AMP to cut market exposure

Press, 14 May 1987, Page 25

AMP to cut market exposure

NZPA-AAP Sydney Australia’s largest institutional investor, the AMP Society, plans to reduce its total exposure to the Australian sharemarket this year in expectation of a possible downturn. The rapid rise in the Australian, New Zealand and U.K. share markets, combined with a 61 per cent increase in new life insurance business, helped the AMP lift net surplus by 29 per cent to a record sAust3.29 billion

last year. However, managing director, Mr lan Stanwell, commenting on the release of the society’s 138th annual report, said the local market was close to its upper limit and a correction was likely. "At this point in time it’s unlikely that we would put as high a proportion of our funds into shares in 1987 as we did in 1986,” Mr Stanwell said. Global developments,

including the possible trade war between the U.S. and Japan and fragile overseas economies, combined with the state of the Australian economy would be factors influencing the market. Price earnings ratios on the Australian market had moved more into line with those overseas, with the exception of Japan, and stocks were now becoming overvalued. The AMP is most likely to increase its exposure

this year in fixed interest investments, such as short term deposits, government securities and debentures — areas in which it reduced its investment in 1986.

Other options would be the property market, where AMP claims to have an unparallelled portfolio in Australia and New Zealand, and overseas equity markets, where the society has built up significantly its exposure in recent years.