The more the NZD falls the more compelling this market looks. We have long been believers in the contrarian investment philosophy which involves recognising under-loved markets and investing when things look worst. The rationale is that when things appear at their worst things can only get better because all the bad news has been priced into the market.
Clearly with the ARM mortgage resets in the USA only just starting to feed through the US market, we will be looking at more bad news in the USA. Its unlikely this bad news has been fully priced into the market. This might actually be the news that drives the NZD to 40c USD. Why? Because when thew US stumbles, the NZ and Australian currencies tend to suffer as 'growth' associated economies with weak internal demand. This perception is actually flawed in the sense that weaker local currencies increase local receipts from US export earnings. This is the great aspect of the Australian and NZ economies, that they have this wonderful currency buffer in bad times. For this reason I suggest any move to 40c will be a magnificant FX trading opportunity, whether its the currency you solely play, or whether you are buying NZ property.
The compelling attractions about NZ at the moment are:
1. A current account deficit of 9.6% - which can only improve in a time of global uncertainty
2. Free trade agreement with ASEAN nations - this in itself is a positive indicator that Asian nations are not protectionist in these difficult times
3. Greater integration between Australia-NZ
4. Strong food export receipts for NZ - as commodities are denominated in USD
5. Improvement in NZ savings rates
6. Increasing tourism - the low NZD will make NZ a preferred destination for international travellers. Perhaps the other strong aspect in hard times is the ability of NZ to offer cheap travel options for backpackers.
I visited some business colleagues last weekend in Ruepehu. In the town of Taihape the largest bar-restaurant is in foreclosure. This is a wonderful opportunity to develop an external tourist market for this property because this is a town with a wide range of eatery options. What it needs is better marketing. The owner of this property over-capitalised in the property, but has under-invested in developing tourist links. During this period of low dollar, there could be no better opportunity to buy this property for foreigners or NZ expatriates. This place stands in the shadow of Mt Ruepehu. It has access to whitewater rafting, the skifields, jet boating, and its situated between Auckland and Wellington. It strikes me as a good investment!
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Andrew Sheldon www.sheldonthinks.com
Clearly with the ARM mortgage resets in the USA only just starting to feed through the US market, we will be looking at more bad news in the USA. Its unlikely this bad news has been fully priced into the market. This might actually be the news that drives the NZD to 40c USD. Why? Because when thew US stumbles, the NZ and Australian currencies tend to suffer as 'growth' associated economies with weak internal demand. This perception is actually flawed in the sense that weaker local currencies increase local receipts from US export earnings. This is the great aspect of the Australian and NZ economies, that they have this wonderful currency buffer in bad times. For this reason I suggest any move to 40c will be a magnificant FX trading opportunity, whether its the currency you solely play, or whether you are buying NZ property.
The compelling attractions about NZ at the moment are:
1. A current account deficit of 9.6% - which can only improve in a time of global uncertainty
2. Free trade agreement with ASEAN nations - this in itself is a positive indicator that Asian nations are not protectionist in these difficult times
3. Greater integration between Australia-NZ
4. Strong food export receipts for NZ - as commodities are denominated in USD
5. Improvement in NZ savings rates
6. Increasing tourism - the low NZD will make NZ a preferred destination for international travellers. Perhaps the other strong aspect in hard times is the ability of NZ to offer cheap travel options for backpackers.
I visited some business colleagues last weekend in Ruepehu. In the town of Taihape the largest bar-restaurant is in foreclosure. This is a wonderful opportunity to develop an external tourist market for this property because this is a town with a wide range of eatery options. What it needs is better marketing. The owner of this property over-capitalised in the property, but has under-invested in developing tourist links. During this period of low dollar, there could be no better opportunity to buy this property for foreigners or NZ expatriates. This place stands in the shadow of Mt Ruepehu. It has access to whitewater rafting, the skifields, jet boating, and its situated between Auckland and Wellington. It strikes me as a good investment!
------------------------------------------------
Andrew Sheldon www.sheldonthinks.com
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