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

 

Interest Rates: Wheeler Hikes OCR To 3% On Inflationary Pressures, Eyes Kiwi

Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were "becoming apparent" in an economy that’s picking up pace and he's watching the impact of a strong kiwi dollar on import prices. More>>

ALSO:

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news