With economic storm clouds gathering, is it time to start thinking defensively? Alan Wood takes a look.
Monday, November 21st 2005, 5:28AM
by The Landlord
During a period when a terror attack is reported every week and economists are predicting a New Zealand, if not global, economic slowdown, it seems timely to readjust your investment portfolio.
While a slowdown, or worse a recession, would point investment punters toward safe defensive stocks – telecommunications, gas, electricity and infrastructure – it is not quite as simple as that. Such stocks are already fully valued, equity research experts say.
While the New Zealand share market has boomed in the past three years, the strong equity gains have not continued this year. The market is likely to track sideways.
In the past 12 months there have been much better performances in overseas sharemarkets, and while the outlook offshore remains stronger no one should expect the future to hold stellar growth.
First NZ Capital's Jason Wong says mum-and-dad investors should realise that returns from New Zealand or offshore equities may not be what they once were. "I think overall returns are going to be pretty modest all round. You can say go global – (but) the global equity market has seen a pretty good run and therefore you can't expect those sorts of solid returns to be ongoing.
