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Latest MasterIndex™ Reveals Kiwi Consumer Confidence on the Increase

Auckland, 1 February 2007 - Despite Australia often being labelled 'the lucky country', it seems Kiwis no longer feel the grass is greener on the other side of the Tasman, according to the latest MasterIndex of Consumer Confidence, released today by MasterCard Worldwide.

The six-monthly index reveals that while Australians' consumer confidence is in decline and their outlook on their quality of life remains pessimistic (falling from 39.5 to 25.5 according to the index) this is in stark contrast to New Zealand where the quality of life score is 53.6, up ten points since six months ago.

While the last six months have been punctuated by rising interest rates and residential property prices as well as weak economic growth, New Zealanders are optimistic about what the next six months hold. The New Zealand MasterIndex score is 61.0, compared to six months ago (45.2) and a year ago (42.5). Australia's overall score of 45.3 declined from six months ago (46.5) and a year ago (49.8).

The MasterCard index analyses prevailing consumer perceptions of economic conditions for the six-month period ahead and has been conducted across the Asia/Pacific region for 14 years.

New Zealanders' return to cautious optimism is signalled by improved scores in four of the five economic factors measured by the index. Kiwis are feeling significantly more confident about the economy (51.0 vs. 25.2 six months ago), the stock market at 55.2 (vs. 28.7 six months ago), and employment which measured at 61.0 compared to 42.7 six months ago. Their outlook on regular income deceased only slightly - 84.3, a decrease from 85.8 six months ago but still ten points ahead of Australia’s score.

The Asia/Pacific region as a whole has a consumer confidence index of 64.3, rising from six months ago (57.4) and a year ago (57.7), and it is also above the Historical Average (59.5).

From a regional point of view, factors likely to have contributed to an improved consumer sentiment include the decline in crude oil prices and strong performance of the stock markets. Country-specific factors include the election of a new prime minister in Japan and its highly positive Tankan1 reports on business confidence and the ousting of the former prime minister in Thailand.

Notably, ten of the 13 Asia/Pacific markets have seen an improvement in their consumer confidence levels from six months ago. Vietnam continues to be the most optimistic market (93.7), followed by Hong Kong (88.8), Singapore (82.5) and China (81.2).

This positive outlook of consumer confidence for the first half of 2007, however, has to be viewed in the context of a widely expected slowdown in growth in the US, and possibly China, two key drivers of exports for Asia.

"Many markets across Asia/Pacific are still heavily dependent on exports. Net exports have contributed more than domestic demand to economic growth in recent years in most Asian markets. There is a need to build a more robust domestic sector. Consumer sentiment is fairly optimistic in 1H 2007 but things might change quickly in the second half of the year if growth slows sharply in the US, leading to a decline in export demand for Asia," said Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide.

The latest MasterIndex survey, the region's most comprehensive and longest running consumer confidence survey, was conducted from 11 October to 30 October 2006 and involved 5,405 consumers across 13 key Asia/Pacific markets. In its fourteenth year, the bi-annual survey analyzes prevailing consumer perceptions of economic conditions for the six-month period ahead. The scores ranging between 0 and 100 are based on responses on five variables: Employment, Economy, Regular Income, Stock Market and Quality of Life.

Other highlights of the 1H2007 MasterIndex of Consumer Confidence survey include:

• Vietnam continues to demonstrate very high levels of consumer optimism, with its current MasterIndex of 93.7 being a record high for the market. The positive outlook can be attributed largely to Vietnam switching from a traditional communist state to a market economy that is the fastest growing in South-East Asia.


• Compared to six-months and a year ago, consumer confidence in Indonesia (62.5 vs. 42.4 six months ago and 39.0 a year ago), New Zealand (61.0 vs. 45.2 six months ago and 42.5 a year ago) and Thailand (65.1 vs. 28.6 six months ago and 47.9 a year ago) has rebounded significantly.


