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No easy money this year

Picking which markets are likely to be the best performers is a difficult task, as none really stand out, BT Funds Sydney-based economist Chris Caton says.

Wednesday, February 7th 2007, 7:25AM
“There are no gimmes,” he says. “Well none that are glaringly obvious to me.”

He says last year international markets had a good run and it is “unrealistic” to believe that it will continue. Caton says people should stay invested and “eke out modest gains.”

The main concern is the United States market, where economists are predicting a soft landing for the economy.

However, Caton says that history shows us that often when a soft landing is predicted in the US, a hard landing eventuates.

Caton has always been bullish on the Asian markets and he remains so. His contention continues to be that these countries will continue to grow strongly.

Investors should get good returns in Asia, but they come at a higher risk level than in other markets.

As for commodities Caton shows a graph (left) which pictures a serious upward spike in real base metal prices. However the same graph shows that historically these spikes have steep and fast falls too.

Does this mean the same will happen this time around? Caton says there is an expectation that they will come down at some stage, but he does suggest “the world has changed” when it comes to commodities.

One reason is the high demand levels from China and India, and the other that the resources are more tightly controlled than before.

He thinks there is a risk here, but says “I’m not sure it is a 2007 risk.”

In Australia, where there is a large resource sector, the “sector is priced for a fall.”

Caton says that this is a good year to sit back, to stay invested. He repeats his word of warning, that while sitting back keep one eye on the United States market.

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 1.99 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
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SBS Bank Special - 2.29 2.29 2.65
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The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
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TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
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Westpac Special - 2.29 2.69 2.79
Median 4.54 2.79 2.99 2.96

Last updated: 15 February 2021 8:47am

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