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W & K

KiwiSaver

Winners and Losers in 2014

Over the past year the stand out performance area has been from shares with strong dividend streams. The share prices of listed property companies in general did very well. This is a trend that has continued for some time, and explains the popularity of Australasian Equity Income Funds. These types of investments can have a pretty wide investment mandate and provide a revenue stream typically well in excess of what can be obtained from bank deposits and a diversified range of bonds.

What Has Happened in the Market Place?

At this time of year many people look back and think about what has been happening during the year. In the investment world it is also common practice. Economy wise, things have been ticking over pretty well in New Zealand. But there is an elephant in the room which could have serious implications over the next couple of years, particularly in the provincial centres. This of course, is the decline in dairy prices.

Free Trade Agreements

One of the major changes over time, particularly over the last few decades has been the freeing up of economies. The Treaty of Rome was the forerunner to the European Union. This created a large free market between the original members, with tariffs or quotas being imposed on goods produced outside the member states. Effectively the rules were set so the home teams had a significant advantage.

Capital Gains Tax –a Web of Unintended Consequences

New Zealand has had a capital gains tax for many years. Historically its use has largely been confined to property speculators, and smaller builders and their associates who often built “spec homes”. Some share market investors who made frequent share trades could also have fallen into the capital gains tax regime.

There have been plenty of arguments for an updated capital gains tax regime. No one in New Zealand has been able to come out with a capital gains tax proposal that is actually workable and with quantifiable results.

Price Gouging or a Lack of Service

Running a company for the benefit of the shareholders rather than the potential customers is invariably a can of worms. Directors of a company have the obligation to meet the financial and ethical demands of the shareholders.

 

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