Forum Archive Index - August 2000

["vincent.wang" <vincent.wang@xtra.co.nz>]

  The sharemarket is a true reflection of a country's economy.  From my memory,NZSE is probably the only sharemarket in Western world which has not recovered from its 1987 crash, and so is our economy.

 

Yes, we are in a catch 22 situation.  The reason why many Kiwi companies pay out high dividends is probably they could not get a better return by reinvesting the increased retained earnings.  

 

The reason why they could not identify a better investment opportunity is probably because:

 

1. the N.Z. domestic market is too small,  there are not many investment opportunities; (3.8 million population is too small for many manufacturing industries, manufacturing industries need an economic scale.  And we are experiencing a net loss of population in recent years)

 

2. the international market is huge, but N.Z. company's knowledge and skill are not competitive enough to gain a market share.(image how many foreign household names products we buy in N.Z. and how many N.Z. brand names have become an international household name in the past 150 years?  the only N.Z.'s international household name come to my mind is Anchor)

 

I don't see a quick medicine to cure the illness.  But in longer term, following medicine might help:

 

1. We need a viable economic policy.  Until today, I still can't see a viable and consistent economic policy in place.  Last year, Max Bradford mentioned "a knowledge-based economy" idea, and many people think it is a good idea to start, but since the Labour Government took power, I don't see anyone mentioned that idea anymore.  If we do not have a viable economic policy in place now, we can't see a brighter economy future in next 10-20 years.

 

2. Our society need entrepreneurship spirit.  We respect All Black players and American Cup sailors as heroes, but we don't pay much more respect to entrepreneurs.(if you read the N.Z. Herald, you'll find the Sport Edition is placed in front of Herald Business)  To me, Michael Hill, Doug Myers, Gerry Hoggard(apart from his recent inside trading scandals) are real heroes to our economy.  They are the real job and wealth creators.( I will add Steven Tindall's name to my list if he succeeds on his invasion into Australia market)

 

3.  We need to overhaul our education system, from primary school to university.  My understanding is our education quality is well behind many developed countries and developing countries.  Without the first class education, our kids can't compete in the international arena.

 

4.  We need to save money.  A compulsory saving scheme is needed. (Winston Peter's idea is good but unfortunately, 92% New Zealanders rejected it, probably because people do not like his other ideas) I have read a report which says the average household debt is over 90% of average household disposal income.  From my simple calculation, I can say even our grandchildren can not pay back the debt we owe today.  

 

Regards,

 

Vincent Wang