♦ Issue 2010/01

27 March 2010♦ Fortnightly Issue

Personal Finance & Investment

Newsletter

News and Updates for the Savvy Kiwi Indian

IIssssuuee CCoonntteennttss IInnvveessttm

meennttss
U.S. and global stock markets may be in for a increased rates since the end of February,
Financial Briefs: fourth straight week of gains on the back of while China has ordered financial institutions
NZ 2 the passing of the US healthcare bill, lower to set aside more funds as reserve twice this
India 3 than expected jobless claims, benign year.
inflation numbers from the US and a decision A recent downgrade of Portugal’s sovereign
FX/Commodities by the Fed to stand pat on its target rates. credit rating and Greece’s fiscal woes have
Snapshot 4 Despite the positives however, a number of added to the uncertainty and hastened the
issues continue to plague the market. Among flight of funds to safe havens like the U.S.
them, fear that as economic stimulus Dollar. The U.S. Dollar index (measure of US
NZ-India Trade 4 programs are wound back with central banks Dollar against a basket of currencies) has
around the world becoming more wary of appreciated around 0.6% of late. U.S. Long-
Article: inflation, global recovery may be at risk of term treasuries, which have been relatively
Exchange Traded Funds stalling. The Reserve Bank of India moved to quiet in recent weeks, moved lower as stocks
(ETFs) 5 raise its rates by 0.25% on Mar 19. Policy appreciated. Yield on the benchmark 10-year
makers in Australia and Malaysia have also note rose to 3.84% as at March 24.
Special:
India Budget 6 M
Moorrttggaaggeess
●●●●●●
KKiiw Last week was a very busy week in the home this week and dropped its 1 and 3-year rates
wiissaavveerr loan market with 12 lenders cutting rates. to 6.15% and 7.7% respectively. BNZ also
Kiwibank put pressure on the major banks by made its first reduction to rates for 2010 for
TOP 5 RETAIL FUND dropping its 1, 2 and 3 year fixed rate by its 2-year and longer rates. PSIS has cut its
MANAGERS 0.1%. Its 1-year rate stands at 6.15%, in line two-year rate to 7.10%, which is now in line
(December 2009) with that of National Bank. HSBC’s 1-yr rate with a few of the big banks
stands lower at 5.99% (but with an eligibility
Funds Under criteria). Kiwibank’s 2-yr rate now stands at Lowest Floating: BNZ’s Total Money at 5.59%
Manager 7.1% and 3-yr at 7.7%. Rates for AMP Home
Management Lowest 1-year: Fidelity Life at 5.90%
($ Billion) Loans were also reduced for the 3, 4 and 5 Lowest 3-year: AMP Home Loans (+$200k) at
year time frames down to 7.75%, 8.2% and 7.65% source: mortgagerates.co.nz
ING (incl. 3.77
8.5% respectively. Westpac followed suite
ANZ &
NBNZ) IInnssuurraannccee
ASB (incl. 3.51
Sovereign) Southern Cross gets approval for internal growth strategies to meet its
BT (incl. 2.33 critical illness strategic goal.
Westpac)
AMP 1.89 At a recent annual meeting, a resolution was AIG sells assets to Prudential and
AXA (incl. 1.80 passed allowing the group to offer a broader Metlife
BNZ) range of insurance products. It will start by
Source: Fundsource introducing critical illness cover in March These sales give AIG the needed cash to
●●●●●● 2010. Policy holders can choose their level of repay the $130 Billion owed (as at Dec 31,
cover, either: $20,000, $50,000 or $100,000 2009) to the Treasury and the Fed, as part of
PPuubblliisshheerr:: AA..SS..KK.. PPuubblliisshhiinngg and this amount is paid out in the event the its bailout package. Sources directly involved
EEddiittoorr:: SSuunniill KKhheem member suffers a qualifying critical illness. in the deal told Reuters that Prudential may
mllaannii
PPrriinntteerr:: OOffffiiccee NNoow quit some countries in Asia, including New
w KiwiBank to fill out insurance offering Zealand, due to low market share. AIA is a
small to medium sized player in the
FFoorr ccoom mm meennttss,, aaddvveerrttiissiinngg,, KiwiBank is set to broaden its insurance Australasian market. It is the ninth largest
oorr m mail oorrddeerr,, pplleeaassee
a i l product suite as part of the strategy to life insurer in New Zealand and ranked
ccoonnttaacctt:: become a "full financial services provider", around 14th in Australia.
((0099))33008800778877 oorr eem maaiill:: according to the bank's head of Wealth,
aasskkppuubblliisshh@
@wwoooosshh..ccoo..nnzz Tracey Berry. Currently, Kiwibank distributes
a limited range of insurance products through
© Copyright 2010 A.S.K. its relationship with Cigna Life. The bank will
consider acquisitions, joint ventures and
Publishing. All rights reserved.
 Personal Finance & Investment
Newsletter

