Reserve Bank of New Zealand certainly moves quickly
One thing we can say about the Reserve Bank of New Zealand is they certainly move quickly when they think it is appropriate to do so.
For example, in the nine-month period between July 2008 and April 2009, the New Zealand official cash rate (OCR) was cut on seven occasions, from 8.25 per cent to 2.5 per cent.
Now the opposite is occurring and in the past four months the OCR has been increased on four occasions – each by 0.25 per cent – from 2.5 per cent to 3.5 per cent. The New Zealand economy is expected to grow by 3.7 per cent in 2014, with the recovery in construction and net migration adding to housing and household demand.
The graph below compares the New Zealand 90-day bank bill rate with the New Zealand official cash rate, which commenced life in March 1999 at 4.5 per cent.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Sahil Dmello
:
Thanks David!
David Buckland
:
Hi Sahil,
Yes, I like the outlook for the the New Zealand construction sector over the next couple of years. This comes from a combination of low interest rates, an under-build in Auckland, net migration and the pick up in activity around Christchurch.
Metro Performance Glass is expected to float on Wednesday 30 July 2014, with an initial market capitalisation of NZ$314.5m, or 185m shares on issue, at a float price of NZ$1.70. Net debt at the IPO is NZ$50m, giving an Enterprise Value of NZ$364.5m. Forecast EBITDA for the year to September 2015 is NZ$42.5m, putting the company on a prospective EV/EBITDA ratio of 8.5 times.
Montgomery Investment Management elected not to participate in the Metro Performance Glass IPO.
Sahil Dmello
:
Hi David,
Speaking of New Zealand , on a recent show on Sky Business you sounded very positive on the construction sector there and in particular the ipo of Metro Performance Glass Limited. Will the Montgomery fund be participating in that ipo?
thanks,
sahil