Varying strategies to tackle NZ shares

Fisher Funds Management director Carmel Fisher says that the election this year is likely to have little impact on the New Zealand sharemarket as it appears Labour will regain another three years in power.

Normally uncertainty around elections spooks investors, particularly offshore based ones, and weakens the market.

Fisher told the Society of Independent Financial Advisers conference in Nelson at the weekend that the opposite seems to be happening. The New Zealand market is '"basking in a little bit of sunshine right now" and foreign investors are looking on it favourably.

One of the reasons for this positive sentiment is that it looks reasonably priced and the economy is rolling on well.

Fisher says consumer spending is strong, company earnings are holding up, and the New Zealand Superannuation Fund is likely to have a positive impact on shares.

Because of uncertainty in offshore markets and accounting issues in the United States, offshore investors are "starting to look for other markets."

She says the United States is currently going through a period that is equivalent to what happened in the New Zealand market after the 1987 sharemarket crash.

That is companies are cleaning out their balance sheets and tidying up the way they do things.

Fisher says at around 15 times earning the New Zealand market appears reasonably priced.

She says dividend yields are getting up to around 5%. "You don't need a lot of capital gain on top of that to get a good return," she says.

Despite painting a positive outlook Fisher says managers appear to be taking some very divergent views on how to play the market.

Some are playing the rising New Zealand dollar theme and buying companies which will benefit such as the Warehouse and Sky TV. Others going for companies which will benefit from the global economic cycle moving up and picking companies like Fisher and Paykel Appliances and Fletcher Building.

Another theme is to go for value stocks such as GPG, and yet another tactic is to be bearish and punt for the defensive stocks.

Fisher says managers with a bottom-up stock picking approach are "having a field day."

"If the international markets are going to struggle this year we will have another good year," Fisher predicts.