A robust set of financial results is expected as the
corporate reporting season for New Zealand and Australian
companies starts next month.
Craigs Investment Partners broker Chris Timms said the
reporting season would give the market an update on trading
conditions, the economy and the strength of the important
''We also expect to get further positive news out of China
over the next few months.''
Stable economic growth would be an important signal for
Australia and New Zealand given the reliance on China from an
Many countries across the world, such as the United States
and Japan, continued to print money as a form of economic
support, he said.
With Australia and New Zealand sticking to traditional
monetary policy initiatives, as well as having higher
interest rates than other countries, the transtasman
currencies were expected to remain at current high levels.
The United States had committed to keeping interest rates at
near zero until the unemployment rate improved. That could
take years and would keep downward pressure on the US dollar.
''There is potential for further interest rate cuts in
Australia, which may see the New Zealand dollar strengthen
slightly against the Australian dollar.''
Mr Timms said last year was tough for fixed interest
investing and this year was expected to be just as difficult.
The Official Cash Rate was expected to remain flat, yields
were much lower than investors would like and new issues
would be unlikely to fully satisfy investor demand.
''Unless we see stronger growth than expected, yields may not
move higher until late 2013. While we still favour corporate
bonds, the compression in credit spreads that we have seen
recently has made value harder to find, and we do not expect
much in the way of capital gains from fixed interest this
The property sector offered a ''solid'' income outlook with
dividends at sustainable levels and an average gross yield of
more than 8%, he said.
That should be enough to keep the sector well supported,
although with earnings growth likely to be minimal, share
prices were expected to be relatively flat in the first
Craigs favoured internally managed property vehicles due to
their lower fees - particularly in the face of rising asset
values - and Mr Timms saw potential for further capital
raisings across the sector.
Craigs remained positive on equities and expected most
markets to trend higher, although there would be ''event
driven volatility'' throughout the year.
Late February could be the next difficult patch as US
politics moved back into the spotlight, he said.
''Politicians will need to revisit the debate over how to
tackle rising US debt at some point and this might happen in
late February when the US is scheduled to reach its debt
ceiling. This will likely see a fresh round of similar
political wrangling as both sides of Congress push for
The NZX looked solid with attractive yields, a stable
economic backdrop and modest earnings growth prospects, Mr
However, following a strong run in 2012, international
markets might perform even better in the coming year. Craigs
recommended investors look to add to Australian and