September/October 2021 - Bay of Plenty Business News

September/October 2021 BAY OF PLENTY BUSINESS NEWS 11
Global share markets
continue to hit new highs
NEWSBRIEF
Investment market update (for the quarter ended 31 July, 2021)
Globally, the majority
of share markets continued
to climb higher,
with many sitting at or near
record highs. Markets have
been driven higher by a combination
of:
• Companies generally delivering
better-than-expected
earnings results benefiting
from a combination
of improving economic
activity and significant cost
savings.
• Central banks and governments
remaining committed
to “loose” policy settings,
including ultra-low interest
rates, which continue
to underpin very healthy
growth in economic activity,
and support demand for
higher risk-return investments
such as stocks.
• Vaccine roll-outs in Europe
and the United States
boosting hopes that rising
cases of the Covid-19 delta
variant will not lead to further
lockdowns. Vaccines
have proved effective in
substantially reducing the
proportion of people who
catch the virus getting seriously
ill.
New Zealand has
remained a laggard
The New Zealand market is
dominated by defensive dividend-paying
stocks, which
many investors look at as an
alternative to fixed interest
investments such as bonds or
term deposits. The firming in
long-term interest rates over
the past nine months has generally
been a headwind for
these stocks.
The Reserve Bank of
New Zealand (RBNZ)
likely to lead interest
rate hikes globally
Until very recently the message
from our own RBNZ was
consistent with this “wait and
see” approach. But, in the past
month, the outlook has shifted
sharply. It now appears to be
a two-horse race between the
RBNZ and Norway’s Norges
Bank as to who will be the first
developed market central bank
to hike rates in a post-Covid
world.
There are a number of reasons
we believe the inflation
we are seeing in New Zealand
is likely to be stickier (and
therefore more concerning
for the RBNZ) than in other
countries:
1. Whilst the rest of the world
has been grappling with
restrictions and lockdowns,
New Zealand has largely
(with the exception of tourism
and border movements)
been in a post Covid-19
economy since the middle
of last year. Consumers
— without the burden
of Covid fears — have
responded to ultra-low
interest rates by breaking
out the credit cards.
2. The New Zealand economy
is facing pent-up demand
and capacity constraints —
the housing shortage being
the most obvious example
— from the tidal wave of
WHAT TO DO WITH YOUR MONEY
> BY BRETT BELL-BOOTH
Investment Adviser with Forsyth Barr Limited in Tauranga, and
an Authorised Financial Adviser. Phone (07) 577 5725 or
email brett.bell-booth@forsythbarr.co.nz.
migrants over the last eight
years. In recent years, that
same migration kept a lid
on wages. But now, with
borders shut, capacity pressures
are biting.
3. New Zealand is a small,
open economy a long way
from most trading partners.
The delays in supply
chains and dramatic jump
in freight prices are disproportionately
impacting
import costs for our
businesses.
Invest locally and globally
Over the past decade or so,
a home market bias to New
Zealand would have been very
beneficial. Our high dividend
yielding market has been one
of the top performers globally.
A large part of this return
has been from investors’ willingness
to pay a higher price
for the income generated by
businesses in sectors such as
utilities, telecommunications,
and property. We believe the
shift in the direction of interest
rates means this benefit is now
likely at end.
That isn’t to say you should
throw the baby out with the
bathwater. There are still
high-quality companies in
New Zealand we are happy to
remain invested in. But, it does
mean having adequate diversification
(always a mainstay
of any investment plan) across
markets and sectors may prove
even more important than
usual. As always, whether
regarding adequate diversification
or any other questions
you may have, your Forsyth
Barr Investment Adviser is
available to discuss your
investment plans at any time.
This column is general in
nature and does not take any of
your personal circumstances
into account. For personalised
financial advice, contact Forsyth
Barr for an overview of
the services we can provide.
Shelving the
‘outdated’ library
overdue fine
Opōtiki District
Library has joined
the growing number
of libraries in New
Zealand and around the
world that are shelving the
‘odd and outdated’ notion
of fines on books returned
late.
Ōpōtiki library manager,
Jo Hunt, said that
existing fines have been
wiped and no further overdue
fines would be issued
although there will still be
charges to pay for replacement
or damaged books.
“Our library is such a
valuable part of the community.
Our services open
up doors to information
and expertise for learners
of all ages. We support digital
literacy, a place to do
homework, a place to do
work-work, and of course
reading for pleasure and
social connection.
“I would hate to think
for one second that a punitive
measure, like a fine,
was a barrier to anyone
accessing library services.
“Libraries that go finefree
here and internationally,
note that overdue fees
do nothing to incentivise
people to return their
books, but probably have
the reverse effect – keeping
people away either
because they have overdue
fines they can’t pay or
worry that they could end
up with fines against their
name,” Ms Hunt said.
Increasingly, libraries
are deciding that fines are
inconsistent with the outcomes
that libraries work
towards – equal access to
resources and information
for everyone.
Research shows that
people will stay away
from a library if they don’t
want to pay a fine, which
has the reverse effect of a
book never being returned,
rather than just being
returned a couple of days
late.
Ms Hunt also pointed
out that fines are not a significant
part of the library
funding, and in fact usually
cost more to chase and
administer.
“Libraries are paid for
through rates, like sports
fields and playgrounds, so
that the whole community
has facilities they can use
and benefit from.
“Of course, fines aren’t
how we fund our building
or new resources or staff
time, so they don’t add
anything except put up an
unnecessary barrier.
“At any point in time
we probably only have a
small handful of overdue
books, so they are not a
significant problem,” Ms
Hunt said.
“Our way of working
is to stay in close contact
with our borrowers –
checking in, sending text
reminders and offering
loan extensions rather than
penalty charges.
Removing fines means
that all borrowers, existing
and new, can relax, borrow
and enjoy the resources,”
Ms Hunt said.
YEAR
BOOK
CELEBRATING BAY BUSINESS | 2021
Out
Now
www.bopbusinessnews.co.nz/year-book