NZSX50 - Good News!

[skid]

Meagre are you?? Ok I am now channelling Yoda..so bear with me.... If you want to start a thread...how about
NON-Investment strategies, because that's what that leads to. It means you consider withdrawing from mainstream investing and focus instead on protecting what you have. Problem is of course where do you draw the line...banks fail..better withdraw funds and bury gold bars in the back garden, stock markets collapse so you better cash up and ...and....and...what...? Dwelling on and planning for unknown and possibly unlikely scenarios is all well and good if you know when and how. Either you have an optimistic outlook and believe that the basically intelligent animal that we are will find a way through the difficulties, (as we do and have been doing for centuries), or you start gnawing on your fingernails and start looking for the signs of imminent financial disaster. Up to the individual of course however if you feel strongly maybe start a new thread over in the Investment Strategies.

I think you are looking at the world in black and white ,while possibly discarding the multitudes of shades of grey.
There are plenty of places you can draw the line(especially if your optimistic about man being an intelligent animal)--(you have only given him 2 choices --believe or knaw your fingernails--not much faith in his intelligence.
You can still lose your skin on the share market well before banks fail and it comes down to gold bars in the garden.
Who says you always have to be invested?--sometimes you make more by not being invested. By not losing your hard earned dosh (that you have paid tax on )--The worst way to not make money ,is by losing it.
Investors have strategies to exit shares for that very reason--no reason that cant be the case with the market in general. IMHO

[MAC]

Our market at a macro level is synchronised closely with the US markets, has been for a few decades, and that is unlikely to change anytime soon.

The US share markets peak when cyclical US interest rates have peaked and start to fall in response to a turn in the US economy. We have up to a couple of years before that occurs, assuming the US is not in a secular bull cycle now.

http://www.sharetrader.co.nz/showthr...252#post525252

http://www.harbourasset.co.nz/wp-con...ulus-Final.pdf

The NZ50 is an interesting animal NBT, historically the average PE ratio over time is higher than the share markets of other western countries because we have a market dominated by dividend paying stocks, well, even more so now than ever due to the big power company and other IPO’s last year.

When global interest rates are low as they are at present inflows will go into those dividend paying stocks and boost the NZ50.

At present 40% of the NZ50 is offshore held, historically the average is 30%, and much of that holding will be by offshore yield hunters.

When global interest rates start to rise next year some of that cash may exit, however, it will go from the yield stocks, not necessarily all stocks.

At that time, others who were in those yield stocks for the capital gain, particularly local investors, may also take some profits.

With up to a couple of years to run in the bull cycle, the question really is where will that local profit taking go, some will go to cash, some will go into non dividend stocks, there are a few that are relatively undervalued and have been neglected whilst the yield hunt has been full on.

[BlackPeter]

Hi,

Can someone with a better understanding of the macro environment than myself please explain why the following is incorrect or not a problem (or advise if it is correct)...

Situation; the economy is doing reasonably well and shares are becoming fully priced with no major room for large but rational price increases, therefore are unattractive. Typically during these times of a good economy, interest rates will be reasonably high and therefore bond prices low.
We enter a global slowdown (for whatever reason, say Greece for example) and with fully valued shares, people start to bail from shares and would usually invest in bonds as their prices are low and interest rates are about to fall sending their prices up.
However, in NZ we have the fully priced share scenario, but we also have low interest rates and therefore fully prices bonds. We also have fully priced property!

Is this the perfect storm that's going to cause us the next big dramas as investors, or is the macro theory a little more complicated or different to that?

Cheers,

NBT

Very good question - and to a degree we are here in uncharted territory - i.e. I guess the only thing people can do is to speculate what might happen.

You describe correct the typical cycles we have seen so far (and I am just using different words to describe the same thing):

Interest rates are low, Business is lending (cheap) money to make more business, share prices go up and given a limited money supply interest rates go up; People shift their money from (now dear shares) to (cheaper) bonds, business finds it difficult to still make money given high interest rates and therefore business activity drops. Given less demand for money in a high interest rate environment, interest rates drop. Back to square one.

What's different this time is that Central banks around the world created (using QE) a huge amount of additional money (i.e. the money supply is hardly limited anymore). This prevents interest rates from rising (because there is lots of money floating around) resulting in fully valued shares and low interest bonds at the same time.

In my view the only solution is that long-term the amount of money is re-balanced against the world GDP. There are two options: The world can increase the amount of goods and services (without further increasing the money supply) or alternatively the world can either devalue the money (using inflation) or just take money out of the supply chain (using defaults or so called haircuts, where debtors are not fully repaid).

At this stage it looks like defaults / haircuts seem to be the method of choice to remove some of the surplus money out of the supply chain (remember Russia, Argentina, Cyprus, Greece) - but obviously you never know what the future will bring.

[Joshuatree]

Only 2 stocks in the green this morn on the whole NZX but 19 by the end. Good recoveries in the mkts today
Shanghai bourse up re 5.7%
DOW implied open up re 170

[Hoop]

I had a person tell me there's no time like the present to invest in shares..The economy is strong and going forward with the lower NZ$ the economy will keep strong...
So after reading Warren Buffett books and armed with the life savings at retirement that person is going to enter the market for the first time and buy Blue Chip stocks with large yield rates using a long term buy and hold strategy... I told him as with all investment disciplines timing is the most important factor...

At the moment the time doesn't seem right..Try picking a mature bull market cycle investment strategy instead...

[couta1]

Gee Hoop that guy sounds kinda like me, he will sure have a rollercoaster ride and a lot of fun at the same time but I sure hope he's got huge gonads as well

[Onion]

Which companies are in the NZX50? Is it a secret now?

I have been looking a some Google Sheets spreadsheets of mine that pull in data from Yahoo. It has been some time since I adjusted them to recognise the current constituents of the NZX50, NZX20, NZAX, etc.

So naturally I went to NZX.com to see which companies are currently in the NZX50. I was surprised to see that, since NZX outsourced the management of the index to S&P Dow Jones Indices, there is no list of the companies in the top 50 index!

There is a nice link to http://us.spindices.com/indices/equity/sp-nzx-50-index
... but that only shows the top 10 by weight!

Further, their (S&P) FAQ states:

The lists of index components are not available to the public; they are only provided to index subscribers or by special request.

[sb9]

Trading numbers so far on NZX today...

Daily Value Traded

NZSX	$2,074,673,595
NXT	$0
NZAX	$30,807

[OldRider]

Onion:

Will this give what you want? It does not have a date
so may be no longer current. I haven't checked it
https://nz.finance.yahoo.com/q/cp?s=%5ENZ50

[Kaspar]

Which companies are in the NZX50? Is it a secret now?

I have been looking a some Google Sheets spreadsheets of mine that pull in data from Yahoo. It has been some time since I adjusted them to recognise the current constituents of the NZX50, NZX20, NZAX, etc.

So naturally I went to NZX.com to see which companies are currently in the NZX50. I was surprised to see that, since NZX outsourced the management of the index to S&P Dow Jones Indices, there is no list of the companies in the top 50 index!

There is a nice link to http://us.spindices.com/indices/equity/sp-nzx-50-index
... but that only shows the top 10 by weight!

Further, their (S&P) FAQ states:

Yeah i noticed this a few weeks ago, irritating right?