Property

October’s Market Turbulence: What Does it Mean?

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By Amanda Chadwick (Authorised Financial Adviser of Forsyth Barr Wellington)


The share market took a tumble (or was it more of a stumble?) last week. Headlines

warned that KiwiSaver accounts could halve in value. Was it just media hype?

What are the experts saying? To answer these questions, we approached Amanda

Chadwick of Forsyth Barr to comment on the wobbly market and how we should

respond.


Between October 5th and 11th 2018, global sharemarkets hit turbulence, with

the MSCI World index (in New Zealand dollar terms) falling 6.2%, the Standard &

Poor’s 500 index falling 6.7% and the NZX 50 index declining 5.4%. While the fall

occurred sharply, given the same three indices were up 19.6%, 27.0% and 15.0%

over the preceding 12 month period, Forsyth Barr did not consider the pullback

to be unexpected. By the time things had settled a week later, the same three

markets had rebounded by 1.0% to 2.0% of their initial fall. In some cases,

market volatility can provide an opportunity to invest in quality companies at

more favourable prices.


Market behaviour (as with everyday life) is a combination of reality mixed with

emotion. It is not unusual to see an initial dramatic reaction to market news or

events, often presuming the worst, rather than taking the time to understand the

cause or context of the situation. Human nature has a knack for focusing on

negative news and amplifying its impact through isolation, which is why it’s

valuable to have an Authorised Financial Adviser providing much needed

perspective and strategy. One of the first questions to answer in response to any

sudden market movement is “what’s the cause?”


When reflecting on last week’s correction, the main contributors to the sell-off

were largely a mixture of:

  •  the United States Federal Reserve signalling potential interest rate rises;

and

  •  continuing trade tensions between the United States and China.


Investors with their own investment portfolios, should seek advice from an

Authorised Financial Adviser they can have regular contact with, who provides

proactive updates and communication and is readily available to ‘chew the fat’ in

response to market events. An Authorised Financial Adviser’s real value is not

just managing a portfolio to generate returns, but in navigating the client’s

investment experience. It’s important to consider everything from personal life

goals and objectives, portfolio expectations, the economic landscape, and how to

position the portfolio at any given time, given both the client’s needs and risk

appetite (or lack of it), as well as the stage of the market cycle.

Amanda Chadwick, Authorised Financial Adviser, Forsyth Barr Wellington.

Amanda Chadwick is an Authorised Financial Adviser with Forsyth Barr Limited in

Wellington. For further information on any aspect of this article or to arrange a

meeting to discuss your investment objectives in confidence, call 0800 367 227 or

email amanda.chadwick@forsythbarr.co.nz. This column is general in nature and is

not personalised investment advice. Disclosure Statements for Forsyth Barr

Authorised Financial Advisers are available on request and free of charge.

A Tale of Three Cities

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By Graham Goodisson

I’m currently wading through the murky waters of trying to sell and buy in three

separate cities. It’s in no way as impressive as it sounds. Each requires a different

strategy and each can play havoc on the emotions. Engaging all three cities at once

creates something of a perfect storm.

We’re currently living in Wellington, but right now I’m attempting to sell and buy in Tauranga,

Lower Hutt and Christchurch. This has led me to observe again how different

cities are form each other, not just in their geographies or demographics, but also

how the real estate markets differ from city to city.

Tauranga seems to have auctions and you engage an agent who has the ability to

work across all real estate companies. There are lots of houses on the

market—and lots of really badly built ones at that. I think the real decision in

Tauranga is, not how many avocados to buy, but how to not be caught with a

leaky home. Prices are similar to Wellington.

Selling in Lower Hutt is a little more reserved it seems. It will be sold on a BEO or

listed price basis and will be with the company that seemingly “owns” that

particular suburb. Succeeding here is about a realistic price expectation and also

the thought that it might take a little while. The question in the Hutt Valley is

this: “Will it occur before Christmas?” Immaculate presentation is the key. Stock

levels are still low so that is helpful.

Christchurch is another story again. There are always many questions around

earthquake repairs. Initially, we’ll aim to sell via auction to get some interest and

then we will see. Our agent is the top agent in the city and it’s interesting to be

part of his process. Only one company is involved. It’s a conservative market

with lots of houses to buy.

I’ve learnt that what I know in Wellington is only transferable in terms of doing

your checks, spending time learning the value of properties and that local

knowledge trumps all. Also, you should never be emotionally involved, and that

is just about impossible for an emotional being.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.