Economic Uncertainties Impact on Consumer Confiden

New Zealand MasterIndex™ of Consumer Confidence Reveals Consumers are Less Optimistic

Economic Uncertainties Impact on Consumer Confidence

New Zealand, 26 July 2004 – The level of public confidence in New Zealand has dropped to below the historical market average according to MasterCard’s latest MasterIndex™ of Consumer Confidence released today.

The bi-yearly survey, which is now in its twelth year, reveals that while New Zealanders remain optimistic in regard to regular income and employment, there has been a significant drop in confidence about the economy, the stock market and quality of life.

MasterCard New Zealand spokesperson John Roberts said the results are not unexpected, given the conflicting messages in the marketplace.

“Interest rate rises and talk of more to come have dented confidence and slowed the housing market.

“The stock market will find it difficult to sustain a relatively high level of double digit growth and people are generally cautious as to its performance over the next six months.

“However, when it comes to relating the economy to their own personal situation, New Zealanders appear to be buoyed, due to the high number of job vacancies and the continued growth in consumer spending,” added Mr Roberts.

New Zealand’s current MasterIndex of 56.5 has fallen drastically from its near record high six months ago (73.7) and is currently below the country’s historical average of 60.2 as well as the Asia Pacific average of 62.3.

Consumers in New Zealand remain confident about their prospects of regular income (82.5 versus 89.4 last period) and employment (59.4 v 70.8), however they have become slightly pessimistic about the outlook for the economy (47.2 v 73.0), their expectations of the stock market (46.6 v 65.9) and quality of life (47.1 v 69.2).

The latest MasterIndex survey was conducted from 15 May to 5 June and involved 5,452 consumers across 13 Asia/Pacific markets. Five variables are measured; employment, economy, regular income, stock market and quality of life. MasterIndex respondents are asked about their sentiments on these five variables for the six month period ahead.

Of the 13 markets surveyed, 11 showed an optimistic MasterIndex score, compared to eight in the preceding survey conducted at the end of 2003.

“The region remains solidly optimistic in general, which is consistent with the maturing economic recovery both globally and in Asia. This is quite remarkable given the recent spike in world price of oil and related uncertainties. For markets that have dropped slightly from previous levels of extremely strong optimism, typically it is the poor stock market outlook that has dragged down the average. Outlooks on the economy, income, employment and quality of life tend to remain strongly optimistic,” added Dr. Yuwa Hedrick-Wong.

Vietnam (91.6), Malaysia (84.0) and China (78.9) topped the list of markets with a highly positive outlook; other optimistic markets include Singapore (71.9), Hong Kong (71.2), Thailand (69.2), Indonesia (67.3), Australia (63.4), Taiwan (58.6), followed by New Zealand (56.5) and the Philippines (54.8). While Japan’s MasterIndex score fell short of an optimistic index score (47.6), it has manifested buoyancy that has not been seen in the 12 year history of the MasterIndex. Korea, meanwhile, was the only other market to show a pessimistic outlook (40.7).

This is the twenty-third MasterIndex survey, making it the longest running and most comprehensive consumer sentiment survey in the Asia Pacific region.

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NOTE TO EDITORS: This news release is distributed with an accompanying chart (see page four) that shows current MasterIndex of Consumer Confidence™ scores by market compared with several significant points in the history of the survey.
More information on MasterIndex can be found at the website www.mastercard-masterindex.com

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About MasterIndex
MasterCard’s MasterIndex™ of Consumer Confidence survey has an 12-year track record of consumer confidence indices collected from more than 111,000 interviews, unequalled both in scope and history in Asia/Pacific.
The MasterIndex survey of Consumer Confidence is the most comprehensive and longest running of its kind in the region. MasterIndex has demonstrated its precision at several important junctures as a barometer of consumer sentiment. In June 1997, MasterIndex revealed a decline in consumer confidence – one month prior to the devaluation of the Thai baht that triggered the regional financial crisis. More recently in June 2003, MasterIndex for employment in Hong Kong dropped to a low of 20.0. This was subsequently reflected in Hong Kong’s unemployment rate, which peaked just before Sept 2003 at 8%.
The survey began in Quarter 2 of 1993 and has been conducted twice yearly since. Thirteen markets participate in the survey: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam. Vietnam made its debut in the December 2003 report, replacing India, which will henceforth be covered by the SAMEA (South Asia/Middle East/Africa) MasterIndex survey to be launched in early 2004. The last Asia/Pacific MasterIndex survey was conducted from May to June 2004 among a sample of approximately 400 (total sample of 5,452) across the middle and upper income groups in each market, except in China where approximately 600 respondents were surveyed.
The MasterIndex is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. Five economic factors are measured: employment, the economy, regular income, stock market and quality of life. The responses are consumers' thoughts on the six months ahead (i.e. July to December 2004). Data collection was via personal and telephone interviews with the questionnaire translated to the local language wherever appropriate and necessary. The survey has a margin of sampling error of plus or minus four percentage points at the 90% confidence level.
About MasterCard International
MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members' credit, deposit access, electronic cash, business-to-business and related payment programs. MasterCard International manages a family of well-known, widely accepted payment cards brands including MasterCard®, Maestro® and Cirrus® and serves financial institutions, consumers and businesses in over 210 countries and territories. The MasterCard award-winning Priceless® advertising campaign is now seen in 96 countries and in 47 languages, giving the MasterCard brand a truly global reach and scope. For more information go to www.mastercardinternational.com.

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The following Chart shows the performance of each market at different key intervals and important turning points in the history of the Region’s MasterIndex of Consumer Confidence.

The MasterIndex & The Region

Period Year Crisis Historical
Current Ago Ago Average Average
Markets 2Q 2004 4Q 2003 2Q 2003 4Q 97 - 4Q 98 MasterIndex

Australia 63.4 80.9 45.3 43.0 56.8

China 78.9 83.7 68.0 84.4 71.8
Hong Kong 71.2 81.1 23.2 16.9 46.8

Indonesia 67.3 49.0 57.5 27.2 67.5

Japan 47.6 31.8 17.4 5.4 22.7

Korea 40.7 43.6 31.0 26.1 55.0

Malaysia 84.0 93.5 71.8 40.9 75.5

New Zealand 56.5 73.7 56.6 38.5 60.2

Philippines 54.8 34.3 50.1 47.7 51.9

Singapore 71.9 65.3 33.9 34.4 64.2

Taiwan 58.6 65.7 26.5 45.1 50.4

Thailand 69.2 95.1 80.3 25.6 57.0

Vietnam 91.6 91.0 0.0 0.0 0.0

The Region
{ex-Vietnam} 62.3 64.9 44.9 31.9 55.3

Note: The Crisis period in the Chart above is based on the reflection of the MasterIndex™ of Consumer Confidence results, which may or may not coincide with actual chronology or the definitions of others.

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