• Hong Kong and Singapore continue to experience high levels of confidence, with consumers expressing a very positive outlook on the Economy, Regular Income, Employment, Quality of Life and the Stock Market.

Australia (45.3)

Consumer sentiments in Australia are currently slightly pessimistic. Its MasterIndex at 45.3 is marginally lower than six months ago (46.5) and a year ago (49.8), and significantly lower than its Historical Average MasterIndex of 56.5.

While optimistic about Regular Income (71.7) and somewhat optimistic about the Stock Market (57.1), consumers are pessimistic on Employment (36.1), Economy (36.0) and Quality of Life (25.5).

Consumer sentiments in China remain very optimistic. Its current MasterIndex of 81.2 is slightly higher than six months ago (78.2) and its Historical Average (74.0), but marginally lower than a year ago (82.3).

Chinese consumers remain highly optimistic on the Economy (92.7), Quality of Life (91.5) and Regular Income (88.5), and optimistic about Employment (72.3). Stock Market sentiments (61.0) have also improved from a year ago.

Hong Kong's current MasterIndex of 88.8 is near record high for the market (as it is not statistically higher than the previous record high of 88.5 of period ago). The year ago MasterIndex is 85.8 and the Historical Average is just 53.3.

Consumers continue to be very optimistic on Employment (93.5), Economy (93.9) and Regular Income (94.4). Outlook on Quality of Life (85.4) and the Stock Market (76.7) continue to be positive as well.

Unlike six months (42.4) and a year ago (39.0), Indonesia consumers are now more optimistic (62.5). Consumers are optimistic on Regular Income (86.3) and the Stock Market (71.1), but are only slightly optimistic about the Economy (60.2). They are still pessimistic towards Employment (49.8) and Quality of life (45.0), even though they view these much less negatively than six months and a year ago. The current MasterIndex is slightly below the market Historical Average of 66.6.

Consumer confidence in Japan has in the last three consecutive surveys been optimistic. Its current MasterIndex of 68.3 is just marginally below six months ago (68.9) and higher than a year ago (63.0), when Japanese consumers first turned optimistic since the inception of the MasterIndex in October 1993.

Japanese consumers are optimistic on Employment (79.7), Economy (78.5) and the Stock Market (77.1), and slightly optimistic on Quality of Life (57.8). However, current outlook on Regular Income (48.3), unlike six months and a year ago (61.4 and 61.7 respectively), is marginally pessimistic.

Japan's current MasterIndex of 68.3 is two and a half times stronger than the market's Historical Average of 28.2.

Consumer sentiments (29.3) remain the lowest in the region, as it was six months ago. While sentiments have improved marginally from six months ago (28.1), it is considerably below a year ago (47.5) as well as the market Historical Average of 52.2. It is the fifth lowest in the market's MasterIndex history.

Consumer sentiments on Employment (14.2) and Economy (15.8) are extremely pessimistic, and while sentiments on Stock Market (39.7), Quality of Life (30.1) and Regular Income (46.7) are less so, they are still in the pessimistic range.

Malaysia (37.5)
Consumer confidence in the last MasterIndex for 2H 2006 (51.4) showed a significant decline from the previous six months (68.7) and a year ago (61.4). Consumer confidence has dipped further this time round, turning pessimistic (37.5) and well below the market’s Historical Average of 74.2. The current MasterIndex is the third lowest since the survey started in 1993, with such low levels of confidence seen only during the Asian Financial Crisis

Malaysian consumers are pessimistic on all the five economic factors - Regular Income (31.9), Stock Market (35.7), Economy (39.2), Quality of Life (39.8) and Employment (41.1).

New Zealand (61.0)
New Zealanders have become more optimistic than six months ago (45.2) and a year ago (42.5). Its MasterIndex of 61.0 signals a return to cautious optimism, with improvements on the Economy (51.0 vs. 25.2 six months ago), Stock Market (55.2 vs. 28.7 six months ago), Employment (61.0 vs. 42.7 six months ago). Outlook on Regular Income (84.3 vs. 85.8 six months ago) continues be quite optimistic.

