Equities to cool off in banner year
Next year could be a "banner year" for economic growth in New Zealand but investors should expect "more normal" returns on equities after a racey 2013.
At the same time Wellington-based Harbour Asset Management thinks the market will still be vibrant in 2014, as it releases its yearly outlook today.
The 4-year-old asset management firm recently received its second international award as the country's best investment management company.
Its International Finance magazine award followed the London-based World Finance magazine trophy it collected in July this year.
Managing director Andrew Bascand said it had been a banner year for the company, ahead of what he expected to be a year of outstanding growth in New Zealand during 2014.
"I can't see the next crisis for New Zealand. I've not seen a year looking forward, ever, where you've got so much certainty regarding growth outlook."
But he said the question for investors in 2014 was what the implications of this growth would be, and what had already been priced into the market.
Three of the key risks next year were the political landscape with the election, any actions of the Reserve Bank, and inflation data.
Bascand said markets already knew this in 2013, in which equity prices rose 19 per cent, and were 103 per cent up on the low point in February, 2009.
November 26 had been a record trading day for the NZX in both volume and value, as $926.8 million shares changed hand.
"I think investors need to consider an expectation of more normal returns out of the equity market.
"I don't want to dampen people's spirits; I don't want to jump on people's hopes of grabbing these returns. But I would say that our equity market here, one shouldn't expect it to race ahead here again."
That said, Bascand believed it would still be a busy year, with a lot of new listings expected. He said the domestic technology sector was highly sought after and there were many strong export businesses in New Zealand.
"Protein demand out of China isn't going to lessen, which is good for the likes of Synlait and A2."
Harbour's report said next year's government elections loomed as a significant risk for investors.
Possible changes to the electricity market, company tax rates and the possibility of a capital gains tax were all risks which needed to be priced into the market.