Nick Stride
Friday 30th April 2004 |
Text too small? |
Sharebroker ABN Amro, in a strategy report entitled "Will we catch a cold?," noted commentators were beginning to predict interest rate rises in the US.
The report looked at the effect past US rate hikes have had on the New Zealand sharemarket and concluded the local market performed materially worse during US tightening phases.
This time around, it said, the pre-conditions for poor sharemarket performance weren't yet in place.
In particular "pipeline" growth pressures continued to underpin corporate earnings; robust "own activity" business confidence would underpin investment; and trading partner growth was still strong, as was the construction cycle.
"We are not yet calling for a reduction in New Zealand equity allocations but the time for this is drawing inexorably closer. Federal Reserve action will be another, admittedly powerful, straw," the report concluded.
A strategy paper from Arcus Investment Management, which provides investment advice and analysis to financial planners, said global inflation appeared to be stirring again, prompting it to shift away from its high exposure to global equities towards a more conservative stance.
Arcus expected local shares to provide better returns than cash but didn't expect share price growth to match the past year. "We have reduced our exposure to local equities slightly and will be watching developments in the domestic economy housing turnover and retail sales, for example for any signs the slowdown may be harder than we expect."
Goldman Sachs JB Were's New Zealand equity strategy report said the broker's 12-month expected returns had shrunk to single digits following an 8% rise since the start of March.
"What might shine against such a dull background?" it asked. "Mergers and acquisitions activity may become even more pertinent when other sources of return thin out."
Shares that stood out as candidates were Carter Holt Harvey, for potential divestments, DB Group, for a possible buyout of the minorities, and NGC, for takeover or divestments arising from its announced talks with Powerco and Vector.
No comments yet
Second St John withdrawal of labour takes effect tomorrow with further strikes likely
Sanford Appoints Independent Director
CRP ADVISES CLOSURE OF SHARE OFFER TO EXISTING INVESTOR
Devon Funds Morning Note - 14 August 2024
OCR 5.25% - Monetary restraint tempered as inflation converges on target
Consumers still need due diligence as new deposit takers emerge.
Woolworths strike: staff asked to dress up in Disney costumes for a week on their own dollar
Turners Invests in Quashed Online Insurance Platform
PGW Reports on Challenging Year
Arvida Announces Executive Team Changes