Coronavirus: New Zealand share market up by 10% in April

coronavirus 21/04/2020

Peter Williams was joined by Frances Sweetman from Milford Asset Management to discuss the New Zealand share market and what it means for our Kiwisavers.

The New Zealand share market was over $12,000 in early February, before the market dipped about 30% and Kiwisaver took a massive hit.

Sweetman explains we dropped from a peak on the 21st February, but we have

Gained about 10% of that back in just April.

The New Zealand market is dominated by the likes of Auckland Airport and Meridian Energy, Peter asks whether our sharemarket is more defensive and then perhaps safer than many markets around the world?

“It certainly has been,” she says, “the issue we have in New Zealand is that our market is actually quite small.”

We are led by off shore, Sweetman goes on to say, “we have a large proportion of foriegn investors in a market.”

The news from New Zealand would have gone to investors around the world, and the low rate of infections and low death will not go unnoticed, she states, including the relatively strong government balance sheet.

What we’ve seen in April, Sweetman explains, is very much domestic buying that has supported the rally.

She says the airport and retirement sectors were poor earlier on, but have bounced back quite hard.

“Some of the outbreaks have been in care homes overseas which has led to a tragic loss of life,”

That poses a big risk to the [rest home] sector.

There are also tenants that are unwilling to pay rent while they don't have access to their building, Sweetman explains on listed properties.

Should kiwisavers feel confident about their future? Peter asks,

Kiwisaver is a very long term investment

Sweetman replies, “if you have any worries, Kiwisaver providers are always there,” and to assess whether you are in the right risk profile.

Listen to the full interview above.