BUSINESS STRESS LEVELS RISING new regime to help improve the future resilience of
New Zealand's non-bank sector.
An international survey of 7400 business owners across 36
economies found that 44 percent of New Zealand business owners NEW CAR MARKET CONTINUES
said their stress levels had increased from a year ago, compared RECOVERY (ACCORDING TO MTA)
with a global average of 56 percent, according to an NBR article.
China topped the poll at 76%, with Sweden at a very relaxed 23%. Feb Sales at 4,302 units, up 13% from the same month a year ago.
Peter Sherwin, a partner of Grant Thornton New Zealand, said the Year-to-date sales up 9% overall. MTA spokesman, Marketing and
figures for this country masked a growing problem among small, Communications General Manager, Ian Stronach said “The
family-owned businesses, especially where a husband and wife momentum is holding, and while it’s a bit early to say the market
were involved. has turned the corner, we are seeing some good signs out there.”
"Pressure on cash flow is the major problem affecting New Zealand
businesses at 19 percent, with heavy workload at 16 percent being Leaders by Make Leaders by Models
the next most important stress factor," he said.
1 Toyota 1 Suzuki Swift
PROPERTY MARKET GROWING AT SLOWER PACE 2 Holden 2 Mazda 3
3 Ford 3 Holden Commodore
According to QV Valuations, House values rose 5.5% in the year 4 Mazda 4 Toyota Corolla
through February, though the speed of growth is beginning to slow
down. The average sales price rose to $416,074 last month from 5 Hyundai 5 Ford Falcon
$409,807 in January. According to a spokesperson, "We expect
values to stabilise over the coming months reflecting the ongoing MINIMUM WAGE HIKED NEXT WEEK
uncertainty around economic factors such as unemployment,
pending interest rate rises and continued tight lending criteria." The new minimum wage of $12.75 an hour, up from $12.50 an hour,
comes into effect on April 1. New entrants minimum wage and
Ave r age Hous e Pr ice s
training minimum wage is also set to increase to $10.20 an hour
from $10.00 an hour.
$416,074
$418,000
NZ ENDS WHOLESALE BANK GUARANTEES
$416,000
$414,000
$412,000
$409,807 The Government will close New Zealand's wholesale funding
$410,000
guarantee on 30 April 2010, Finance Minister Bill English
$408,000 $404,671
announced on 10 March 2010.
$406,000 "The wholesale funding facility was set up in November 2008 when
$404,000 the liquidity crisis had hit global markets," he told the New Zealand
$402,000 Australia Investment Forum in Auckland.
$400,000 "It helped our banks access funding during that crisis, but
$398,000 international market conditions have improved - and continue to
Dec-09 Jan-10 Feb-10
improve in 2010. New Zealand banks are now raising funds without
using the guarantee, which was always envisaged as a temporary
source: QV measure for extraordinary times."
The NZ government also has a retail deposit guarantee scheme
NZ GROSS DOMESTIC PRODUCT UP 0.8 PCT IN Q4 which it extended last August until the end of 2011.

