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2001: A Year of Two Halves

This year provides huge opportunites for investors and the savings industry. The outlook for most markets is favourable and the Government appears willing to address problem areas such as tax and superannuation.

Friday, February 2nd 2001, 1:20PM

by Philip Macalister

The past 12 months have been a tough year for investors and advisers, particularly in the area of markets and returns.

In the year ending December 31 nearly all the major indices reported negative returns. The only exceptions where the Canadian and Australian stock markets.

Bonds rallied in the last quarter as central bankers cut rates to keep economic growth going and property had one of those years that are best to forget.

What does 2001 offer?

In Financial Forecasts Good Returns has assembled a group of expert commentators and asked them to look at the year ahead and what it offers.

Two things are clear. On the markets front there is a cautious sense of optimism for returns. There are, as usual, plenty of caveats to these predictions. One of the key ones being that the good news is probably not really due to hit until the second half of the year.

As Bank of New Zealand investment strategist Michael Daly points out the coming months will "likely provide much ugly economic news," but the situation isn't all doom and gloom.

"We believe excellent buying opportunities will present themselves in 2001."

The other theme to come out of Financial Forecasts is that the environment in which advisers and investors operate in is likely to change significantly.

Firstly there is the Government's proposed multi-billion fund to help pay a small proportion of the state pension in several decades time.

Submissions on the bill close on Friday (February 9). While the bill received overwhelming cross-party support from Parliament to go to a select committee, that doesn't indicate the bill will pass through the next stage easily. As reported earlier some parties are already showing they strongly oppose key aspects.

The essential part of the superannuation process has still to be started. That is what does the Government plan to do in what is known as tier two and tier three parts of superannuation?

Finance minister Michael Cullen has suggested changing the tax system to one based on a tax-exempt-taxed formula which would see allow savings to accumulate tax-free, then be taxed on withdrawal.

However, as Investment Savings and Insurance chief executive Vance Arkinstall and PricewaterhouseCoopers tax partner Paul Mersi point out such a change comes at a cost.

Arkinstall sums up the present situation well. He says that changes need to be made and after a decade of being left in the wilderness there is now the prospect of "significant and positive progress on a range of savings policy and taxation issues."

Investors and advisers need to stay abreast of this changing landscape to ensure they are well positioned for the changes.

Financial Forecasts is forward looking and is designed to help you focus on the issues.

Good Returns encourages you to take part in the debate by discussing these or any other topical issues in our online forums. To visit the forum section CLICK HERE

You can read Philip's blog here: http://www.goodreturns.co.nz/blog/

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Lender Flt 1yr 2yr 3yr
AMP Home Loans 6.49 5.69 6.29 6.40
AMP Home Loans $200k+ 6.39 5.59 5.99 6.30
AMP Home Loans LVR <80% - - 5.99 -
ANZ 5.99 5.85 6.49 6.85
ANZ LVR > 80 5.99 6.35 6.99 7.35
ANZ Special - - 5.95 -
ASB Bank 6.00 5.85 6.49 6.85
ASB Bank Special - - - -
BankDirect 6.00 5.85 6.49 6.85
BankDirect Special - - - -
BNZ - Classic - - 5.95 -
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus 6.19 5.85 6.29 6.29
BNZ - Mortgage One 6.60 - - -
BNZ - Rapid Repay 6.19 - - -
BNZ - Std, FlyBuys 6.19 5.85 6.29 6.29
BNZ - TotalMoney 5.99 - - -
Credit Union Auckland 6.20 - - -
Credit Union Baywide 5.85 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Fidelity Life 5.70 5.40 6.00 -
Lender Flt 1yr 2yr 3yr
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 5.90 ▲5.60 ▲5.99 ▲6.35
HBS LVR > 80% - - - -
Heartland 5.95 6.25 6.50 7.10
Heretaunga Building Society 5.75 5.50 6.30 -
Housing NZ Corp 5.75 5.50 6.30 6.40
HSBC Premier 6.24 5.59 6.29 6.55
HSBC Premier LVR > 80% - - - -
HSBC Special - - 5.79 -
Lender Flt 1yr 2yr 3yr
Kiwibank 5.90 5.69 5.99 6.40
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 5.60 - - -
Kiwibank LVR > 80% - - 6.29 6.40
Liberty 5.64 - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.45 5.95 6.60 -
NZ Home Loans 6.10 5.69 6.29 6.60
Perpetual Trust 7.70 - - -
RESIMAC - lo doc 7.34 7.14 7.49 8.05
RESIMAC LVR < 80% 5.84 5.64 5.99 6.55
Lender Flt 1yr 2yr 3yr
RESIMAC LVR < 85% 6.84 6.64 6.99 7.55
RESIMAC LVR < 90% 7.84 7.64 7.99 8.55
SBS Bank 5.90 ▲5.60 ▲5.99 ▲6.35
SBS LVR < 80% - - - -
Silver Fern 5.95 6.10 6.55 7.05
Southern Cross 5.95 6.25 6.50 7.10
Sovereign 6.10 5.85 6.49 6.85
Sovereign Special - - - -
The Co-operative Bank 5.95 5.65 5.99 6.35
TSB Bank 6.04 5.40 5.99 6.40
Wairarapa Building Society 6.20 5.75 5.95 -
Lender Flt 1yr 2yr 3yr
Westpac 5.74 5.85 5.95 6.85
Westpac - Capped rates - 6.19 6.69 -
Westpac - Offset 5.74 - - -
Median 6.00 5.85 6.29 6.85

Last updated: 15 April 2014 9:01am

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