Investors told: Don't let softer dollar put you off
Michael Haddad, principal and senior portfolio manager of Sydney-based PetersMacGregor, said: “I get the sense people are not taking action because the currency has fallen. But we need to take a greater historical perspective. It’s still relatively high. It has fallen but not to the level where it is obviously undervalued… There’s a greater recognition I think in Australia that a lower currency is the new norm and an inevitability. I don’t sense the same yet in New Zealand, hence my concern that people here may defer foreign investment.”
He said increasing global exposure could be reasonable in an appropriately considered asset allocation.
“While we may not naturally feel great about investing in US shares when the NZD is at 63c, recall that in 2003 when the NZD has risen to 63c from under 40c just three year earlier, everyone thought the Kiwi was overvalued and destined to fall. Being able to invest at more than 80c a short while ago may turn out to have been a generational opportunity but it does not mean we don’t continue to face an attractive opportunity in the 60c range.”
He said if the dollar fell back to US40c New Zealanders would experience a value lift of 57%.
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