Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Hands Off the Printing Presses Say Investment Managers

News Release


16 January 2013

Final quarter 2012


Hands Off the Printing Presses Say Investment Managers

It doesn’t happen very often but New Zealand’s leading investment managers are in full agreement that New Zealand should not follow a number of other international economies and print more currency.

Russell Investment’s latest survey of New Zealand’s leading investment fund managers sought their expectations for the markets for 2013. It also asked whether the Reserve Bank or Government should look at bringing down the value of the New Zealand dollar through measures such as quantative easing – printing more money.

The answer from the fund managers was a resounding “no”.

“With the New Zealand dollar sitting at 84 cents last week the perception is that our currency is strong, but the reality is that it more likely reflects weakness of the US dollar,” said Russell’s New Zealand Head of Consulting, Daniel Mussett.

“The investment managers we survey every quarter agree the current high exchange rate is hurting our manufacturing base and our exporters. In the short term, that generates a drag on economic growth, with rising unemployment and deterioration in our external accounts.

“However, a number of those managers also consider that it would be dangerous, if not impossible, to manage our currency through direct intervention. Fortunately, good companies and those with a competitive advantage will continue to do well despite the current position of the dollar.

“Since weak currencies typically characterise poor countries, the sentiment from managers is that it is doubtful you can become rich by making yourself poor.”

The survey also shows our investment managers believe the equity market in New Zealand remains fairly valued following New Zealand’s standout 12-month return of 25% including a return of more than 5% in the last quarter of the 2012 calendar year.

“The majority believe dividend yields support the current valuations and that there may be more upside from cyclical stocks in 2013. They were overshadowed by the strong performance of the more defensive stocks in 2012,” says Mr Mussett.

“There was also a marked improvement in sentiment towards the New Zealand economy from the previous quarter, with the majority of managers expecting stronger economic growth over the next 12 months.

“That appears to be in part from the effect of the Christchurch rebuild, the improved data coming out from our trading partners and higher house prices creating a wealth effect leading to increased consumption. However, some managers remain cautious about the speed of the rebuild. One manager considers there is a risk of increased unemployment as businesses continue to adjust to the current environment.”

The survey also showed a continuation of the bearish sentiment managers have towards the bond market with a bullish outlook on equities. Managers share a view that expectations for company earnings will be exceeded and that there is demand for higher income investments.


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Crown Accounts: Government Ekes Out Six-Month Surplus Of $9M

The New Zealand government eked out a tiny surplus in the first six months of the fiscal year as growth in domestic consumption lifted the goods and services tax take, while uncertainties over the Kaikoura earthquake costs meant expenses were less than expected. More>>

ALSO:

Almost 400 Jobs: Shock At Cadbury's Dunedin Factory Closure

Workers at Cadbury in Dunedin are reeling after learning this morning that the iconic Cadbury factory is to close, with the loss of almost 400 jobs... “The company had reported it was doing well and this has come out of the blue,” says Chas. More>>

ALSO:

Transport: Boards Of Inquiry For Auckland Roading Projects

Boards of Inquiry have been appointed to decide on two significant Auckland roading projects in a move which will get a decision by the end of the year, Environment Minister Dr Nick Smith and Conservation Minister Maggie Barry announced today. More>>

ALSO:

Three Months On: Quake Reciovery In Kaikōura And Elsewhere

Three months after the magnitude 7.8 earthquake on 14 November, encouraging recovery progress is being made in affected communities. More>>

ALSO:

Jetstar, Qantas For Govt Transport: Government Still In Talks With Air NZ

The government is still negotiating with national carrier Air New Zealand in a cross-agency air travel contract that will add a number of new airlines to the list of approved flyers. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news