In an ANZ morning briefing, the bank has pointed out some big shifts in international investor sentiment sweeping markets today.
Risk appetites for emerging markets are being pulled back fast.
Although commodity prices are holding, there are some very real stresses building for a lot of important economies. In fact, they report a British bank warning that "Russian banks are fighting for liquidity".
And, despite the recent gains, a senior and respected German ex-policymakers is still warning that problems loom for the eurozone.
ANZ's view of what this means for New Zealand was summed up like this:
In the past few days we have seen Thailand declare a state of emergency in Bangkok, China’s PMI fell below 50, a circa 15% collapse in the Argentine peso, and there is talk of a liquidity squeeze in Russia. It all sounds very 1990s: we have been here before.
At the margin, it is all negative news for a small open economy like NZ that is highly dependent on trade with the rest of the world. At this early stage, what is going on offshore doesn’t look to have enough of a head of steam, or enough plurality (in terms of there being hotspots in selected pockets, rather than what’s going on being a universal issue) to derail the growth or policy outlook here. But it bears watching, particularly given that in many ways, New Zealand is “going it alone” in the developed world growth stakes.
As a nation, we don’t have enviable debt or productivity statistics, but we are growing strongly and interest rates are set to rise. Had EUR (clearly a key barometer for euro sentiment) not been rallying, we suspect NZD would be on the skids.
The risks out of all this for the NZD are clearly to the downside, but for now, the domestic story and EUR strength ought to provide a buffer.
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11 Comments
Now that is one true statement.
I once worked out in the "sticks" for 9months, I was quite god smacked that a number of ppl I worked with were only interested in what was happening in the town, not even the rest of NZ let alone the world.
Not alone of course, Americans seem to think the same way, no where else matters.
regards
It's hard to reconcile all this news with the stubborn insistence of some that the global economy is rebounding and the world as a whole is back on track to what it was like before the GFC.
My guess is that the RBNZ will hold off on a raise of the OCR until March, at least. We'll have to revisit global data at that stage, but I have a suspicion those won't be nearly as pretty as we've been told they will be.
ANZ are right on the money ...almost all the serious commodity based economies are taking strain , Argentina , Australia , Brazil , Russia , Mexico , South Africa and India .
Mexico and Russia are oil producers and are the odd ones out
We are almost at parity with the Aus$ and almost 10 to 1 to the South African Rand .
Agreed Boatman, most of them have currency and very elevated inflation problems because of the withdrawal of capital (QE tapering a prime driver) and increasingly higher interest rates than the rest of us to try and stream the problem I.e. Yes others are hiking rates already and have much higher rates than NZ contrary popular rhetoric here. Different reasons to NZ though and a reminder that an elevated currency is a much lesser problem for a borrower than one that is under real pressure.
Now this is thread that made me laugh so hard my treasures are imprinted in my jeans.
Be Vigilant....wear a mask.....it'll give you something to wipe the sweat away with when you realize yor ass has been bonded to the ride.
Time for the bondies to get some saddle sores.
Alan Bondies .... or Shane ... are you a sporting man , dear Count ... or a sun-flower child ?
... I told my mates at the gas field when AB bought those Van Goghs for $US 50 million , I'd have grown him a vase full of the real thing for nearly half of that amount ...
How'd yer be good friend ; all sparkly shiny rinky dinky pink in the New Year ?
... and best wishes to " her indoors " .... as 'Arthur would put it ....
Not just the poor Russians fighting liquidity.
HR highness in doors, having a fit....never mind a mere Counts dear lady.
http://www.stuff.co.nz/world/europe/9661164/Royal-family-down-to-last-m…
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