Harbour Navigator: Beijing gets serious: fiscal and monetary stimuli to boost Chinese growth
The Politburo and PBOC have signalled a strong commitment to rebooting the economy, with a range of monetary and fiscal measures, though the size of the stimulus is unlikely to match the scale of a decade ago.
Market reactions to China's recent announcements indicate an expectation that stimulus measures will meaningfully impact economic growth in the short-term.
While some analysts are optimistic about short-term growth, ot...
Harbour Navigator: RBNZ unlikely to accelerate easing
Following last month’s RBNZ rate cut, financial markets have moved to price an accelerated easing cycle, inconsistent with the central bank’s latest OCR forecast and largely driven by lower US rates.
Recent New Zealand economic data don’t support current market pricing with Q2 GDP contracting less than the RBNZ had forecast and soft data showing improvement in response to lower interest rates.
Don’t get us wrong, things...
Harbour Navigator: What does equity market concentration really tell us?
Recently one of the world’s largest companies posted earnings. Nvidia has been more than just a market darling, it has epitomised the concentration of stocks in the global equity index. Rising from a fraction of a percent, Nvidia now stands at over 6% of the S&P 500 index which is comprised of larger capitalisation US stocks. Collectively the top ten stocks account for some 37% of that market, when a decade ago the top ten sto...
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Harbour Investment Outlook: Consolidation after strong returns
Key market movements
The MSCI All Country World Index (ACWI) retreated almost 3% last month, in New Zealand dollar-unhedged terms, after gaining 4.2% in July. August returns in NZD-hedged terms were much better due to a bounce in the NZ dollar, coming in at 1.6%.
Locally, equity market returns for the month were muted after a spectacular August, with the S&P/NZX 50 Gross Index (with imputation credits) returning 0.4%, and the...
Top 10 risks and opportunities for 2024 - A mid-year reflection
As we sit down to write our Top 10 Risks and Opportunities each year, we write it not so much as a forecast for the next 12 months, but rather as a reflection of where we are and what that can potentially tell us about where we are going. Because one unmistakable part of investment research and asset management is that the starting point matters. Be it equity market valuations where we have 100 years of data telling us if you ...
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Harbour Investment Outlook: Rotation amid strong returns
Key market movements
MSCI All Country World Index (ACWI) posted another strong return in July, at 4.2% in New Zealand dollar-unhedged terms for the month. Returns in NZD-hedged terms were much lower due to further NZD weakness, coming in at 1.3%. Performance across sectors was mixed with a rotation away from the recent outperforming sectors of IT (0.1% m/m) and communication services (-0.7% m/m), in favour of utilities (8.6% m...
Harbour Navigator: A selloff under clear blue skies sparks risk-off
Since mid-July global equity market prices have fallen by around 5% as a range of risk factors have risen to the top of investors’ considerations. The drivers for a selloff are rarely perfectly clear and generally include broader economic, positioning and technical influences. When markets were travelling well in the first half of 2024, you could be forgiven for thinking that conditions were like a perfect winter’s day in Well...
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Harbour Navigator: When Rates Fall, Equity M&A Comes to Play
The Arvida deal and now cancelled Warehouse takeover approach gave rise to an expectation of more M&A (merger and acquisition) activity. A lift in capital market activity could be prompted by expectations of lower interest rates linked to weakening activity in the current economic cycle.
The state of the current economic cycle reflects an established cross-sector pattern of weakening activity alongside falling interest rates, ...
Harbour Navigator: RBNZ acknowledges weakening data, establish option to cut OCR quite soon
The RBNZ held the OCR at 5.50%, but in acknowledging a significant weakening in inflation pressures, they set themselves up with the option to cut the OCR pre-Christmas, possibly as early as their next meeting in August.
“When the facts change, I change my mind. What do you do, sir?” John Maynard Keynes’ ghost could have been at the RBNZ’s OCR review meeting. The central bank, having been determined to bring inflation and inf...
Harbour Investment Outlook: A fork in the road for central banks?
Key market movements
MSCI All Country World Index (ACWI) posted a strong return in June, at 3.1% in New Zealand dollar-unhedged terms for the month. Returns in NZD-hedged terms came in at 2.6% after New Zealand dollar weakness. Performance was again mixed from a sector perspective. Information technology surged ahead by 10.0%, followed by communication services at 4.6%. Utilities and materials were the worst performing sectors...
