Time for caution but room for optimism too

16:00, Oct 13 2012

Last week's article on KiwiSaver in which fund founder Phil Veal suggested changes to allow more investment in alternatives to listed assets and cash produced a strong response from the industry. Some were in favour of change while some were opposed and one favoured letting KiwiSaver evolve naturally.

We'll present those arguments in depth next week, but suffice to say there are several things going on here. First there is the desire of investors (and from fund managers) for better returns - and better returns almost always require investors to take on more risk.

Second, there are people out there eyeing the ever-growing KiwiSaver treasure chest and there will be more. Many will have good intentions and will be seeking to ensure we make the best possible use of that money, but some won't.

And that's why we need to be cautious. KiwiSaver has succeeded spectacularly well and its reputation is precious. A few things have gone wrong, and that's only to be expected, but no-one has lost their dough.

Given New Zealand's recent history, that's a good place to be. We should always look at ways to improve KiwiSaver, but we should also always do so in a measured and well-thought-out way.

Just lately there have been worrying signs of a softening in the local economy. The high dollar is killing jobs and companies and there is a needed debate breaking out about how or whether that should be more directly managed.

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Delays in rebuilding Christchurch are not helping and as I sit in my office I can see chunks of the Auckland skyline notable mostly for the absence of cranes in them.

The stimulus of infrastructure investment, high commodity prices, strength in Australia and China and, credit where due, a bit of good management, have all helped us glide through what could have been a very unpleasnat crisis.

But if we want that to continue, we can't keep relying on luck.

That's why it is good to see some long-awaited activity on the NZX with Moa unveiling its offer last week and others, bigger companies with bigger revenues and arguably bigger prospects, waiting in the wings.

This isn't a selling off of the national silver. It is not controversial. It's something we should all celebrate. It is what happens when capital accumulates and clever and driven entrepreneurs do what they do best and build companies, brands and quality job opportunities.

Following the successful partial float of Trade Me, we could be about to see one of the most active periods ever on the NZX, fingers crossed. In this environment, that's almost miraculous.

Sunday Star Times