Forum Archive Index - May 2000

[Mike Nelson <bb2345@ihug.co.nz>]

Ril,

You would not have had the advantage of reading this mornings Dominion
obviously. On page 2 they show through the burgernomic survey that the Kiwi
is 23% undervalued. What do you have to say about that ?

MN


At 02:33 AM 03-05-00 +1200, you wrote:
>After reading today's Herald site.
>
>There was a time very recently when a trade deficit (visibles) had never
>occurred. Now it is running at $3.5 bn for the Feb year. This is an
>extraordinary figure. March is the time for export resurgance and this
>was also blown away by a bigger increase in imports.
>
>These are significant figures. Comrade Brash will raise interest rates
>even higher this month to try and hold up the Kiwi ruble and stop the
>importing of inflation. 
>
>Most economists were predicting recently that the Kiwi would reach 53 -
>55 cents this year. No way.
>
>Brash will keep hiking rates and mortgages will hit 10% late this year
>is my guess.
>
>However, the writing is on the wall for the Kiwi and the interest rate
>rises will choke off equities some more. His theory is also that demand
>for imports will fall if interest rates rise but this has not been the
>case so far. In my opinion this will only happen when the dollar falls.
>
>At some point Brash is going to have to stop raising or lower rates and
>the Kiwi ruble will take a pounding. Offshore fund managers should be
>coming to the same conclusion about now. They will be thinking, hey if
>the ruble drops 10% I have to make 20% back on the NZ equities to get a
>decent return to my investors. Knowing that the chances of making such a
>return in NZ equities or bonds is about the same as a decent ski season
>on Ruapehu, they will yank their dough out.
>
>This will depress the local sharemarket even further IMHO.
>
>It is looking really bad for the balance of payments/ current account.
>It's going to be a shocker this year. Mexico style.
>
>What should an intelligent investor do? Aussie or American government
>bonds. Why? Protection for currency risk and corporate bonds are going
>to get hit in the stockmarket crash. 
>
>Also, with all these big companies doing a runner to Sydney there will
>be more shareholders there in time and a higher dividend stream heading
>over the Tas (or remaining over the Tas).
>
>Like to offer some good news but can't except every time the ruble falls
>I get a payrise.
>
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