New Zealand's economy grew at its fastest pace in two years in the
New Zealand NZX 50 Index
three months to December, as the country pulled further from
recession, backing the view the central bank will probably start
Week High: 3237
raising rates around the middle of the year. Week Low: 3222
Gross domestic product rose a seasonally adjusted 0.8 percent in Week Close: 3237
the fourth quarter, following an upwardly revised 0.3 percent gain Daily Q.NZ50 11/12/2009 - 31/03/2010 (WEL)
in the previous three months, according to official data released on Price Line, Q.NZ50, 26/03/2010, 3,237.549
March 25. NZD

CREDIT RATINGS MANDATORY FOR DEPOSIT TAKERS 3,240

3,200
The Reserve Bank announced on 1 March that credit ratings are
now mandatory for non-bank deposit takers (NBDTs). 3,160
Mandatory credit ratings are a key component of the new
prudential regulatory regime for deposit taking finance companies, 3,120
building societies and credit unions. The regime also includes
3,080
capital adequacy requirements, restrictions on lending to related
parties, governance and risk management requirements. The 14 21 29 05 11 18 25 01 08 15 22 01 08 15 22 29
Reserve Bank is progressively introducing the requirements of the December 2009 January 2010 February 2010 March 2010

Source: Reuters

2
 Personal Finance & Investment
Newsletter

RESERVE BANK OF INDIA (RBI) RAISES RATES

Marking an end to the India’s central bank’s easy monetary policy
regime, two major policy rates were raised by 25 basis points each
on March 19.
The repo rate (interest charged by the RBI on borrowings by
commercial banks) now stands at 5 per cent and the reverse repo
rate at 3.5 per cent.
India's annual rate of infation, based on the wholesale price index,
rose to 9.89 percent in February from 8.56 percent in the previous
month. The RBI move comes against the backdrop of Finance
Minister Pranab Mukherjee warning that India's inflation rate may
return to double- digit levels this month if steps are not taken to
contain the price rise.
INDIAN ECONOMY TO GROW 8% NEXT FISCAL: IMF
The International Monetary Fund (IMF) has estimated 8% growth
for the Indian economy in the next fiscal (2010-11) even though the
industrialized countries show a slower recovery. IMF projected the
growth rate of the current fiscal at 6.75 per cent for the country
much lower than the 7.2 per cent projected by the Central Statistical
Organisation..
In 2009, U.S. Exports to India stood at about
$16.5 billion versus imports at $21.2 billion.
The $37.7 billion bilateral trade stands roughly
one-tenth of bilateral trade between the United States
and China.
RESIDENTIAL PROPERTY PRICES MAY RISE BY 10%: Cushman
According to Cushman & Wakefield Executive Director (India) Ravi
Ahuja, prices can rise up to 10 per cent in the next two quarters in
the housing segment. In the last eight months, very robust demand
was seen for both affordable and the premium housing segments, he
added.
"In 2009, the prices had gone up, on an average, 15-20 per cent
across the country. The highest rise was in Mumbai and it was in the
range of 30-40 per cent," Ahuja said.
He said other cities like Pune and Bangalore as well as the National
Capital Region (NCR) witnessed moderate to sharp rise in prices in
the residential segment.
On the commercial segment, he said the scenario is completely
reverse and only 50 per cent of the supply in 2009 was absorbed.

