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Uncertainty for council around key investments

Local and global uncertainty is impacting current market conditions, an investment adviser has told a Wairarapa council meeting.

Jonathan Eriksen from Eriksens Global spoke to the Carterton District Council [CDC] investment committee last week about factors affecting its investment strategy.

Describing recent market conditions, Eriksen set out the challenges.

“The markets have been absolutely brutal,” he said.

“That’s why when we recommended these particular products to you, we picked low-risk, multi-asset income funds.”

A report to the committee said that, as of September 30, CDC had more than $16 million dollars invested in a mix of financial assets, including term deposits and managed funds.

The deposits at BNZ, ANZ, and Westpac are in accounts ranging from on-call to six-month terms.

Eriksen set out current conditions in more detail in response to a question from Carterton Mayor Ron Mark.

“We have money on-call and invested on term deposit. You are not confident enough to say that we should be putting more money into this [other] investment?” Mark asked.

“No, no we’re not,” Eriksen replied.

“We are saying six per cent on term deposit in the bank is better than an uncertain investment.”

In a wide-ranging discussion, Eriksen said investment strategies over the longer term will be subject to regular review.

“In the short term, we are saying keep the money on term deposit. In that sense, you can get 6 per cent on six months or a year [deposit] and we say lock that six per cent in for a year.

Eriksen went on to summarise a number of critical geopolitical events affecting investments.

“We are still waiting to see what our new government is and how it’s structured. Because that will have a significant impact on the morale and the way the nation of New Zealand goes forward.

“Secondly you have President Xi and President Biden meeting in Beijing, and that could hopefully be helpful.

“Of course, you’ve also got the problem between Israel and Hamas, and that war is dragging on.”

The war in Ukraine is also still going, he said.

“All these global things will have an impact on us, and it’s a question of spreading the risk – as you have – between four very different managers that are exposed to different parts of the market.

The report presented to the committee, which gave an overview of the current investment status, was written by Kyra Low, the council’s finance manager.

-NZLDR

Public Interest Journalism funded through NZ On Air

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