Forum Archive Index - February 2000

["Mark Hubbard" <mhubbard@es.co.nz>]

----- Original Message -----
From: james chamley <james.chamley@xtra.co.nz>
To: sharechat <sharechat@sharechat.co.nz>
Sent: 6 February 2000 1:29 PM
Subject: [sharechat] $NZ


> There seems to me to be little likelihood of a vast capital inflow into
> New Zealand (ie no major asset sales and an unhelpful Government
> environment for investment) aside from funds pursuing those higher rates
> of interest.

As well as the interest rates, the rural sector has also had a very good
season, which means that more $NZ will be purchased - so pushing up the
rate. However, I do not agree with the economists who are prediting 15%+
appreciation of the $NZ over the coming year. I think the current government
will frighten off investment in NZ for the next three years, which will have
a dampening effect - at least meaning more NZ money being invested in
overseas economies. Also, our current account deficit is getting bigger, not
smaller, with record levels of imports - again this will be partly corrected
by the sale of a high level of commodities, but it still seems to be an
ingrained problem (and then there is the other frigate, etc, etc). I suspect
about a 5% appreciation will be the order of the day (although I am not an
economist, and this is only an opinion).


> However, it would seem to me that if that appreciation of the $kiwi
> occurs then you are down 20% before the stock price has moved if you
> invest overseas but expect to repatriate the funds at some stage.

Yes, you are correct james, however consider this:

1) I do not think we are looking at a very high appreciation of the $NZ (see
above).
2) For myself, my overseas investments are very long term  investments, over
which I believe the superior performance of my underlying overseas asets
will far outweigh any currency risk. On my last post I stated that I had
purchased shares in Finsbury Technology UK Investment fund, since I
purchased this at the start of last November, it has now made over a 60%
return - who cares about a little currency appreciation (although note this
is an extreme example). My main point is that I consider that a long term
time frame ameliorates currency risk.

To counter what I have said, above, though, the $NZ at the moment is very
low, increasing risk of taking money out just now.

I, too, would be interested to hear the opinions of others regarding the
$NZ, and likely movement.



----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
To remove yourself from this list, please us the form at
http://www.sharechat.co.nz/forum.html.