MELBOURNE—Asian investors will increasingly target assets in New Zealand including government debt securities, natural resources and farms, pushing up the value of the nation's currency, Prime Minister John Key said Sunday.
"We are starting to see quite an increase in interest from Asia, particularly as they look at New Zealand and see the potential in the mining and exploration centers, we've seen significant interest there, and obviously in the agriculture sector where we have a pre-eminent position," Mr. Key said in an interview with The Wall Street Journal during a visit here for talks with his Australian counterpart, Julia Gillard.
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The remarks come after Mr. Key's government approved Shanghai Pengxin Group's acquisition of 16 dairy farms in the country, one of the largest made by a Chinese company in New Zealand.
Mr. Key emphasized that China is especially interested in New Zealand-based assets.
"They like the New Zealand story. They are a country that is significantly worried about food security. Not only do they want to buy food, but they are increasingly starting to buy products on the basis of health benefits," said Mr. Key.
China is New Zealand's second-largest market after Australia. New Zealand was the first developed nation to sign a free-trade agreement with Beijing but recent investments have caused anxiety among some groups in the Pacific nation.
"Where we see more sensitivity is around the purchase of real assets in New Zealand," said Mr. Key, emphasizing that investments in farm land will have to meet strict conditions.
Aside from farms, New Zealand's government bond securities are drawing significant interest from Beijing and other foreign buyers as the small Pacific nation takes advantage of demand for safer assets following the worsening of the European sovereign debt crisis, according to the recently re-elected prime minister.
"There has been significant foreign interest, particularly out of China, but right across the world," Mr. Key said. "We think one of the reasons why the Aussie dollar and New Zealand dollar are so strong is that foreign interest in the securities market."
That demand has helped push up the value of the New Zealand dollar, or Kiwi, putting in pressure on some exporters and tourism.
"We are concerned at the level of the exchange rate because we think that above $0.75 [U.S.] it's very difficult for our export sector," Mr. Key said, adding that he doesn't see a drawback in the Kiwi's strength in the near term. "It's not a story I think is going to reverse anytime soon. I think we're in a new band now for a while and I don't think it's going to go away."
Despite both Standard & Poor's and Fitch Ratings downgrading the country's debt measure in September, citing its worsening external-debt position and the costs of earthquake recovery, Mr. Key is confident his government will return the budget to surplus in the fiscal year starting 2014.
Christchurch, the country's second-largest city, was wrecked by major earthquakes in 2010 and 2011, leaving the nation with a reconstruction bill estimated in the tens of billions of New Zealand dollars.
Mr. Key, a 50-year-old former investment banker, whose previous roles include serving as head of global foreign exchange for Merrill Lynch, led the National Party to a second consecutive election win in New Zealand in 2011 after voters endorsed his mandate for a partial sale of some prominent energy assets in an effort to help rebuild Christchurch.
"We think there is so much pent up demand for investment products from both domestically and offshore we are confident we can get them away," Mr. Key said.
"We are starting to see quite an increase in interest from Asia, particularly as they look at New Zealand and see the potential in the mining and exploration centers, we've seen significant interest there, and obviously in the agriculture sector where we have a pre-eminent position," Mr. Key said in an interview with The Wall Street Journal during a visit here for talks with his Australian counterpart, Julia Gillard.
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The remarks come after Mr. Key's government approved Shanghai Pengxin Group's acquisition of 16 dairy farms in the country, one of the largest made by a Chinese company in New Zealand.
Mr. Key emphasized that China is especially interested in New Zealand-based assets.
"They like the New Zealand story. They are a country that is significantly worried about food security. Not only do they want to buy food, but they are increasingly starting to buy products on the basis of health benefits," said Mr. Key.
China is New Zealand's second-largest market after Australia. New Zealand was the first developed nation to sign a free-trade agreement with Beijing but recent investments have caused anxiety among some groups in the Pacific nation.
"Where we see more sensitivity is around the purchase of real assets in New Zealand," said Mr. Key, emphasizing that investments in farm land will have to meet strict conditions.
Aside from farms, New Zealand's government bond securities are drawing significant interest from Beijing and other foreign buyers as the small Pacific nation takes advantage of demand for safer assets following the worsening of the European sovereign debt crisis, according to the recently re-elected prime minister.
"There has been significant foreign interest, particularly out of China, but right across the world," Mr. Key said. "We think one of the reasons why the Aussie dollar and New Zealand dollar are so strong is that foreign interest in the securities market."
That demand has helped push up the value of the New Zealand dollar, or Kiwi, putting in pressure on some exporters and tourism.
"We are concerned at the level of the exchange rate because we think that above $0.75 [U.S.] it's very difficult for our export sector," Mr. Key said, adding that he doesn't see a drawback in the Kiwi's strength in the near term. "It's not a story I think is going to reverse anytime soon. I think we're in a new band now for a while and I don't think it's going to go away."
Despite both Standard & Poor's and Fitch Ratings downgrading the country's debt measure in September, citing its worsening external-debt position and the costs of earthquake recovery, Mr. Key is confident his government will return the budget to surplus in the fiscal year starting 2014.
Christchurch, the country's second-largest city, was wrecked by major earthquakes in 2010 and 2011, leaving the nation with a reconstruction bill estimated in the tens of billions of New Zealand dollars.
Mr. Key, a 50-year-old former investment banker, whose previous roles include serving as head of global foreign exchange for Merrill Lynch, led the National Party to a second consecutive election win in New Zealand in 2011 after voters endorsed his mandate for a partial sale of some prominent energy assets in an effort to help rebuild Christchurch.
"We think there is so much pent up demand for investment products from both domestically and offshore we are confident we can get them away," Mr. Key said.
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