KEY POINTS:
One year on from the credit crunch and consumers and financial professionals alike are still licking their wounds.
Consumer confidence has crashed through the floor, hardly surprising when you take stock of finance company failures, rising energy costs, the ever-present fear of rising inflation and falling property prices.
The financial carnage started just over a year ago in Europe with the European Central Bank injecting funds into the money markets and the US Federal Reserve following suit.
On August 9, 2007, the NZX-50 was sitting at 4160.43. A year later it was 3357.82, a 19.29 per cent fall.
It's fair to say virtually every investment has been affected in one way or another. Even cash and term deposits are affected because inflation has started to rise, eroding the value of the capital.
New Zealand's finance companies were already crashing before the international crisis, and more hit the wall. And then the property market started a slide that continues unabated.
Overseas, the credit crunch has changed the way some indices look. For example, a third of the UK's FTSE-100 index is now made up of commodity-related companies, compared with 26 per cent a year ago.
Here in New Zealand, our companies have felt less of a direct impact from the credit crunch, thanks to the lack of a financial sector.
"Although there are no direct casualties in New Zealand, our market has been hit by the follow-on effect," says Mark Lister, head of research at stockbroker ABN Amro Craigs.
The top five crunch-defying stocks on the NZX, says Lister, have, a little unsurprisingly, been Pike River Coal, New Zealand Oil and Gas, Port of Tauranga and the utility companies TrustPower and Contact Energy.
"Pike River has just about doubled its share price over the past 12 months and that is not including dividends," says Lister. NZ Oil and Gas has risen by roughly 15 per cent.
"Neither company had much debt on its balance sheet, so there are no concerns about having to refinance." While Port of Tauranga, TrustPower and Contact Energy had not shown gains in their share prices, they had paid dividends resulting in flat returns _ which is no small feat in the current market.
Other sectors which have defied the credit crunch to a certain extent include healthcare and also the agricultural sector, says Lister.
"In small cap land we are looking at stocks such as Ebos or Opus Consulting, which is leveraged to government infrastructure spending."
Lister expects the same stocks to continue to defy the effects of the crunch _ although he believes Pike River and NZ Oil and Gas share prices could suffer in the short term from falling oil prices.
ABN Amro Craigs is steering clear of stocks with exposure to consumer discretionary spending and the residential property market _ although the stockbroker sees Ryman Healthcare as the exception to the rule.
When it comes to fund-based investments, it's hard to find any that are in the black. Of the "top-performing" funds listed on Fundsource.co.nz, not a single one has even broken even in the past year _ although not all New Zealand-based funds are listed.
Funds that have defied the odds tend to be materials funds, rather than those based on financial stocks, says Brook Asset Management managing director Mark Brighouse.
"There has been a huge divergence between the performance of financial stocks and basic materials stocks," says Brighouse.
Two of Brooks' funds, the Alpha Fund and the Tasman Fund, as well as its KiwiSaver product, have shown modest rises over the past 12 months. Brighouse puts this down to active management, stock selection and keeping a cash balance that has at times exceeded 40 per cent.
Both funds invest in New Zealand and Australian equities, markets which have tumbled in the past year.
At the other end of the scale, the crunch has exposed the real dog funds. While virtually every fund monitored by Fundsource has taken a dive in the past year, some have taken enormous hits _ much greater than related indices. The Fisher Funds NZ Growth Fund, for example, has dropped 25.74 per cent in a year.
Some of the dog funds may be next year's best buying. That doesn't translate automatically. If they're badly managed or invest in investments that continue to struggle, they may still be a dog next year.
Brighouse adds that the divergence in materials versus financial stocks has been so great in the past year that "it is worth considering whether that is necessarily going to be the case going forward. Investors and portfolio managers will have to make some careful decisions about valuations going forward".
If you adhere to the argument that the property market has already collapsed, then residential property investments might defy the crunch from here on in.
Some, however, think that it's hopeful thinking, that the crash is little more than just started. At the same time yields have been dropping and cash-flow positive properties _ that is, ones that make a profit _ are still nigh impossible to find.
There is a growing oversupply of rental property on the market and rents are clearly dropping.
At an Auckland Property Investors' Association meeting this week only one investor reported getting increased rent on a property he had let within the past month. Others had all taken a drop or had their properties remain vacant for periods of time.
Surprisingly, while doom and gloom pervades many investment markets, the art market has escaped somewhat unscathed both here and overseas. In the UK, Asian buyers helped push Christie's sales up 10 per cent in volume in the first half of this year compared to the same period in 2007.
In New Zealand, record prices have been achieved in certain sectors of the market. A Bill Hammond work, Fortified Gang Headquarters, got the highest price at auction for the work of any living New Zealander.
Sophie Coupland, Webb's managing director, says: "People are thinking `where are we going to put our money? There's no safer place than a Goldie'."
While some of Webb's standard client base haven't been buying, a new more conservative buyer group has entered the market, pushing up the prices of the best works from the 19th century through to the 1930s to 1940s.
However, the trend among investors is to hold their money in liquid investments that can be cashed in with ease.
Not surprising, perhaps, when many New Zealanders are having to sell properties in fire sales or even auction luxury cars to make ends meet.
