Survey: CIOs pick NZ shares for 1999
Good Returns asks Chief Investment Officers (CIO), in a survey, for their predictions of where markets are heading in 1999. It also asks a number of questions related to asset classes, the economy and politics.
Friday, January 29th 1999, 12:00AM
New Zealand equities have clearly come through as the most favoured asset class for 1999, followed by international bonds.
CIOs expect the NZSE 40 index to be somewhere between 2200 and 2500 by the end of the year. This represents a gain of between 2 per cent and 16 per cent on its current level.
Dividend yields are also expected to come off their highs towards the 6-7 per cent level. The range for gross dividend yields was 5.9 per cent to 7.5 per cent and the mean 6.6 per cent.
Their expectations are that 90 day bank bills will be between 4 per cent and 5.5 per cent by the end of the year
There was much less agreement on the least favoured equity market. Asia and the United States were each picked by four CIOs and Japan and Asia was picked each picked by one respondent.
|
Most favoured equity market (no of respondents) |
Least favoured equity market (no of respondents) |
|
New Zealand 8 |
Japan 4 |
|
United Kingdom 1 |
USA 4 |
|
Europe 1 |
Europe 1 |
|
Japan/Asia 1 |
Asia 1 |
|
|
N/a 1 |
When asked what where the five most favoured New Zealand shares at present a total of 23 stocks were named.
Number one was, not unsurprisingly current high-flier the Warehouse which was selected by five managers. Waste Management and Sky Casino where picked by four CIOs and on three each were Air New Zealand and Ports of Auckland.
|
5 |
Warehouse |
|
4 |
Sky Casino and Waste Management |
|
3 |
Air New Zealand, Ports of Auckland |
|
2 |
Fisher and Paykel, Tourism Holdings, GPG, Sky Networks, Baycorp, Telstra, TranzRail, Fletcher Building |
|
1 |
Auckland Intl Airport, Colonial, Corporate Investments, Fernz, Force Corp, Mainfreight, MetLife, NZ Refining, Restaurant Brands, Westpac |
Seven of the respondents picked New Zealand shares as the most favoured asset class for the next 12 months, and another said Australasian shares. Two said international bonds and one didn't answer the question.
Respondents were asked what is your current position, for a balanced fund, on the following asset classes?
|
Asset class |
Overweight |
Overweight/ Neutral |
Neutral |
Neutral/ Underweight |
Underweight |
N/A |
|
NZ shares |
7 |
2 |
1 |
0 |
0 |
1 |
|
NZ fixed interest |
3 |
0 |
4 |
0 |
2 |
2 |
|
NZ cash |
1 |
0 |
3 |
1 |
4 |
2 |
|
NZ property |
0 |
0 |
7 |
0 |
1 |
3 |
|
International equities |
1 |
0 |
1 |
0 |
8 |
1 |
|
International bonds |
4 |
0 |
2 |
0 |
4 |
1 |
This clearly shows the bias towards New Zealand equities and bonds, both locally and internationally, while property, international shares and cash are clearly out of favour.
CIOs were also asked their predictions for world and New Zealand economic growth in GDP terms, plus their outlook for inflation, as measured by the CPI over the year.
RANGE
Global economic growth 1.5 - 2.5%
NZ economic growth 2.0 - 3.2%
CPI 0.8 - 1.95%
US dollar 0.5400 - 0.6000
Aust dollar 0.8350 - 0.8800
There was clearly a bias towards a firming of the currency and a pick up in growth. They also, generally, agreed there would be a gradual tightening, albeit a modest one, by the Reserve Bank in monetary policy.
Only two CIOs though there would be an early general election, however all but two predicted Labour would lead the next Government.
Views were mixed as to whether this would be good or bad for the savings environment.
The two who thought National would win the election, also thought that would be good for the savings environment. Of the CIOs who predicted a Labour victory, two said it would be good for the savings environment, three gave such an outcome the thumbs-down, one passed on this question, while the remainder said it would be neutral (no change).
The one point they were most agreed on is that the All Blacks wouldn't win the World Cup. Only one CIO thought that the All Blacks would win (and that firm has a South African economist).
Firms surveyed included: AMP Asset Management, Armstrong Jones, BNZ Financial Services, Colonial First State, Coronet Asset Management, Fisher Funds Management, Guardian Trust Funds Managament, National Mutual, Royal & SunAlliance, Spicers Portfolio Services and Tower Asset Management.
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