Waterman Capital is a private equity investor established in 2004 to provide capital and management expertise to mid-market businesses based in New Zealand, with a long track record of investing in, and adding value to businesses in that space. We are excited to offer you the opportunity to attend a presentation from Executive Directors Lance Jenkins, and Chris Marshall to hear about an opportunity to invest in their third fund.
Eurozone – Further easing expected The Eurozone markets are anticipating that the European Central Bank (ECB) will increase the Quantitative Easing (QE) program in 2017. This has led to the European debt market interest rates continuing to fall into negative territory with 40% of all Eurozone government debt now offering investors NEGATIVE interest rates. We anticipate that the QE will continue into 2016, and potentially into 2017, as the Eurozone continues the slow grind out of recession. Once the ECB ceases the QE this will leave only Japan underwriting the excessively high asset prices around the world, which will lead to more uncertainty around the sustainability of prices, and we will be watching all markets with an increased level of concern Chart 1 – Who’s still doing QE? Source: BoE, DB Global Markets Research Chart 2 – Negative Yields on Euro Gov Source: Jack Di-Liza, Bloomberg Finance LP, DB Research
When will rates go up in the US? Globally the financial world remains focussed on Janet Yellen, Chair of the Board of Governors of the Federal Reserve (the Fed), as she continues to suggest that the Fed will increase interest rates in the US at some stage before the end of this year. As shown below in chart 4 the market is now pricing in a much higher expectation of rates rising in December 2015. If the US Fed does commence tightening in December we can expect to see the market volatility increase for a short period of time, before potentially moving into a more sustainable growth period. As shown in the table below in the past we have varying performance through tightening cycles, but on average it has been a positive share market with a sustainable climb in values. This table comes with the common disclaimer that past performance is not a good indicator of future performance, but while history may not repeat to often, it certain rhymes. Chart 1 – Market’s assumed probability of a move Table […]
We see a lot of investors who have a long term plan, someone in their mid 40s potentially needs an investment strategy to cover a period of 60 years (or more!), yet so often our decisions are based on what makes them happy today, typically believing that they have time to ‘deal with’ the consequences. This is compounded when the decisions being made are clouded with emotion, rationalism is quickly thrown out the door! Here is a good article titled “Short-Termism: it’s more contagious than the flu” – we can’t agree more.
At first glance the Future Generation Global Investment Company looks just like any other, run-of-the-mill international investment fund, however on close inspection this fund will provide some very tangible benefits for Australian and New Zealand “at risk” youth. All of the fund’s underlying managers have either donated their services for free or at significantly discounted rates in order to benefit this very worthwhile cause. The discounted fees are donated annually to charities working closely with Australian and New Zealand youth suffering mental health issues. The fund regulators and administrators have come on board as well , with both the Australian stock exchange and the funds Auditors heavily discounting their own fees to assist the cause. Read more here Disclaimer The information provided in this email is general only. It does not take into account the investment objectives, financial situation or particular needs of any person and may not be appropriate for your requirements. We strongly suggest that investors consult a financial adviser prior to making any investment decision.
September has been an eventful month in the property market with New Zealand becoming the most overvalued property market in the world. As shown in the table below, when we take an average of the house price divided by average income, and the house price divided by the average rent, New Zealand property is currently trading at 62% above its historical averages, making it the most overpriced in the developed world. Chart 3 – Global Property Prices Source: OECD, Deutsche Bank Global Markets Research, monthly chart pack New Zealand Dairy Over the last month dairy prices have rallied globally, which will be a welcome relief to New Zealand farmers. In the last 2 auctions, being mid-August and early September the global dairy trade prices have risen by 15% and c11% respectively. This is still leaving the price per kg of milk solids low, and Fonterra has not revised their forecast from $3.85 ($4.25-$4.35 including dividends) To date farm land in New Zealand has continued to hold its historically high prices, and hence banks are still supportive of farmers drawing on […]
Globally the financial world remains focussed on Janet Yellen, Chair of the Board of Governors of the Federal Reserve (the Fed), as she continues to suggest that the Fed will increase interest rates in the US at some stage later this year. As shown below in chart 6 the market is now pricing in a much higher expectation of rates rising in December versus September this year. In chart 7, the Fed dot chart, which shows each US Federal Open Market Committee (FOMC) members views on where they feel interest rates are heading that are all predicting rates will increase into the end of 2015, and increase further over the next few years. The red line on chart 6 is the markets expectations of what will they are pricing in with regard to rate increases. As you will note there is a large difference between market and the average FOMC expectations, and as such we may see increased volatility in the fixed interest market if the committee do commence tightening in next month instead of the end of the year. […]
The information provided in this email is general only. It does not take into account the investment objectives, financial situation or particular needs of any person and may not be appropriate for your requirements. We strongly suggest that investors consult a financial adviser prior to making any investment decision.