WealthDesign

China is the world’s second largest economy yet Western investors continue to ignore the investment opportunity that China represents.

Wage growth in China is running at somewhere between      15 – 25% p.a. and the Chinese economy is changing from a mass producer of cheap low quality goods, to a more mature market.

Up until now investing in China has been problematic. This is how it worked.  Chinese incorporated companies had A-Shares that only Chinese investors could purchase.  These companies also had B-Shares available to non-resident investors (non-Chinese).  These shares were on the Shanghai and Shenzhen Stock Exchanges (mainland China).

However from November this year, these stock exchanges will merge with the Hong Kong Stock Exchange.  This will mean that A and B Shares, that couldn’t be purchased outside of mainland China, will now be accessible via the Hong Kong Stock Exchange.

The outcome of this will be that Chinese listed companies will be accessible by the rest of the investment world (for the first time).

Watch this space … the investment world will take this opportunity to buy into Chinese companies. 

If you wish to talk about how you can participate in this changing investment scene, give me a call.  I’ll be happy to talk you through this exciting opportunity.

John Barber

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The media has invented the phrase ‘housing crisis’ and repeated it so many times that many now believe we have one. Yes, people are buying houses off each other in some parts of the country for ridiculous prices; even an uninhabitable villa can go for $1,000,000 in Auckland. But that doesn’t mean we have a crisis.

Auckland has a supply issue, particularly with land – which makes up 60% of the cost of a new house in that city. In Christchurch, where over $3,000,000 a day is pouring in from insurance funded repairs and new builds, there is a mega-boom going on. That also doesn’t mean we have a crisis.

Veda have said that people aged under 28 are borrowing more often for personal loans and credit cards and less for mortgages. With four consecutive Official Cash Rate (OCR) hikes this year, the well-publicised 20% deposit requirements and constant reporting of this so called ‘crisis,’ who could blame them?

Since the previous boom peaked in 2007 house prices in 16 areas across New Zealand have increased, but have fallen in 37 and remained stable in 19 – including Palmerston North. Around Manawatu there are plenty of houses under $200,000 that would be suitable for first home buyers, and if you look just outside Palmerston North, there are several small towns that offer houses for even less.

With KiwiSaver’s first home withdrawal, Housing NZ’s first home grant and the Welcome Home Loan Scheme, many people are still buying houses. There are many more who may not even be aware of just how close they already are – banks are still able to lend to 90% (just not all the time), and the LVR restrictions do not apply to new builds (so a 5% deposit may do it).

Some in the media have been saying that first home buyers need to reduce their expectations around how much they can spend on a home, where that home should be and the size and type of property they can buy first up. There is merit to that, but there is far too much misinformation out there too.

Rather than giving up, people just need good advice. They need to speak to someone who knows what is really going on, and who has a sensible and realistic approach. Give us a call – we help make the complicated simple.

Regan Thomas

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The total KiwiSaver balance for all investors is now $ 19.94 billion of savings. Who said New Zealanders don’t save?

With rising investment balances, investors need to consider the fees they are paying and which asset allocation they are invested into. In some cases they are paying top fees for the lowest return.

We have access to independent research that can compare fund with fund and manager with manager. Fees and performance really matter, and you need to be an informed investor. This is especially important as most of the marketing around KiwiSaver focuses on things like access to your KiwiSaver balance; not the real issues of fees and performance.

Our door is always open and we are happy to help you become an empowered investor.

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MTC is a great sweetener for KiwiSaver scheme members.  As long as you have saved $1,042.86 by June 30th each year, you receive a full tax credit of $521.43.  For a number of reasons, you may not have hit this target but it isn’t too late.  If you haven’t saved this amount during the year, you can still make one off payments to maximise the tax credits.  You can either send a cheque or pay IRD directly or go via your KiwiSaver provider.

If you want to talk about your KiwiSaver or do not know who it is with, do not hesitate to call the WealthDesign office. We have the latest Morningstar research on all the KiwiSaver funds so you can see if your fund is right for you.

John Barber

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It’s often overlooked because it’s not particularly sexy to mainstream investors, but there is huge opportunity in global farmland and sustainable farming.

You see, global population has increased at a staggering rate over the past century, with an increase of one billion in the past decade alone and a projected world population of nine billion people by 2050. Yet today’s global food production continues to leave over a billion people undernourished.

There has also been a proliferation of a new middle class with increased purchasing power in emerging markets, coupled with a shift in dietary trends, which has increased the demand for meat.

This global population growth and an increasing reliance of the global livestock industry on grains for feeding its livestock has, in turn, led to an increased demand for grains that will continue to trend upwards.

Add to that the millions of acres of land lost to urbanisation every year and the negative impact of extreme weather events, soil degradation, water scarcity, and rising temperatures on agricultural productivity.  Then there’s increase demand for biofuels, and the ‘finite’ nature of arable land to meet this ever-increasing global demand, and you’ll begin to understand why global farmlands — a prime asset — continue to be an attractive investment on a global scale.

On a local scale, we are starting to see a move into farm syndication that will allow investors to invest directly into land. Today farm syndication makes up 7.1% of all New Zealand farming operations. The fact is that not all syndicates are as good as another and prudent investing is wise.  If you would like to discuss what is available, and how best to take advantage of it, please do not hesitate to give me a call.

John Barber

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