Forum Archive Index - March 2000

["ritchie marr" <ritchie_marr@hotmail.com>]

As I understood it, a large part of the reason that the Australian market is 
doing so well is because of their introduction of compulsory superanuation, 
a while back. The massive amount of money generated from contributions had 
to be put somewhere and what better place than into growth and value 
companies in their own market. The advantage is that this is not like 
overseas investors who bring in one big lump sum, but rather a continuous 
regular flow of substantial proportions. Prices will reach an equilibrium at 
some point, but the nature of the money going into these stocks is so long 
term that you won't see a mass exodus of funds going out when appropriate 
corrections on different markets occur, simply because they are in for the 
long haul. Yet when corrections do occur, there is the vast sums of money 
resulting from regular contributions pouring in to the market to buy even 
more of these now undervalued stocks, so the corrections are halted and 
reversed very quickly.

Now if OUR government were to address the compulsory superanuation issue 
again, with obviously a more appealing approach than the last attempt...( 
such as was done with the insurance situation; having a lot better range of 
choices ), then the NZ market would not only find itself again, but with the 
increase of locally influenced interest, overseas investors would come back 
into our market, as it would have to be in that situation one of the fastest 
growing markets by value in the world, due to how low we are now.
Just a thought!
Ritchie



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