[Weekly Wrap] Tough decisions are coming

One observation I would make at the moment is that there is a lot of short-term thinking and short-term opportunity-taking happening across the market.

Friday, November 28th 2008, 4:28PM

This is understandable in a volatile and uncertain market, but at some stage people need to make some decisions for the longer term.

A classic example is the actions around the fixed interest sector and government guarantee. It appears heaps of people are investing with maturities in October 2010 when the guarantee ends. Also a number of firms are clearly taking advantage of this guarantee and offering products maturing at that date.

What are they going to do after that when re-investment decisions have to be made and rates are likely to be much lower? Maybe equities will look attractive again?

So it was nice to see this week the launch of a new private equity fund and some comment from Diversified Investment Strategies that the bottom to these markets may be close (although many people disagree with this!).

The woes do continue for some. As reported earlier ING has more problems with its credit funds. The latest is that it may consider closing its Credit Opportunities Fund. We do hear, though, that the company may not be far off announcing a resolution or solution to its other distressed credit funds. Many people await this news with nervous anticipation.

The home loan space continues to be full-on with changes in advance of the reserve Bank's OCR announcement next week. BNZ made headlines early in the week with its changes, particularly its sub-7% six-month rate.

The general thinking around borrowing strategy recently has been to go short and refinance again at rates which, hopefully, will be lower. In our Weekly Home Loan report on the site today Maria Scott reports that the opportunities for short-term borrowing are reducing and people need to be aware of the longer term too.

This is pretty similar to the theme picked up about investments earlier in the newsletter.

Meanwhile the life insurance sector continues to be busy. Last week we reported on market share figures and also late last week Tower put out its latest results which showed it was tracking along.

During the week we reported on Sovereign's push into the business insurance market and also details of an acquisition made by Asteron.

Also I thought it useful to update you on the PIS/Newpark deal, from Darren Gannon. He says that PIS has not bought Newpark. "All that has happened is an offer has been made and I have agreed to the terms at this stage. I am told there is still work to be done via PIS before the deal is final and complete.
It is everyone's intention to cement the relationship of the two firms as fast as possible and both companies are currently working towards this in good faith."

Our main news in People this week is a new appointment at BT Funds. If you have any new appointment news you would like to share with us please email details to maddy@goodreturns.co.nz.

Have a good weekend and for all of you out there doing the Round Taupo Ride - have fun and go hard!

www.goodreturns.co.nz

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