BSE SENSEX SET TO RISE 11 PERCENT BY END-2010 – REUTERS

POLL

TOYOTA INDIA UNIT SEES DOUBLING SALES IN 5 TO 7 YRS
Toyota Kirloskar Motors, the Indian unit of Toyota Motor Corp
expects to double its sales in the next five to seven years, powered
by its Etios cars to be launched at the end of this year, a top
company official told Reuters. Etios is a compact car, developed by
Toyota specifically for the Indian market, and showcased at the
Delhi Auto Expo in January. In 2010, the company expects its sales
to grow more than 15 percent from 2009, when it had sold 55,497
cars.
The BSE Sensex is set for solid gains in 2010, driven by earnings
optimism and supported by robust economic growth, albeit at a
slower rate than last year, a Reuters poll found.
The 30-share BSE Sensex is seen rising 3.6 percent by mid-year and
by nearly 11 percent by end-2010 from March 16's close at 17,383,
according to the median forecast of 20 brokerages and investment
houses.
The benchmark was expected to rise to 18,000 points by end-June
and end 2010 at 19,250. Forecasts ranged from 13,800-21,500. The
year-end figure was up from 19,000 in a December poll.
The Mumbai benchmark stock index rose 81 percent last year after
the economy was spared the worst of the global economic
downturn, with foreign investors pumping in $17.5 billion.
Bombay Sensex Index
Week High: 17600
Week Low: 17337
Week Close: 17558
Daily Q.BSESN 11/12/2009 - 5/04/2010 (BOM)
Price Line, Q.BSESN, 25/03/2010, 17,558.85
INR

U.S. INDIA MOVE TO STRENGHTEN TRADE, INVESTMENT TIES 17,200

The United States and India signed an agreement on March 17 to

strengthen trade and investment ties, following through on a pledge 16,800
leaders of the two countries made last year.
The pacts lays out a work plan for discussing barriers to trade in 16,400
agriculture, services and manufactured goods and how to encourage
greater bilateral investment flows and increased protection of 16,000
intellectual property rights.
14 21 29 04 11 18 25 01 08 15 22 02 08 15 22 29 05
December 2009 January 2010 February 2010 March 2010
Source: Reuters

3
 Personal Finance & Investment
Newsletter

New Zealand dollar declined since the

middle of last week on the back of
Greece’s fiscal problems dampening
appetite for high yielding currencies.
A deteriorating current account
balance countered by a better-than
Daily QNZD= 16/12/2009 - 30/03/2010 (GMT) Daily QNZDINR=R 16/12/2009 - 30/03/2010 (GMT) expected 4th quarter GDP, failed to
Pric e Line, QNZD=, 25/03/2010, 0.7034 Pric e Line, QNZDINR=R, 25/03/2010, 31.953 provide much direction. The Indian
USD NZ$ / US $ INR NZ$ / Indian Rupee rupee fell close to a three-week low as
0.73 Week High: 0.7102 33.5 Week High: 32.31 the U.S. Dollar edged up against some
Week Low: 0.7015 Week Low: 31.75 major currencies and banks bought
0.72 Last Trade: 0.7035 33 Last Trade: 31.98 dollars ahead of a local market
holiday on 24 March. Oil is India’s
0.71 32.5 largest import and demand for dollars
tend to peak at the end of each month
0.7 when payments are made. The
32
0.69
unexpected rate hike by RBI and mild
31.5 gains in the share market prevented a
sharper fall in the rupee.
21 28 04 11 18 25 01 08 15 22 01 08 15 22 29 21 28 04 11 18 25 01 08 15 22 01 08 15 22 29
December 2009 January 2010 February 2010 March 2010 December 2009 January 2010 February 2010 March 2010
Source Reuters

Weekly YTD
22/02/2010 25/02/2010 Change Change
(%) (%)

Crude Oil (US$) 80.93 80.33 -0.74% 0.88%

Gold failed to attract safe-
haven buying this week and
declined to a six-week low Gold (US$) 1106.90 1090.45 -1.49% -0.49%
US Crude Oil Futures declined
on concerns over EU’s this week on the back of an in
agreement of the debt increase in U.S. crude oil Source: Reuters
concerns of Greece and inventories, suggesting
Fitch’s downgrade of consumer demand remains
Portugal’s sovereign credit weak. and a stronger U.S.
rating. Dollar.

Total trade with India (exports and imports)

reached the NZ$1 billion mark for the first time in 2009.

