Offshore Investors Seek Short-Term Opportunities Amid Global Economic Uncertainty
As the global economy faces uncertainty, offshore investors are shifting their focus towards short-term opportunities rather than long-term investments. This change in sentiment has been highlighted in the fifth mergers and acquisitions (M&A) report by law firm Simpson Grierson, which surveyed international investors’ attitudes towards investing in New Zealand.
Mixed Appetite for Investing in New Zealand
The report reveals that offshore investors’ interest in investing in New Zealand is mixed this year. Out of the 90 investors surveyed, less than half (44 percent) have plans to invest in the country within the next 12 months. However, there has been a significant increase of 51 percent compared to last year in the number of investors interested in short-term investments.
Opportunities in Declining Valuations
James Hawes, corporate partner at Simpson Grierson, suggests that the increase in interest for short-term investments is driven by declining valuations. As valuations decline, investors are actively seeking bolt-on investments for their existing platforms. This indicates a strategic approach to capitalize on the current market conditions.
As the global economy faces an uncertain period marked by high interest rates and inflation pressure, investor sentiment in New Zealand has experienced a shift. According to a recent report, fewer investors are taking a long-term view of the country as a viable investment destination. However, despite this change, New Zealand remains an attractive place for investors.
A Changing Perspective
The report reveals that only 29 percent of investors are considering investments in the medium- to long-term, a significant decrease from the 54 percent recorded last year. Additionally, the study found that 14 percent of investors would not consider New Zealand as an investment destination, a notable increase from the previous year’s 0 percent.
Despite these figures, experts in the field, such as John Hawes, believe that New Zealand still holds appeal for investors. Hawes states, “Our survey results showed people were still very bullish in terms of New Zealand as a location. It came out on top as the country most easy to do business in the Asia-Pacific region.”
The Impact of Elections
The survey also highlights the influence of the upcoming elections on investor sentiment. Approximately 31 percent of respondents stated that a change of government would increase their intention to invest in the country. However, Hawes remains optimistic, stating, “Even though the survey shows a drop in positive sentiment, we don’t think the elections and potential change in government will have any tangible impact on investment here. Looking ahead, we have cause for cautious optimism despite the headwinds.”
Conclusion
While long-term investing sentiment may be affected by global economic uncertainty, offshore investors are adapting their strategies to focus on short-term opportunities. The survey conducted by Simpson Grierson highlights the shifting dynamics in the investment landscape, with investors actively seeking out potential investments in New Zealand. As the market evolves, it will be interesting to see how these trends continue to shape the investment landscape.
