'NZ worsts therefore best" investment

Press, 9 November 1988, Page 45

'NZ worsts therefore best " investment

PA Sydney New Zealand is one of the best places in the world for investment, according to a leading analyst with a huge United States investment bank, Morgan Stanley. Working on a counter-cyclical investment theory, Morgan Stanley’s New York-based director of worldwide strategy, Barton Biggs, predicted New Zealand shares and bonds would rally as all the bad economic news had already been reflected in market levels. “We are putting 4 per cent of our international model portfolio into New Zealand, the cheapest and worst-performing open market in the world,” Mr Biggs said in a report released last night. Mr Biggs said New Zealand's real interest rates were near historical

highs and Morgan Stanley economists believed the Reserve Bank was running “the tightest monetary policy anywhere.” The Government was committed to bringing inflation down to 2 per cent or less, but real gross national product had fallen in the last quarter, and unemployment had risen. "However, we detect signs of improving business confidence, and the first major property acquisition since the crash was recently announced,” Mr Biggs said, referring to Robt Jones Investments Ltd’s decision to spend $450 million on three buildings in Auckland and Wellington.

“We expect both stocks and bonds to rally. All the bad news seems to have already been discounted.” Morgan Stanley favoured Brierley Investments, Ltd, and Fletcher Challenge, Ltd, as New Zealand r*ocks to buy. Mr Biggs said New Zealand, Thailand, Hong Kong, Singapore and Malaysia were currently the best countries for investment. He said high-growth east Asian and Pacific markets had all done badly since the late (northern hemisphere) spring but, with their cyclical nature, they would once again be global leaders when the world economy had a “soft landing” in 1989.