Kiwi investors spot opportunity to buy into Facebook, Google
Tuesday, 7 April 2020
New Zealanders are spotting an opportunity to buy a slice of big-name brands while their share prices are cheap, the founder of one investment platform says.
Share markets all over the world have been hit by Covid-19 disruption. The S&P500, which tracks the 500 large companies listed on stock exchanges in the United States, has fallen 17.95 per cent over the past three months.
Kristen Lunman, co-founder and general manager of Hatch, a platform which allows New Zealand investors to buy United States shares, or part of them, said some Kiwi investors had seen their chance to jump into markets that had previously been seen as highly priced.
'Disney, Coca-Cola, Nike, Facebook and Google have fallen between 20 per cent and almost 40 per cent. It's no surprise that companies associated with tourism and luxury goods have taken bigger hits than this. Quality shares on sale, and then general sectors like technology, telecommunications, and healthcare seem to be Hatch investor picks now.'
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Facebook hit an all-time share price high of US$223.23 in January but was down to US$165.55 on Tuesday. Nike dropped from US$104.58 in January to US$84.63 on Tuesday, after rebounding from a low of US$60.
Lunman said it could be expected that a market recovery would follow the crash.
'Generally, Kiwi investors don't need to pick exactly when share prices will stop falling to do well when the cycle turns. Investing is really about putting money to work over the long term. By having a long-term investing strategy and investing regularly, Kiwis can take advantage of lower prices at any point in the coming months without the pressure of trying to time the bottom.
'Known as dollar-cost averaging, adding to our investments at different prices over time ensures we don't run the risk of missing out while waiting for a better deal.'
She said 'buy low, sell high' was the foundation of good investing.
'Falling share prices have given many the opportunity they've been waiting for to purchase quality shares at lower prices and investors backing the companies they invest in are looking at these share price drops as a 'sale'.
'Good quality companies are seeing their share prices fall as a result of everything being dragged down in market panic. Investors are looking to high-quality companies that have strong balance sheets, low debts and cash on hand – market crashes and corrections will come and go, but great businesses are resilient.'
Lunman said a record number of people were signing up to Hatch.
'Our sign-ups have jumped by 50 per cent these past few months, and we have more than 30,000 Kiwis on Hatch. We also have hundreds signing up to our Getting Started Course, to build their confidence and learn something new while in self-isolation.
'We'll likely experience significant market bumps to come, so we are encouraging newer investors to get in slowly. It's important investors don't overcommit - and need to get money out in a hurry. Getting in with small amounts buys a bit of time to see how the markets play out in the coming months.'