Black Swan Events
Nov 15, 2016
Just as we thought that we would have a steady run in to Christmas with no major new news, we have a couple of “black swan” events which requires us to put our thinking caps on as we try to appreciate the implications (if any) of what these events will mean.
Donald Trump wins the US Presidential Election
- A capitalist approach to dealing with the US economy moving forward
- Potential protectionism with ongoing trade agreements and therefore higher prices
- Lower corporate tax rates
- Stimulation to the equities markets (banks, construction etc.)
- A significant drop in the bonds markets associated with increased government borrowing
- Higher growth and higher inflation
- Increase in the value of the US dollar and decrease in value of the NZ dollar
- Resultant higher interest rates in NZ
- Higher numbers of US immigrants
A large earthquake near the top of the South Island
- Increased demand put on construction and infrastructure companies
- Short term decrease in tourism to NZ
- A loss in confidence from Wellington, South Islanders & international property investors
- Insurance companies and banks being even stricter on low seismic strength buildings.
- Renewed strength in the Auckland property market
We often forget that property, like any investment class is subject to external forces which have direct and indirect effeycts on the value of your property. How the recent events will pan out in 2017 is also not a straightforward prediction.
Previous Market Commentary: Money is still looking for a home