Property preferred as shares slump
Hard on the heels of a slump in the stockmarket, New Zealand's biggest fund manager is shifting money into property in the hope rising rentals will translate into better returns.
Wednesday, April 20th 2005, 8:26AM
by The Landlord
AMP Capital Investors, which manages more than $10 billion of funds, announced yesterday it will shift funds from local bonds into local property and remain slightly underweight in local stocks.Many three-year property rental agreements were only now being renegotiated upwards, meaning the property market performed better at the tail end of a recovery than stocks, which tended to be more sensitive to forecasts of an economic slowdown.
"The yields are underpinned by a very firm rental environment at the moment," said AMP Capital chief investment officer Tore Hayward.
"It's much more of a late cycle investment than, say, equities."
AMP's announcement of an asset shuffle came the day after the New Zealand stockmarket's worst day in almost two years. The NZSX 50 Index bounced back 0.58 per cent yesterday to 2969.9, but remained below the 3000 mark amid fears of a global slowdown triggered by higher interest rates and sky-high oil prices.
Mr Hayward said the New Zealand economy was likely to slow down this year and expectations of slower earnings growth had already hit sharemarkets.
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