Goodbye recession. Hello recovery.

For immediate release: Friday 24 July 2009

Goodbye recession. Hello recovery.

The New Zealand economy has spent the last 18 months going backwards, but there is a good chance that the recession is finally over, said Jason Wong, Head of Investment Strategy for AMP Capital Investors.

At AMP Capital’s June Quarter briefing, Mr Wong said that global economies are in a bottoming out phase and we can expect an economic recovery through to the end of next year.

“In NZ, data on business and consumer confidence, retail sales and housing market indicators suggest that the economy is in a bottoming out phase already. Adding in the cocktail of lower interest rates, the weaker NZD from a year ago and better global economic conditions, an economic recovery is likely to ensue through to the end of next year.”

For the quarter to 30 June, AMP Capital’s conservative diversified fund returned 1.4% and for the year, 5.1%, its balanced diversified fund returned 4.7% for the quarter and -6.9% for the year and its growth diversified fund
returned 7.3% and -18.8% respectively.

Individual asset classes had varying performances. Global property returned 31.6% for the quarter but -43.0% for the year and hedged global equities returned 20.2% for the quarter and -41.7% for the year. Global fixed interest
had a -0.6% quarter return and a 9.2% return for the year. New Zealand fixed interest had a 1.0% return for the quarter and a 15.8% annual return. New Zealand equities returned 8.0% for the quarter and -6.4% for the year, and cash returned 1.0% for the quarter and 7.0% for the year. New Zealand property produced negative returns at - 9.9% for the quarter and -21.2% for the year

Mr Wong said that while it feels like this recession has dragged on a bit and comparisons are often made with the Great Depression of the 1930s, it hasn’t been particularly extraordinary. Compared to other countries, NZ’s recession has been fairly mild and the economy appeared to suffer a great deal more in the periods of 1974-77 and 1987-1992

“Domestically, the New Zealand sharemarket has already bounced off its lows, reflecting expectations of better growth ahead and this positive trend should continue. However, New Zealand shares are relatively expensive

compared to global counterparts and therefore offer less upside in a world of better return opportunities,” said Mr Wong.

ends

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