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With the global economic recovery well underway now, focus has turned to the sustainability of the recovery. Policy support will not remain indefinitely and authorities are already clearly signalling the winding down of emergency lending programmes introduced during the financial crisis.
After a poor start, 2009 has probably proven to be much better than most imagined - especially considering the precarious position the world was in at the beginning of the year. Overall, risky assets were the place to be, reflecting the significant turnaround in risk appetite. But, what is the outlook for the economy and investment markets in 2010? Our latest Investment Insights provides a comprehensive review of 2009 and looks at how we think the global economy and investment markets will perform in 2010.
Rabobank's market commentary, brought to you in conjunction with Morningstar, provides an overview of current cash, bond, property and equity market performance as well as some future predictions.
Mortgagee sales are like unemployment - the long tail of a downturn that lingers long after other indicators have turned around. The rule of thumb is that the average person could survive between one and three months after losing their job.
Just as the stagflation of the early 1970s ushered in what became known as the Monetarist Counter Revolution of the late 1970s, the Global Financial Crisis of the late 2000s has apparently ushered in a Keynesian Counter Revolution of its own, or at least a return of 'Big Government' in many countries in the West.
By Dr Shane Oliver, Head of Investment Strategy and Chief Economist and Jason Wong , Head of Investment Strategy for AMP Capital Investors (NZ)
The AMP Capital Investors' Investment Brief for the month of November, which provides you with a summary of the key investment markets during the month and updates you on our current outlook for markets.
The economic outlook has continued to improve both domestically and internationally, and the global financial crisis has continued to ease. While markets have reflected these positive developments, investors across a range of asset classes seem to have gone into 'wait and see' mode about what 2010 will bring. Markets may remain in the same state of mind until more data is to hand confirming the reality of potentially better times ahead.
According to the consensus, a global economic recovery has begun. Crucial to this belief is the fact that this month's manufacturing confidence surveys (such as the US ISM index and the Euro Zone purchasing managers' surveys) have moved into 'expansionary territories', while the US economy reportedly expanded at a three percent rate in the third quarter and China's apparently did even better, with a near 9% rate of growth in real terms. Based on these observations at least, it would seem that the G20's co-ordinated policy response to last year's global financial crisis has finally borne fruit.
With the global economic recovery underway, attention has turned to the shape of the recovery. The global economic recovery is expected to broaden and intensify over the next six months.
As the global financial crisis recedes, attention continues to focus on prospects for growth both globally and at home. The outlook for the New Zealand share market is now reasonably positive, but the upside potential from economic recovery is greater in other sharemarkets.
The fate of the US dollar is emerging as a leading theme of the post-global credit crisis period. The US dollar matters internationally because from the 1950s onwards it has served as the world's leading reserve currency.
"Young people aren't taking enough risk." This one comment from Tower's Roger Perry got me thinking recently. And Perry wasn't just meaning Gen Xs. He meant everyone up to the age of about 40 or even 45. In part it's because investors often mistake market volatility for risk. It's also that the same person will need to take different levels of risk at different stages of his or her investing life to maximise the growth retirement investments.
With New Zealand dollar at 14 month highs and the Aussie dollar heading north on higher interest rates across The Ditch, the outlook for savers over the next year is improving. Earlier this month, the Reserve Bank of Australia became the first G-20 central bank to raise rates and officially herald the end of the world financial crisis.
Optimism over the prospects for a global economic recovery has increased markedly over recent months, particularly as asset prices have recovered around the globe.
By Dr Shane Oliver, Head of Investment Strategy and Chief Economist and Jason Wong, Head of Investment Strategy for AMP Capital Investors (NZ).
From early-March lows, risky assets have rallied impressively. High yield corporate debt for example has risen some 40% and equity markets have been similarly impressive rising nearly 50%.
The economic outlook has improved both domestically and internationally, and the global financial crisis has eased, with equities, listed property, and corporate bonds all making strong gains as a result. Barring unforeseen shocks or policy mistakes, the outlook should be conducive to further gains for growth assets.
By Dr Shane Oliver, Chief Economist and Head of Investment Strategy for AMP Capital Investors. Many investors have asked us whether we have entered a bull market, we show why there is good reason to believe that shares have embarked on a cyclical recovery.
Peter Lynn brings back the debate - Is active management worth the higher fees than passive investment? This is a more straight forward debate now that the tax incentive has been removed for New Zealand passive investors.
Evidence continued to mount that the global economic recession was drawing to a close. Many countries reported positive real GDP growth in the June quarter, with some particularly large increases across Asia. As a result, consensus forecasts of global economic growth over the coming year continued to be nudged up.
Is the equity upswing on its way? It would appear so from headlines across the world. Confidence is certainly returning to the stock markets after one of the worst hammerings in a century. Leading markets and our own NZX have been tracking up since the lows of March.
Economists reach for superlatives when it comes to the newly reappointed chairman of the US Federal Reserve, Ben Bernanke.
Much has been written about the global "credit crunch" and the flow-on economic effects.
We have written at great length on how official support packages have provided direct assistance to banks and financial institutions, but in the hundreds of assistance initiatives announced since September last year, we have only briefly touched on the succour offered directly to the consumer. As consumers or households make up around (60/70%) of all economic activity, it makes sense that any programmes pragmatically target this sector.
