However, we have undertaken some analysis and in our view, the Budget was generally positive for investors. We agree with the findings of Deloitte who regard the Budget as reflecting modest optimism. We have improving economic conditions and the Budget has reacted to that.
There is a good chance that the government will get our financial situation into positive territory by 2015 and this is welcomed by ratings agencies around the world. This potentially means our country credit rating will not fall so interest rates are likely to remain low for some time to come.
The government seems committed to slowing the rate of housing price escalation. This could ultimately see more money move to the sharemarket resulting in equity prices rising in the future.
The rebuild of Christchurch received added government stimulus and this money will find its way into the wider economy, creating more jobs, added economic confidence and further growth in share values over time.
The government confirmed it will bring other SOEs to the market for partial floating and this will further stimulate the long moribund stock market.
Overall, economic commentators feel that it was a responsible and ‘steady as you go’ Budget that will position the country for careful and considered future growth. This bodes well for keeping inflation levels low, keeping interest rates low for at least the remainder of this year, and helping to stimulate the stock market. The Budget, together with improving economic signs around the world, helps provide much needed confidence to investors to move more into growth orientated investments.