GDP number was higher today and bond yields spiked higher . Still have to get on top of Covid in Auckland but the market has priced in interest rate increases from the Central bank.
I'm dividend harvesting currently but wonder how rate rises will affect their underlying value.
When the OCR was 3% it didn't seem to hurt though ..
Not so sure ...
Power companies are seen as quasi bonds ... though expected to deliver a bit higher return than say BBB bonds.
Most power companies have at current a dividend yield of around (or slightly above) 3%.
If OCR goes up to 3% (I doubt though, it will anytime soon), than BBB bonds will pay at least 4.5 to 5%;
Which means that Power companies either need to increase their dividends by something like 50% (but where to take from) or the SP's will drop accordingly (to something like 2/3rd of todays).
I guess you are right - this will not hurt the power companies, but it might make a difference to the invested capital of the owners :
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"Prediction is very difficult, especially about the future" (Niels Bohr)
For what it's worth I think the Evergrande stuff is totally overblown.
Agreed.
To put Evergrande’s $300 billion debts in perspective, it’s the equivalent of a group in NZ defaulting on $4.5 billion* of debts. Will that being NZ financial institutions & investors collapsing?
To put Evergrande’s $300 billion debts in perspective, it’s the equivalent of a group in NZ defaulting on $4.5 billion* of debts. Will that being NZ financial institutions & investors collapsing?
* NZ’s GDP is 1.47% of that of China’s in 2020.
True, might be however only the tip of the iceberg.
Lots of property speculation going on in China and an enormous amount of unfinished and not anymore wanted apartment buildings ... some town quarters seem to look a little bit like Ireland after the GFC.
Agree however - not that likely to bring the Chinese economy to a grinding halt, but it might be a bit more than an inconsequential scratch ...
----
"Prediction is very difficult, especially about the future" (Niels Bohr)
True, might be however only the tip of the iceberg.
Lots of property speculation going on in China and an enormous amount of unfinished and not anymore wanted apartment buildings ... some town quarters seem to look a little bit like Ireland after the GFC.
Agree however - not that likely to bring the Chinese economy to a grinding halt, but it might be a bit more than an inconsequential scratch ...
It will impact but nothing like what some of the Western commentators are describing as China's Lehman moment. Laughable.
This year’s Santa Rally could be a particularly cheerful season for investors in S&P/ASX 200 Index (ASX: XJO) shares. There are predictions that there will be an $84 billion-plus spending spree leading up to Christmas and into early 2022! This bullish prediction is made by high profile Bell Potter trader, Richard Coppleson. He added up all the dividends, cash takeover bids and off-market buybacks to get to that staggering cash pile
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Originally Posted by Entrep
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