Main Exports
Coal - NZ$386m (54%), Wood - NZ$78.7m (11%),
Wool - NZ$42.7m (6%), Dairy products - $42.4m (6%),
Machinery - NZ$31.8m (4%), Hides and skins - NZ$29.6m (4%),
Iron and steel - NZ$24.5m (3%)

NZ$709.1 million
NZ$343.7 million

Main Imports
Medicines - NZ$37.3 million (11%), Diamonds - NZ$28.9 million (8%),
Confidential items - NZ$23.7 million (7%),
Electrical machinery - NZ$20.0 million (6%), Machinery - NZ$15.4 million (4%)
Textile articles - NZ$14.5 million (4%), Woven clothing - NZ$14.2 million (4%),
Source:
Statistics NZ (for the year to August 2009)

4
 Personal Finance & Investment
Newsletter

If you find the tasks of analyzing and picking stocks a little daunting, Exchange-traded Funds
(ETFs) may be right for you.

WHAT IS AN ETF? American Stock Exchange (AMEX) in • PowerShares Financial Preferred

An ETF is essentially a portfolio of
stocks (or in some cases other
investments) that trade on a stock
exchange much like a regular stock
does. Its performance tracks an
underlying index, which the ETF is
designed to replicate. An S&P 500
ETF for example tracks the
performance of a basket of stocks
that make up the underlying
components of the S&P 500 index.
1993.
Today - tracking a wide variety of
sector-specific, country-specific and
broad-market indexes - there are
hundreds of ETFs trading on the open
market.
According to Morgan Stanley, by the
end of 2007, there were 1,171 ETFs
trading worldwide, with assets
approaching US$ 800 billion.
(PGF): up 261% from its March 2009
low
• Market Vectors Coal ETF (KOL): up
228% from its March 2009 low
• Market Vectors Indonesia ETF (IDX):
up 205% from its March 2009 low
• Rydex S&P MidCap 400 Pure Value
ETF (RFV): up 201% from its March
2009 low

An ETF's price changes throughout
the day, fluctuating with supply and
demand, unlike a mutual fund that
has its net-asset value (NAV)
calculated at the end of each trading
day.
By owning an ETF, you get the
diversification of an index fund plus
the flexibility of a stock. Because
ETFs trade like stocks, you can short
sell them, buy them on margin and
purchase as little as one share.
Another advantage is that the
expense ratios of most ETFs are
lower than that of the average
mutual fund. When buying and
selling ETFs, you pay your broker the
same commission that you'd pay on
any regular trade.
Varieties of ETFs
The first exchange-traded fund was
the S&P 500 index fund (nicknamed
spiders because of their SPDR ticker
symbol), which began trading on the
You can pretty much find an ETF for
just about any kind of sector of the
market.
For example, if you were interested
in the biotechnology sector, perhaps
Barclay’s iShares Nasdaq
Biotechnology Index Fund (ticker IBB)
would be worth looking into. Does
the Indian market pique your
interest? Then take a look at the
Societe Generale’s Lyxor ETF India
(S&P CNX NIFTY) (ticker FC6). Or if
you’d like exposure to the gold
sector, then maybe Standard & Poors
Depository Receipts’ SPDR Gold Trust
(ticker 087) might be for you.
5 BEST-PERFORMING ETFS FROM
MARCH 2009 LOWS
While the overall markets have
performed well since the March 2009
lows, some ETFs have surprised many
with their impressive rallies. Let’s
take a look at some of the best
showings over the past 12 months.
• Rydex S&P 500 Pure Value ETF
(RPV): up 194% from its March 2009
low
* Source: ETFdb.com
ETFS- RIGHT FOR YOU?
ETFs are index funds at heart, so
investors are encouraged to study the
philosophy of index investing which
downplays stock picking in favour of
buying the market.
ETFs can be a valuable component
for any investor’s portfolio, from the
most sophisticated institutional
money manager to a novice investor
who is getting started. Like other
investments, it is important for the
investor to evaluate the different
options to ensure the right ETF is
chosen for their objectives.
Sunil Khemlani, Client Advisor
Toll Free: 0508 874 015

