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

 


NZ shares still have distance to climb, says Milford

NZ shares still have distance to climb, says Milford

Jan 30 (BusinessDesk) - Fears the New Zealand sharemarket is becoming over-valued as it continues last year's run into the new year are over-stated, and the market is "far from frothy", says Milford Assets portfolio manager Mark Warminger.

Writing in the fund manager's blog, Warminger says the last few years have been tough for corporate earnings and that even though analysts know earnings have stabilised, they are too reluctant to forecast improved profits as the six monthly earnings reporting season looms next month.

"We believe that earnings are likely to exceed expectations over the next year as the economic recovery continues and gains pace," he writes. If that happens, what looks at present like a high average price/earnings ratio for New Zealand shares of around 15.5 times will be somewhat lower.

The average PE ratio for the market over the last decade has been 14.7 times.
"Analysing another valuation metric would suggest the New Zealand equity market is currently fair value on a dividend-yield basis, with the current prospective dividend yield equal to its 20 year average.

"Comparing the equity market dividend yield to current government bond yields would suggest the New Zealand equity market is cheap," Warminger argues, and applies the same logic to other metrics such as equity risk premium and discounted cash flows.

"The current investment climate of low interest rates, low but stable growth and most valuation metrics showing no signs of frothiness argues well for continued gains as earnings improve and the PE multiple expands to reflect the current environment."

Fears of an overheated local equities market followed last year's 25 percent rise in the NZX50 Index of leading stocks, with the rise continuing in the early part of this year.

The NZX50 briefly hit a five year high point of 4,2204.407 on Monday, in very light trade affected by Auckland and Australia anniversary weekends.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Constructions Builds: Consents Top $2 Billion For The First Time

Building consents reached a record $2 billion in March 2017, boosted by new homes and several big non-residential projects, Stats NZ said today. This was up 37 percent compared with March 2016. More>>

Other Stats:

Health: Work Underway To Address Antimicrobial Resistance

As part of a global response the Ministries of Health and Primary Industries have today jointly published ‘Antimicrobial Resistance: New Zealand’s current situation and identified areas for action’ to respond to the changing pattern of antimicrobial resistance in New Zealand. More>>

ALSO:

Employment: Vodafone Announces Family Violence Policy To Support Team

From today, any of Vodafone’s 3,000 workers affected by family violence will be eligible for a range of practical support, including up to 10 additional days of paid leave per year. More>>

Burning Up Over Saturn: Cassini's Grand Finale

With propellant running low, NASA scientists are concerned that the probe might accidentally crash into one of Saturn’s nearby moons, which could contaminate it with Earthling bacteria stuck to the spacecraft. Instead, the spacecraft will be safely "disposed" in Saturn's atmosphere. More>>

ALSO:

Our Fresh Water: Monitoring Report Confirms Serious Challenges For Rivers

• nitrogen levels are getting worse at 55 percent and getting better at 28 percent of monitored river sites across New Zealand • phosphorus levels are getting better at 42 percent and getting worse at 25 percent of monitored river sites across New Zealand More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news