The deepest recession in NZ history. What’s behind it? / NZ Share Market Rises and Falls Over the Last Week/ My 4 Company Losers and 2 Winners ($11,021 Stock Portfolio Update)
✅ TABLE OF CONTENTS ✅
0:00 News Topics.
0:26 The deepest recession in NZ history.
3:12 Heartland Group Stock Update (HGH - NZX)
5:24 Serko Stock Update (SKO - NZX)
5:57 Tourism Holdings Stock Update (THL - NZX)
7:08 Enprise Group Stock Update (ENS - NZX)
8:34 My Public Portfolio Update $11,021
If you look at this chart we must be all in trouble. And I’m talking about WW2 trouble because we have not seen such GDP drop since 1930.
However, something really bizarre is happening. GDP chart is down but the NZX 50 is going up. There is a big disconnect from the real economy and the stock or the property market. One of the main reasons is that the NZ government is handing out a lot of money and RBNZ reduced the Official Cash Rate close to zero.
Since investment earnings are scarce in a recession with zero or negative interest rates, investors are flocking to anything promising capital gains. Equity, real estate or even rare whiskeys are attractive alternatives to watching your money melt away in real terms.
Last week, the Real Estate Institute of New Zealand (REINZ) released its latest property price statistics. In the past year, the median house price increased by 16%.
If you thought there was an economic crisis or a recession going on, it does not show up in insolvency proceedings too. For the six months of March to August, 481 bankruptcy adjudications were sent to the High Court. That was 23% below last year's figure, 40% fewer than in 2018 and 56% below the 2017 numbers.
In New Zealand, a 12% plunge in June quarter gross domestic product (GDP) was the worst result since records began in 1987, but a fall of that magnitude, reflecting the coronavirus lockdown, had been expected.
However, all the padding around this economic crisis makes it look like a boom. Globally, governments have moved trillions of dollars to prop up businesses, subsidise workers, support the unemployed and run shovel-ready projects. Meanwhile, central banks are printing trillions of dollars and lowering interest rates to keep governments financed and businesses afloat.
What do you think will happen when this support is over?
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