The chart below captures some of what I think of WRT to NZ in that the decline was shallower than in the US but it did start to rollover sooner than the US did. Not captured in the two year chart is that the US and NZ correlated very closely in the middle of the bull market but before that NZ outperformed significantly with the occasional run of negative correlation to the US. It is probably not accurate to think that NZ was a great place to hide out during the bear market.
Alan Bollard (RBNZ chief) said last week that New Zealand would be early to come out of the recession. This was almost simultaneous with Fitch lowering its outlook on the country to negative (the outlook not the rating). FWIW an analyst named Brian Redican from Macquarie said on Squawk Australia this morning that Fitch was late and that his firm tended to think Bollard was closer to right on New Zealand's relatively early recovery.
A good way to research what stocks are available is to go to the NZX website and just look around. There are plenty of stocks that have five letter US designators including a couple of ports, one airport, several farming related stocks and a couple of consumer names. While many of them can probably be accessed they may be difficult to find deep enough markets to get trades done. Many of the stocks have very low share prices so even a small position could be several thousand shares which could mean higher commission and your broker having difficulty finding shares. I have faith that this will become easier in the next couple of years but that remains to be seen.
The catalyst for this post was this article about Fonterra, the big NZ dairy co-op. Fonterra is not publicly traded but there is a small chance that it could have a public listing soon. It stands to reason that a publicly traded Fonterra could be a reasonable proxy for the country. A big road block, as I understand it, is that the farmers who belong to the co-op believe their dividend pool would be reduced with a public listing. In addition to selling milk in the region there is also a business where they offer consulting-like services for dairy management.
In the context of yesterday's post I think New Zealand would be in the 2-3% portfolio weight category. I also think that at some point down the road there could be a little room for owning the currency or a little short term debt (but not both).
1 comments:
Roger, you speak of NZ stocks and their availability via their 5- letter (I assume pink sheets) symbols to US investors, and the disappointingly low volume. Not making a recommendation in any way, but I wonder if these stocks, and other, typically unavailable foreign to US investors, stocks are more liquidly (is that a word?) accessible via an Interactive Brokers (IB) account. I'd be interested in reading about yours or any commenter's experience with trading foreign stocks on foreign exchanges via IB or another brokerage (where you stay current, time taken to execute trades, your confidence in the security, spreads, commissions and other expenses (such as transactions taxes), etc.). By the way, I have investigated, but never pulled the trigger on, an individual IB account and the minimum account size is only US$10,000, and this will provide access to local trading (real-time, I think) of stocks on dozens of foreign exchanges.
Thanks,
JCarr
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