The AMP Capital Investors' Investment Brief for the month of July, which provides you with a summary of the key investment markets during the month and updates you on our current outlook for markets.
Speculation is building that the biggest nations' leaders and central banks will soon start turning off the fiscal stimulus that has poured into credit markets, bank balance sheets, infrastructure projects and welfare since the credit crunch rescue plan took hold.
Shares have just wrapped up two consecutive years of big losses. After such a slump, the list of worries is long and the outlook is viewed with some trepidation. The temptation is to assume more of the same. This note looks at why the worry list might not be so worrying.
Recent market rallies and inventory data have been the cause of some optimism, even excitement. There are many references to the search for "green shoots of recovery".
The AMP Capital Investors' Investment Brief for the month of June, which provides you with a summary of the key investment markets during the month and updates you on our current outlook for markets.
One investment analyst recently described the actions of an institutional manager to raise capital by a rights issue as "a cannon to the head" for existing investors.
Since early March, shares have climbed a classic 'wall of worry' with fears about everything from debt defl ation to policy stimulus causing hyperinfl ation. However, an important issue is how any short term cyclical rebound in shares will fi t into the medium or longer term trend.
Given the complexity of investment markets and investing, along with the massive amount of information available to investors, many people rely on ’common sense‘ or simple ’rules of thumb‘ to make investment decisions. However, while some rules of thumb are reasonable, in many cases they are not and can result in investors missing opportunities or losing money. In this article we look at some of these and why they are unreliable.
Equity markets have rallied over recent weeks, despite the mixed performance of economies around the world. In New Zealand, the rally has been significant, accompanied by a strengthening New Zealand dollar. The latter is an unwelcome ingredient for our economy.
The flow of economic data continued to suggest that the worst was over in terms of negative growth momentum for the global economy, with a range of activity indicators improving from deeply depressed levels. The debate turned to whether a genuine economic recovery had now begun, or whether growth rates would remain depressed.
The 2009 Budget is pitched against a backdrop of rising unemployment and dwindling tax revenue as the global economy suffers its worst slump in decades.
Despite the media hype and complicated jargon, when it comes down to it, markets are fairly simple things. They consist of buyers and sellers, and when the former outnumber the latter, the laws of supply and demand see to it that prices rise. That creates more wealth and confidence, which feed on themselves to continue the upward path.
The two ‘I’s’, inflation and interest rates, are two of the most discussed economic variables. Most of us are aware of the dangers of a high rate of inflation - that it can erode savings and even lead to shortages of some goods (because when people start to expect continuous increases in the cost of goods, they buy more). As for interest rates, anyone with a mortgage is acutely conscious of the ups and downs in this area.
TOWER was delighted to win the prestigious Chapman Tripp Bond Fund Manager of the Year award at the National Business Review 2009 INFINZ Industry Awards held in Auckland on 30 April.
In our latest Investment Insight, Dr Shane Oliver, Chief Economist and Head of Investment Strategy for AMP Capital Investors takes a look at the move to ‘quantitative easing’ and efforts in the US to remove toxic debt from banks.
Over recent weeks, as we have visited and reviewed a number of seemingly quite disparate economies around the globe, one of the features that has stood out most clearly has been the extent to which implied labour productivity rates have tumbled of late in many countries around the world.
The flow of global economic data improved, reducing the risk of an ongoing downward spiral in economic activity. Across a range of indicators, there were signs of some improvement from deeply depressed levels, suggesting that after spiralling downwards over the December and March quarters, the global economy showed some preliminary signs of stabilisation in the current quarter
New Zealand and Australia are weathering global financial and economic distresses better than most. This is due, in part, to our continued ability to tap international credit markets. In this month’s Tyndall comment, we discuss our expectation that New Zealand’s recession will deepen further in coming months. And, the different paths emerging for our and the Australian economies.
In our latest Investment Insight, Dr Shane Oliver, Chief Economist and Head of Investment Strategy for AMP Capital Investors, takes a look at the Swine flu outbreak and its potential impact on the global financial community.
It would be understandable if the events that unfolded over the last eighteen months have undermined investors’ faith in the ability of investment markets to deliver satisfactory returns over time. But has the world fundamentally changed? Should we be changing our strategic asset allocation? What alternatives are available?
Economic data in March continued to portray that the global economy was in deep recession, but there were hints that the rate of economic contraction was slowing in the US.
Sticking your head over the parapet and investing in the rubble of share prices and savings rates can be daunting.
Many assets look cheap by historical standards but we sense that historical valuation measures may be misleading in the current environment.
By Anthony Edmonds, AMP Capital Investors
The AMP Capital Investors' Investment Brief for the month of February, which provides you with a summary of the key investment markets during the month and updates you on our current outlook for markets.
The AMP Capital Investors' Investment Brief for the month of January, which provides you with a summary of the key investment markets during the month and updates you on our current outlook for markets.
When the Reserve Bank cut the Official Cash Rate by a further 1.50% at the end of January to a new low of 3.50%, it brought the cumulative reduction in the OCR since July 2008 to 4.75% percentage points. What implication does this have for property investors?
While the economic outlook is gloomy, the investment outlook is more upbeat as there is already significant bad news factored into prices.
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