth before the pain starts to ease.

They also thought the NZ dollar was likely to depreciate over the next 12 months and it would fall out of favour with international investors.