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We\u2019re roughly half way through the year (how did that happen so fast?), and the shortest day is now behind us.\u00a0 What is the latest outlook for investment markets?<\/p>\n
New Zealand cash and fixed interest<\/strong><\/p>\n Most economic forecasters anticipate long term interest rates will gradually edge higher, with the NZIER forecaster poll predicting 10 year government bond yields will average 3.4% during the year to March 2018, up from 2.8% the year before. \u00a0Fixed interest investors can anticipate gradual increases in term deposit rates, but bond investors should be wary.<\/p>\n Opinions on the NZ dollar are mixed, although a majority of forecasters are expecting some modest depreciation.\u00a0 Based on this, a small boost to investors\u2019 returns from unhedged overseas assets looks more likely than not.<\/p>\n International fixed interest<\/strong><\/p>\n While the pace and magnitude of global interest rate hikes may be less than was forecast a year ago (which has led to global bonds performing reasonably well over the last 12 months), they are still likely to happen as inflation reappears.\u00a0 Interest rate increases typically equate to a capital loss for bonds, hence the outlook is negative.<\/p>\n NZ commercial property<\/strong><\/p>\n The backdrop for commercial property is generally favourable.\u00a0 Strong population growth, a buoyant economy, and growth in the numbers of office workers should see demand for office space (especially in Auckland) stay high, and vacancy rates low.\u00a0 Commercial property provides dividend yields of around 5% at present, although gradually rising interest rates may offer an alternative for yield-seeking investors.\u00a0 Outlook: positive returns, but likely underperformance v the wider share market.<\/p>\n Australian & international property<\/strong><\/p>\n In Australia, retailers have been struggling (some closing their doors) in the face of increasing online competition, including the upcoming arrival of Amazon.\u00a0 This however has boosted the demand for warehousing, storage and logistics properties.\u00a0 With similar headwinds from rising interest rates, underperformance v equities is likely.<\/p>\n Rising interest rates are likely to be an even bigger hurdle for global commercial property, where the global property index yields only 3.7%.\u00a0 The outlook here is for underperformance.<\/p>\n NZ equities<\/strong><\/p>\n The NZ economy is full steam ahead.\u00a0 Commodity prices have increased across the board, businesses are generally upbeat about their prospects, and prepared to hire and invest.\u00a0 Expectations for profits (which were already high by historic standards) have risen further.\u00a0 NZ equities are expensive (19.9 times projected earnings), but can continue to perform well on the back of the strong economic conditions. \u00a0The outlook is for further strong performance.<\/p>\n Australia equities<\/strong><\/p>\n In Australia, economic growth has been more muted, although recent signs of a pick-up in activity are encouraging.\u00a0 While Australian shares are less expensive (15.3 x prospective earnings), the consensus is there will need to be more evidence of stronger economic growth before we see anything other than modest equities performance. \u00a0Outlook = treading water.<\/p>\n International equities<\/strong><\/p>\n Equities have been performing well in Europe with generally increasing economic growth and no major political shocks in recent elections (although UK shares have stalled with the minority government election outcome).\u00a0 The US has also performed well year to date, increasing over 8%.\u00a0 Lower than expected GDP growth has held Japan back (4% increase YTD), but emerging markets have continued to outperform the developed world, up 16% YTD.<\/p>\n The World Bank and OECD are forecasting the word economy to grow strongly at around 3.5% this year, with China and India at the forefront.\u00a0 This strong forecast growth supports expectations for global profit growth, and does support high valuations.\u00a0 The consensus view is that global equities will continue to grind out further solid gains over the next 12 months.<\/p>\n <\/p>\n Dean Edwards<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" We\u2019re roughly half way through the year (how did that happen so fast?), and the shortest day is now behind us.\u00a0 What is the latest outlook for investment markets? New Zealand cash and fixed interest Most economic forecasters anticipate long… <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-268","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"aioseo_notices":[],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts\/268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/comments?post=268"}],"version-history":[{"count":2,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts\/268\/revisions"}],"predecessor-version":[{"id":270,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/posts\/268\/revisions\/270"}],"wp:attachment":[{"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/media?parent=268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/categories?post=268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nestegginvestments.co.nz\/index.php\/wp-json\/wp\/v2\/tags?post=268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}