Opinion: Looking on the bright side

By Roger J Kerr If readers are completely sick and bored of the doom/gloom/Armageddon economic scenarios for the NZ economy coming from the economists located at local banking and broking institutions, have a think about the following more positive anecdotes:- 1. Auctions for small commercial and residential property sales over recent weeks have been very well attended and bordering on "buoyant". It's amazing what 3% bank deposit rates and 6% mortgage borrowing rates do to investors looking for 8% and 9% returns with capital value upside. There are still many risk takers in the investment world, and our economy needs them.

2. Some of my clients in export industries such as fishing, forestry and horticulture tell me they are better off today profit-wise than two years ago when a high exchange rate and high oil prices were killing them. 3. Export commodity prices in NZD terms are stabilising well above historical averages. 4. The bank moneymarket dealers have rapidly re-priced market interest rates to the RBNZ economic outlook, not the very pessimistic forecasts of their own bank economists. 5. Residential property prices are down 10% on a year ago, nowhere near the 20% to 30% forecast by many. 6. Corporate bond issues at 7%/8% yields have been snapped up by investors who cannot live off 3%/4% yields being paid on bank deposits. At least the corporate bonds are better credit quality than the tier-3 finance companies the same investors rushed a few years ago. 7. The NZD has appreciated by more than other currencies against a weaker USD in recent days, the RBNZ Monetary Policy Statement changing the sentiment. The forex markets are telling us that interest rates have seen their bottom. 8. New capital is available from equity investors (albeit at a price "“ ask Nuplex!) 9. Big private and institutional investors who have weighted their investment asset allocations to cash over the last 12 months, will soon become very tired of a 3% return with no upside. 10. The Little General, Stacey is back at the Warriors and they lead the NRL (pity about the cricket!) Notwithstanding the above, there are still major challenges and hurdles facing the economy. The number of "For Lease" signs up in industrial and retail environs of our cities tell a sad story. However, our economic recoveries always start in rural New Zealand, this one is no different and it may be already underway. ---------------- * Roger J Kerr runs Asia Pacific Risk Management. He specialises in fixed interest securities and is a commentator on economics and markets. More commentary and useful information on fixed interest investing can be found at rogeradvice.com