Tower plans big spend on Kiwi and Aussie shares

Sam Stubbs, Tower Investments chief executive. Photo / Janna Dixon

Tower Investments is planning a $200 million pre-Christmas spend-up on the New Zealand and Australian share markets, chief executive Sam Stubbs said yesterday.

Stubbs said Tower planned to trim its Northern Hemisphere equity investments and to reduce its holdings in cash, in favour of increasing its New Zealand exposure to shares, bonds and property to 55 per cent of its total funds under management from the current 45 per cent.

About $160 million of the $200 million increase would be re-directed towards New Zealand.

"'We have a strong home bias now," he said.

"If you run the numbers and do the modelling, it all stacks up. We are relatively bullish."

He said very low interest rates made the local equities market look attractive because of its high dividend pay-out ratios.

Changes to the tax treatment of property, as outlined in the Budget, had helped to create a more level playing field, and increased KiwiSaver inflows had helped to change the dynamics of the local market, he said.

Stubbs said the New Zealand share market represented just 30 per cent of gross domestic product, but that he expected that statistic to improve.

"We believe that this commodities cycle that we are in will be longer and stronger than some people think."

Increased KiwiSaver flows had allowed Tower to invest in smaller companies, such as Scott Technology and Tourism Holdings - both companies that Tower would not have considered before the scheme was introduced.

Stubbs expected local and international interest rates to remain low for a long time. He said the kiwi remained relatively strong, as did the commodities cycle, and prospects of increased supply in the form of the State Owned Enterprises was a potential plus for the market. Tower would hold funds back if it looked like the Government would proceed with plans to partially privatise the assets.