Economic data is likely to look good during the next three
months, Craigs Investment Partners broker Chris Timms says.
The Reserve Bank was forecasting New Zealand's annual
economic growth rate to peak at 4.2% in the three months
''This will be reported in September and should keep
sentiment upbeat, giving it will represent the fastest pace
of growth in a decade.''
The United States was also likely to report a strong rebound
in growth over the period, following an abnormally weak start
to the year, he said.
The election in September was the most important event for
local investors during the second half of the year, Mr Timms
It National was re-elected, it would largely be business as
''We would expect such an outcome to be taken positively by
the market and the business community generally.''
If a Labour-Green bloc was elected, there would be more
uncertainty. Markets would grapple with the prospect of
increasing income taxes, a capital gains tax, higher
regulatory risks and changes to monetary policy, he said.
That would likely be negative for markets, if only due to the
range of uncertainties arising from a new and somewhat
''We would also likely to see businesses delay spending or
hiring decisions as a result.''
On current polling, National was the strong favourite to win
the election and retain power.
But given the nuances of New Zealand's MMP electoral system,
small changes in voter preferences could affect the outcome
and investors must be mindful of the risks, he said.
At a glance
Currency: The New Zealand dollar is expected to peak
this year before showing some modest weakness over the next
Interest rates: The Reserve Bank is expected to
increase the official cash rate by 0.25% later this month.
Markets are then expecting a pause before one further rise of
0.25% in October or December to take the OCR to 3.75% by the
end of the year.
Listed property: The property sector offered a solid
income outlook with dividends at sustainable levels, offering
an average gross yield of close to 8%.
Equity markets: Short-term risks are increasing and
many investors seem complacent about potential risks to
growth or earnings. With most markets trading in line with
20-year averages, value has also become more difficult to