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AMP on the defensive

AMP Capital is altering its portfolio allocation after a September quarter which reflected international market turmoil.

Wednesday, October 8th 2008, 11:04AM

by Rob Hosking

Chief strategist Leo Krippner acknowledges the extent of the market turmoil but says some of it has been overplayed.

“Emotive headlines suggest investors have lost their shirts…. in reality, diversified fund investors have just lost a few buttons.”

Hedged global shares dived 18.2% in value, while unhedged shares fell 10.7%.

New Zealand shares showed a slight gain – 0.8% – while New Zealand commercial property took a 7.9% dive.

The good points were cash and New Zealand fixed interest, with 2.2% and 5.6% gains respectively.

Krippner says the asset rebalancing involves a substantial swing away from global fixed interest, with smaller tilts away from global and New Zealand shares. The main overweight positions are now in cash and New Zealand fixed interest.

AMP is slightly overweight on commercial property but this will revert to neutral “as KiwiSaver flows are directed into other asset classes.”

Krippner says there are opportunities for investors.

“Share prices now look more reasonable compared to earnings.”

New Zealand firms affected by the lower exchange rate are looking good for investors – Fisher & Paykel Healthcare being a particularly good example, says AMP’s head of New Zealand equities Guy Elliffe.

Pressure though is likely to remain on firms exposed to the retail and construction sectors.

“The New Zealand market is in good shape. The New Zealand domestic consumer is not,” says Elliffe.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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