The current MasterIndex of 61.0 is slightly ahead of the market’s Historical Average of 58.8.

Consumer confidence in the Philippines has recovered from the very low levels in 2005, and has turned marginally optimistic.

The current MasterIndex (57.2) is a further improvement from six months ago (51.9) and a year ago (28.9), and is above its historical average (49.1). While consumers are overall optimistic, they are however still uncertain about the Economy (46.7), Employment (45.0) and Quality of Life (42.8), where sentiments are still slightly pessimistic.

Current consumer sentiments in Singapore are very optimistic. Its MasterIndex of 82.5 is a further improvement in consumer confidence, and is significantly stronger than six months ago (73.9), a year ago (74.8) and the market Historical Average (65.2).

Consumers are very optimistic about Employment (86.1), Quality of Life (84.8), Economy (83.9), Regular Income (81.1) and to a slightly lesser degree, the Stock Market (76.6).

Consumer confidence in Taiwan (30.8) is marginally higher than six months ago (29.1) and improves from a year ago (26.6). Its current MasterIndex of 30.8 however demonstrates continued pessimism as confidence on four of the five economic factors - Regular Income (31.3), Economy (28.4), Employment (25.3) and Quality of Life (24.1) is still low. Sentiments towards the Stock Market (44.7) are less negative but nevertheless still pessimistic. Taiwan's current MasterIndex of 30.8 is well below the market's Historical Average of 48.5, and the second lowest among the 13 markets surveyed for 1H 2007.

Consumer sentiments in this market (at 65.1) have recovered significantly from the last survey, where its MasterIndex score (28.6) was the lowest since the Asian Financial Crisis of 1997/98. Currently, Thai consumers are somewhat optimistic on all five economic factors. The current MasterIndex is significantly ahead of the market's Historical Average (56.1).

Current consumers' outlook on Regular Income (77.0), Economy (64.8), Quality of Life (62.5) and Employment (62.4) is fairly optimistic, and significantly higher than both six months and a year ago. Stock Market (58.7) sentiments are slightly optimistic.

Consumers in Vietnam continue to be very optimistic and confidence in this market is at an all-time high (93.7).

Confidence has increased even more from six months ago (89.6), and a year ago (93.1), beating its Historical Average (91.4). Sentiments on Employment (91.6), Economy (95.9), Regular Income (94.5) and Quality of Life (98.7) and the Stock Market (87.8) are very positive.

NOTE TO EDITORS: This news release is distributed with an accompanying chart (see page 7) that shows current MasterIndex of Consumer Confidence scores by market compared with several significant points in the history of the survey.

The MasterCard MasterIndex™ of Consumer Confidence survey has a 14-year track record of consumer confidence indices collected from more than 131,000 interviews, unequalled both in scope and history across Asia/Pacific.

The MasterIndex of Consumer Confidence is the most comprehensive and longest running survey of its kind in the region. It 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 is now covered by the SAMEA (South Asia/Middle East/Africa) MasterIndex survey. The last Asia/Pacific MasterIndex survey was conducted from 11 October to 30 October 2006 among a sample of approximately 400 (total sample of 5,405) 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. January to June 2006). 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.

The chart below shows the performance of each market at different key intervals and important turning points in the history of the MasterIndex of Consumer Confidence.

MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 16 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard7reg;, Maestro® and Cirrus®, MasterCard Worldwide serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercardworldwide.com.

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.

Historical Average is the mean average of all MasterIndex scores up through Period Ago but not including the Current Period.

* The average excludes Vietnam as this market was not surveyed in 1997/98.

¹The Tankan is a quarterly poll of business confidence reported by the Bank of Japan showing the status of the Japanese economy. It is one of the key financial measures in Japan and has considerable influence in stock prices and the currency rate.