“This publication has been prepared on behalf of and issued by StoneBridge Securities (NZ) Limited (“StoneBridge”). This is not an offer to
deal in any financial product and is not specific advice for any particular investor. StoneBridge believes that any information or advice
(including any recommendation) contained in this publication is accurate when issued but does not warrant its accuracy or reliability, and is
not liable for the future performance of transactions or for any loss or damage arising in connection with this publication. A full Disclosure
Statement in accordance with the Securities Markets Act 1988 is available free of charge on request. ”

5
 Personal Finance & Investment
Newsletter

Budget 2010/11

Spending Highlights (2010/11) 11.87

12
(Rs.)
15% 10
8 6.82
Defence: 1.47 trillion
trillion
Infrastructure Investment: 1.73 trillion 6 4.57
rupees
Social Sector: 1.38 trillion
4
Rural Development: 661 billion
2

Subsidies 0
Total Total Revenue Gross
Expenditure Borrowings
* Subsidy bill seen at 1.16 trillion rupees.

* Petroleum subsidy for 2010/11 seen at

31.08 billion rupees Fiscal Deficit as % of GDP

* Fertiliser subsidy for 2010/11 seen at

499.8 billion rupees 8.00%
7.00%
6.00%
6.90%
Taxes Highlights (2010/11) 5.00%
(Rs.) 5.50%
4.00% 4.80%
* Federal excise duty on non petroleum 3.00%
products to go up to 10 pct from 8 pct 2.00%
1.00%
* Raises federal excise duty on petrol,
diesel by 1 rupee per litre 0.00%
2009/10 2010/11 2011/12
* Aims to introduce Goods and Services Tax Year
in April 2011

* Service tax rate kept unchanged at 10 pct

FINANCE MINISTER MUKHERJEE ON
* Personal income tax slabs widened THE STATE OF ECONOMY
* Final FY10 GDP figure maybe higher than
estimate of 7.2 pct
NEW TAX SLABS * Need to review public spending
* Government to simplify FDI policy
* Roadmap within six months to cut public
From Rs 1,60,001 From Rs 5,00,001 Above Rs debt
MEN Up to Rs 1,60,000 to Rs 5,00,000 to Rs 8,00,000 8,00,001 * To set up finance sector legislative reform
commission
Nil 10% 20% 30% * "The Indian economy now, is in a far better
position than it was a year ago."
* "The first challenge before us is to quickly
From Rs 1,90,001 From Rs 5,00,001 Above Rs revert to the high GDP growth path of 9
WOMEN Up to Rs 1,90,000 to Rs 5,00,000 to Rs 8,00,000 8,00,001 percent."
* "After successfully managing the effects of
Nil 10% 20% 30% the global slowdown, we need to strengthen
the domestic macroeconomic environment to
help consolidate the rebound in growth."
From Rs 2,40,001 From Rs 5,00,001 Above Rs * "We need to reduce the stimulus, important
SENIOR CITIZENS Up to Rs 2,40,000 to Rs 5,00,000 to Rs 8,00,000 8,00,001
to the economy, and move towards the
preferred path of fiscal consolidation."
* "We need to make growth more broad based
Nil 10% 20% 30%
and ensure the supply demand imbalances
are better managed."
Source: Reuters

6

A.S.K. Publishing
145 Symonds Street, Suite 406
Auckland 1010
T: (09) 3080787 F: (09) 3080789
E: askpublish@woosh.co.nz
Financial Quotes
“Academic qualifications are important and so is
financial education. They're both important and
schools are forgetting one of them.”
"Finding your entrepreneurial spirit and making it
strong is more important than the idea or business
you are developing."
Robert Kiyosaki
- author of “Rich Dad, Poor Dad”
DISCLAIMER
The information contained in this newsletter is for
information purposes only and does not constitute a
solicitation or an offer to buy products or services. No
warranty or guarantee is given regarding the accuracy,
reliability, veracity, or completeness of the information
provided here, and under no circumstances will the editor,
publisher or advertiser be liable for any loss including but
not limited to direct, indirect, incidental, special or
consequential damages caused by using the information.
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gives you access to:

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The Group was established in Sydney in 1994 and currently employs over 200 people in 10
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