Yovich & Co. Market Update - 17 August 2015

Aug 17, 2015 | Commentary

Changes in Market




Market Themes

  • Last week saw the New Zealand market fall by almost 3%, the biggest weekly fall for the year. There were some notable disappointments from the week’s result announcements that saw investors remaining cautious.

  • From a global perspective the big news was the devaluation of the Yuan. The Chinese government moved their peg downwards against the USD in a shock move to ensure that Chinese manufacturers remain competitive.

  • This had a negative effect in Australia as the market interpreted this as a negative for Chinese demand for resources.

  • The US Markets see-sawed throughout the week but made modest gains as investors focused on positive economic data published by the Federal Reserve.

  • Forecasts are showing that global growth is slowing and that there are strong expectations for lower interest rates in both New Zealand and Australia.

  • The New Zealand Dollar reacted to the news of the Chinese Currency devaluation and traded back towards the five year low of 65 cents against the USD.

Investment News

Lower Growth, Lower Interest Rates and Where to Park Excess Cash.

The most common conversation I am having with clients is, “how can we continue to earn good income from portfolios, especially with interest rates continuing to fall?” The answer has been consistent, “buy high yield stocks on any weakness”. It is a boring strategy, but even if over the medium term the market goes sideways and we do not experience the same gains as we have over the past five years, at least we are being paid to invest. As long as investors are comfortable with taking an overweight exposure to the share market and the volatility that goes along with that, and they have a long term time horizon, this is going to be a strategy that will provide more income. Below is a list of our preferred high yielding NZ shares and their forecasts according to FNZC research. Most of these are in defensive sectors but a few are cyclical in nature and the timing of these investments are more critical.

Investment News

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About the author

Jarrod Goodall

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Weekly Update Investment Shares Bonds Market Commentary High Yield


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