Bay of Plenty Business News July/August 2017

20 BAY OF PLENTY BUSINESS NEWS July/August 2017
PROFESSIONAL SERVICES
The half year report card
Sharemarkets have had a good run in
recent years and many investors now ask if
a market correction is near.
Some point to the length
of the current expansion
relative to historical
cycles as an indication that a
correction is overdue, possibly
coinciding with an imminent
recession. However, none
of the signals of a recession
appear present. Recessions
usually come from:
• Inflation risks and monetary
policy tightening.
• The bursting of asset price
bubbles, and the unwinding
of macro-economic imbalances.
• External shocks.
In the US, interest rates
have risen from their low point,
but inflation is still very modest.
The inability of President
Donald Trump to push through
any meaningful policy initiatives
has resulted in a reversal
of the increase in bond yields
that followed his election, easing
pressure on the Federal
Reserve to tighten monetary
If you are considering your current
investment arrangements, perhaps
it’s time to get a complimentary review
Forsyth Barr is a New Zealand owned firm with 21 offices nationwide
including three offices in the Bay of Plenty and Waikato regions.
Supported by Forsyth Barr’s research and investment expertise, our Authorised
Financial Advisers can work with you to deliver a personalised approach taking
into account your investment objectives, preferences and your tolerance for risk.
To make an obligation free appointment to discuss your investment
arrangements, contact your local Forsyth Barr office by calling 0800 367 227.
We look forward to discussing how our investment advice can work for you.
Disclosure Statements are available on request and free of charge.
Fees and charges will apply if you elect to have a continuing relationship with Forsyth Barr.
policy. Even record low unemployment
has not resulted in
wage inflation, usually a sure
sign of increasing inflation.
Offsetting forces include competition
from globalisation,
technological innovation, and
ageing populations.
While share prices have
increased and are above historical
valuation averages,
improved economic growth
and resulting increased corporate
earnings have helped
underpin these higher valuations.
In terms of potential external
shocks, the main risks
appear to be:
• Conflict between Saudi
TAU5162-01 – © Forsyth Barr Limited August 2016
Arabia and Iran, which
might impact on oil supply.
Yet oil prices are down 20%
on 2017 highs, and both
Saudi Arabia and Iran have
much to lose economically
by escalating tensions.
• Military tension around
North Korea. However,
South Korea’s sharemarket
is up 18 percent this year,
and cooperation to defuse
North Korean tensions is
intensifying.
• Impeachment of Donald
Trump (although the
US sharemarket is up
eight percent this year).
Impeachment would require
Non-residential
consents are up 11
percent over the past
12 months, but this is
due to cost inflation
as actual square
metre consents are
down 13 percent
over that period.
WHAT TO DO WITH YOUR MONEY
> BY BRETT BELL-BOOTH
Investment Advisor with Forsyth Barr Limited in Tauranga.
Phone: (07) 577 5725 or email brett.bell-booth@forsythbarr.co.nz
at least 19 Republican senators
to vote against him.
His replacement, Mike
Pence, would be seen positively
by investors.
In New Zealand, our
Reserve Bank has indicated
they are not likely to raise
interest rates until late 2018.
While some wage pressure
is appearing on the back of
skill shortages, lower oil prices
and an easing property sector
have reduced inflationary
expectations. Concerns over
a property price bubble have
also eased, with signs that the
residential market is softening.
The trend in residential
consents is flat, constrained
in our view by unaffordability,
tightening of credit, and
capacity constraints. Over the
past six months single dwelling
consents in Auckland are
down 12 percent, Waikato-Bay
of Plenty is minus five percent,
and Canterbury is minus
12 percent (these regions
accounted for 71 percent of
nationwide consents over the
past 12 months).
Non-residential consents
are up 11 percent over the past
12 months, but this is due to
cost inflation as actual square
metre consents are down 13
percent over that period.
In summary, consensus
views indicate that economic
growth looks modest in
the US, compared with good
recovery in Europe. China’s
slowdown appears to be
arrested at an annual growth
rate of six to seven percent.
New Zealand and Australia’s
growth rates, in excess of 2.5
percent per annum, are expected
to continue.
Sharemarket returns are
expected to be positive, delivering
less than recent stellar
returns, but still ahead of
deposit rates and fixed interest.
Whether you are saving
or in retirement, seeking
provision of income or capital
growth, an Authorised
Financial Adviser can help
you with every step of the
investment process and provide
advice on how best to
approach your investment
goals. This column is general
in nature and is not personalised
investment advice.
References: UBS House
View 29 June, 2017 “Is It Time
to Worry About Tail Risks” by
Mark Haefele; “Forsyth Barr
Quarterly Market Comment”,
by Brian Stewart, senior
analyst, strategy and Kevin
Stirrat, Forsyth Barr head of
investment strategy.
Enhance your brand with better presentations
“Death by PowerPoint”
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Microsoft’s software
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4
After
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The human brain is
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Document themes
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