New Zealand round up 18/02/99

The future looks much brighter for investment in New Zealand, according to Spicers Portfolio Management research manager Aaron Hing.

Hing says the Spicers personal investors index for January pointed to a big boost for local investment, with New Zealand shares returning 5.5 per cent, New Zealand commercial property 0.9 per cent and New Zealand bonds 0.7 per cent.

At the same time, international share returns fell 0.3 per cent and overseas bonds dropped 3.3 per cent.

"The New Zealand investment environment is looking much more positive, with low inflation, low interest rates and the return to growth,"

Hing says. "Also the local markets were hammered last year because of overseas volatility and consequently were oversold. New Zealand investments now look like good value."

Hing says recent support for the New Zealand dollar shows overseas investors are again interested in investing here.

Investment trust manager at Credit Suisse First Boston (NZ), Peter Irwin, agrees that New Zealand is looking more attractive. He says the performance of the UK-based New Zealand Investment Trust (NZIT) offers evidence of recovery.

"The last 18 months have been very tough for NZIT, which moved from trading at a premium to a discount of well over 10 per cent," Irwin says.

"NZIT is extremely underrated and must now be attractive to investors."

Irwin says NZIT is well placed to benefit from a recovery and has outperformed the NZSE40 index since December last year. Senior NZIT fund manager Richard Scott says New Zealand is now a perfect place to invest.

"For global investors who only judge New Zealand in the shadow of Australia, it must be asked why, when Australian equities did so well last year, the value of New Zealand equities fell over 10 per cent," says Scott.

"The answer helps to show why now is a good time for UK investors to buy New Zealand shares."

He says the underperformance of New Zealand's stockmarket last year was due to a severe drought and a strong currency. It did not reflect any severe weakness in the economy relative to Australia.

"The performance of the New Zealand share market is beginning to reflect the encouraging prospects for the economy," says Scott. "From a low point last October, the market has recovered by around 30 per cent but remains a long way from its highs."

In its first push into international markets, Melbourne-based financial services group Australian Unity has struck a deal with property company Waltus Investments to market its property security fund in New Zealand.

Waltus will now promote the Australian Unity Property Securities Fund (formerly the GEM Property Securities Fund) to New Zealanders, who have already invested around $7 million in it..

Group managing director of Australian Unity, Mark Sibree, says the New Zealand operation would become an integral part of the $1.2 billion in assets Australian Unity currently controls.

"As a result of our taking control of the GEM Property Securities Fund last year, we assumed responsibility for the investments of some 1000 New Zealanders," says Sibree.

"By establishing an official presence in New Zealand, we are flagging our intention to build on that base."

He says New Zealand investors can now invest through Australian Unity in a diversified portfolio of listed property trusts, which own commercial, industrial and retail properties in Australia and the US.

"Waltus already has a strong presence in Australia, with around $AU50 million of New Zealand money invested in the Australian property market," says Waltus director Shayne Hodge. "The Australian Unity product is very complementary and now enables us to offer New Zealand investors access to both direct and listed property in Australia."

Hodge says Waltus has also stepped up its own Australian campaign and is registering a prospectus there, enabling Australians to participate directly in its products.

"Good quality property in New Zealand is hard to find at the moment and the competition is very fierce. The Australian property market offers much greater depth and opportunities," Hodge says.

"Property continues to be popular because of high yields, which are about three times greater than Government bond yields at the moment.

The difference should really only be three or four basis points."

Despite the competition, Waltus has recently purchased two office buildings in Wellington for a combined price of around NZ$30 million.

WestpacTrust will hold a series of seminars over February and March, examining retirement income issues for farmers.

The seminars will cover much of rural New Zealand and focus on superannuation, technology, business planning and succession.

WestpacTrust's national manager of agribusiness, Jim Lee, says there is an increasing need for farmers to face potential retirement problems early.

"Changes to Government superannuation means farmers need to better organise their retirement income," Lee says. "Successors are being saddled with bigger debt due to farm values rising between generations, increasing the need for early decision-making."