By Chris Hutching
Friday 27th June 2003
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BT executives held a series of seminars around the country a fortnight ago and New Zealand sharemarket specialist Fisher Funds held forums in the main centres this week for investors and analysts.
BT's theme was "Are Equities Dead?" The inferred answer of course was reinforced by a quote from Mark Twain "Rumours of my death are greatly exaggerated." The BT team presented historical charts to show the inexorable rise in sharemarkets over the decades in spite of setbacks.
BT chief executive Craig Stobo said the 1990s phase of over-exuberance had been replaced with excessive pessimism. He introduced guest speaker was Dirk Morris, head of Australasian Putnam Investments, an investment partner with BT.
Mr Morris said the world economy remained anaemic but there were recent signs of recovery and while deflation remains a threat it will pave the way for corporate recovery.
But he emphasised that investors should reduce their expectations compared with the pre-2000 environment. BT predicts bonds and property will be the next asset class to take and advise the correct investment strategy is active management of international equities in a diversified portfolio.
BT believes earnings growth from Europe (outside the UK) and Asia will surprise investors. Putnam's ideal asset allocation is 54% in the US, 20% in the UK, 4% Asia Pacific, 9.5% UK, 4.5% Japan, and 3.7% Latin America.
Favoured investment sectors in order of preference are financial sector (25% weighting), healthcare 14.8%, basic materials 7%, communications 9.5%, and consumer staples 12.5%.
Fisher Funds Management, emerging from its quater tragicus, has reweighted its portfolio after reporting a fall in the value of the Fisher Funds NZ Growth Fund of 2% in the year to May 2003, while the Fisher Funds Fledgling Fund fell 5%. This compares with strong three-year returns of 29% fort the growth fund but minus 8% for the fledgling fund.
Stocks that have been dumped from the growth fund include Baycorp Advantage, Skellmax and Restaurant Brands. Lessons taken from Baycorp's recent poor performance prompted fund manager Carmel Fisher to note that in future when a company announces a significant merger or takeover of an Australian company her fund will sell and wait for 12 months before re-evaluating the situation.
She said fund managers and investors are eagerly awaiting Finance Minister Dr Michael Cullen's superannuation fund, which is expected to invest up to $100 million in the local market beginning in October.
Fund managers are making submissions to be chosen as investment managers for the fund.
New stocks taken into the "concentrated" portfolio of stocks were Infratil, Port of Tauranga, Turners Auctions, Metlifecare and reintroduction of Mainfreight. Weightings of the portfolio now stand at Briscoe Group (5%), Guinness Peat Group (3%), Metlifecare (1%), Michael Hill (6%), Port of Tauranga (5%), Tru-Test (1%), Waste Management (12%), Wrightsons (2%), F&P Appliances (11%), Infratil (5%), Mainfreight (2%), NZ Investment Trust (1%), Sky City (15%), Turners Auctions (6%), The Warehouse (7%), cash (18%).
The chief executive of growth stocks Infratil, Port of Tauranga, and Turners Auctions also gave addresses at the Fisher roadshow and outlined the progress of their companies. Intratil chairman Lloyd Morrison talked about the new investments in peripheral airports near metropolitan centres such as Glasgow Prestwick International Airport.
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