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


AMP Capital selling kiwi dollar in expectation of decline

AMP Capital selling kiwi dollar in expectation of decline

By Paul McBeth

April 17 (BusinessDesk) - AMP Capital New Zealand, which manages more than $18 billion of assets, anticipates the kiwi dollar will start falling, and has started reducing its holdings in the local currency.

The New Zealand dollar rose to a post-float high 81.03 on a trade-weighted basis on April 10, recently trading at 80.04, and ended the March quarter at a record on the MSCI weighted New Zealand dollar index, which AMP Capital uses to track the currency, head of investment strategy Keith Poore told a media briefing in Wellington.

With dairy prices falling on Fonterra Cooperative Group’s GlobalDairyTrade auction in recent months, and the prospect of US interest rates starting to rise next year, the currency’s appeal is expected to diminish, he said.

“The kiwi dollar is starting to look good as a good proposition to sell - if you can sell something at a record-high, that’s not a bad place to sell something,” Poore said. “What we’ve been doing in the portfolios is selling New Zealand dollars, just a small position at the moment, so going unhedged in the portfolios to benefit what we think will be an eventual reversion to a lower New Zealand dollar.”

New Zealand’s accelerating economy, which AMP Capital sees growing 3.7 percent this year, and the prospect of rising interest rates have attracted investors to the local currency in search of yield, though that allure will dim as the rest of the world recovers from a protracted downturn.

AMP Capital chief economist Bevan Graham said the exchange rate will play an important role in where the Reserve Bank decides to end its tightening policy, though he anticipates governor Graeme Wheeler will push ahead with the already signalled rate hikes.

Graham expects the OCR to be at 3.75 percent this year, rising to 5 percent or 5.25 percent by the end of 2015. Wheeler hiked the benchmark a quarter-point to 2.75 percent last month, and traders have priced in a 97 percent chance of another rate hike next week.

AMP Capital is holding its benchmark allocation of local stocks, with the New Zealand equity market looking fully-priced relative to earnings, head of equities Guy Elliffe said.

Elliffe said he’s targeting stocks with low dividend risk, a strong competitive competition, realistic earnings growth expectations, and a strong balance sheet.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news