Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details
Don’t Expect Another Roaring Year for Asia-Pacific Stock Darling
(Bloomberg) -- New Zealand equities will find it hard to match the stellar run they have had this year.
After a record 29% rally in 2019, the benchmark S&P/NZX 50 Gross Index is poised to give in to gravity as earnings stagnate. UBS Group AG sees it climbing to just 11,780 by the end of 2020, or 4% above the last close.
The surge this year was mostly due to relaxed monetary policy across the globe, with New Zealand leading the dovish trend by being the first developed-market economy to cut interest rates this cycle. The boost came at the right time to support the market, just as corporate earnings dwindled. Low rates offsetting poor fundamentals is likely to be the theme carrying over to 2020.
Ongoing profit downgrades, combined with a tepid domestic economy point to “largely non-existent” earnings growth of 1% next year, UBS Group AG analysts led by Jeremy Kincaid wrote in a Dec. 3 note. Possible acquisitions, the potential closure of Rio Tinto (LON:RIO) Group’s aluminum smelter and a federal election are all factors that could weigh on equities, they said.
“Like most equity gauges across the globe, upside in Kiwi stocks has been supported by accommodative RBNZ policy, rather than a terribly strong earnings growth outlook,” said Kyle Rodda, an analyst at IG Markets Ltd. in Melbourne. Still, an improved U.S.-China trade outlook “has and will have a significant impact” on the shares, and a pickup in China’s economy would go a long way to lift up the market, as the country’s exports have been hit by weakened Chinese demand, he added.
New Zealand’s economy also grew at a faster pace in the third quarter, suggesting its slowdown is over. Frances Sweetman, a senior analyst at Milford Asset Management, sees some glimmers of hope in the domestic economy. Increased confidence in the housing market and government plans to boost infrastructure spending could bolster the shares, she said.
But not like this year.
“We don’t expect the share market to perform as well next year,” said Sweetman from Auckland. “It should still be a reasonable performance.”
(Updates with 3Q economic growth in sixth paragraph)
Related Articles
Australia stocks higher at close of trade; S&P/ASX 200 up 0.13%
By Investing.com - Aug 09, 2022
Investing.com – Australia stocks were higher after the close on Tuesday, as gains in the Telecoms Services, IT and Consumer Discretionary sectors led shares higher. At the close...
Japan stocks lower at close of trade; Nikkei 225 down 0.88%
By Investing.com - Aug 09, 2022
Investing.com – Japan stocks were lower after the close on Tuesday, as losses in the Insurance, Services and Precision Instruments sectors led shares lower. At the close in Tokyo,...
Legal & General on track to hit financial goals as H1 profit rises
By Reuters - Aug 09, 2022
LONDON (Reuters) - Britsh insurer Legal & General said it was on track to meet or beat cash and capital generation goals as it recorded an 8% rise in operating profit to 1.16...
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.