a2 Milk Steps Up Market Development
Source: Weekly Times
The a2 Milk Company reported on earnings last Wednesday. In spite of net profit 47% ahead of last year with a 41% increase in revenue, the market was disappointed by reduced margins, reportedly due to increased spending on marketing and, as a consequence, the price has fallen.
a2 spent more on marketing and product development than expected
We see this as building the foundation to be a global leader in ...
Navigator: Inversion Irrelevance
The US yield curve briefly inverted last week, sparking predictions of recession
Whilst US activity is slowing, the prospect of recession is not borne out by the data
The NZ yield curve is not inverted, and inversion has not been a useful predictor of recession
NZ economic indicators are not signalling recession but global risks do provide a negative skew to RBNZ Official Cash Rate outcomes in the near term
US yield curve inve...
Harbour Outlook: Lower and lower domestic interest rates
Key pointsThe trade tensions roller coaster continued during July. Hopes were initially raised with the announcement of further trade talks in China, though that hope turned quickly to despair as Trump announced further tariffs on Chinese imports.
The US Federal Reserve delivered its much-anticipated rate cut in July, just eight months after its last hike. The Fed’s view that this is a “midcycle adjustment to policy” disappoin...
Payments: The Disruption of a Two Trillion Dollar Industry
Key Points
The two trillion-dollar global payments industry is forecast to grow 9% p.a. through to 2022
Chinese companies are leading payments innovation and expanding globally
Disruption in the payments industry is being driven by technological and regulatory change
The global payments industry is one that sits quietly underneath the world’s economies. Generally, businesses facilitating payments have been very successful thr...
Banks make a start on new capital
A new capital security issued on Tuesday night by Westpac Banking Corporation (Westpac) has highlighted the lack of higher-yielding opportunities available for New Zealand-based investors.
Banks fund the loans they make from deposits, bonds and shareholders’ contributions. In Australia, that’s also the order in which funds are repaid in the event of default. To go into further detail, there’s also a class of securities that...
Secular changes are benefitting global growth investing. Are they here to stay?
Key points:Since the Global Financial Crisis (GFC), growth stocks have outperformed value stocks significantly. This follows a long period of outperformance for value.
Whilst the “tech bubble” made some investors weary of technology and growth companies, valuation levels for tech companies today are significantly lower than 20 years ago. Further, investors should look at the earnings certainty of industry incumbents through th...
Harbour Outlook: Finely balanced, markets walking a tightrope
Key points Trade tensions again dominated the headlines during June, while the “truce” reached at G20 summit mitigated some left-tail event fears, there is plenty yet to play out and the outcomes are likely to be non-binary.
Trade tensions and a string of softer than expected economic data led global yields lower in June.
In line with the global trend, domestic data erred on the side of disappointing with low PMI and busines...
Sustainability is Good for Returns
Harbour has been a signatory to the UN Principles of Responsible Investing since 2010 and is also a member of the Responsible Investing Association of Australasia.
Harbour is adding sustainability as an investment mega trend in our equities process
We continue to find integration of ESG factors is a positive factor for returns
An additional overlay of sustainability as a mega trend influence may provide better interaction an...
Interest Rates Race to Zero?
Yields on fixed interest securities, which have been falling sharply all year, took another surge lower last week. The 5-year swap rate, a good proxy for market rates in New Zealand reached 1.36%, down from 2.20% at Christmas 2018 and 2.65% a year ago. That’s a record low level for NZ bond yields. The primary catalyst last week was a signal that the US Federal Reserve is close to cutting rates. They are joining the central ban...
READ MOREResponsible investing and equity returns
There is a growing awareness that stock returns are influenced by Environmental, Social and Governance (ESG) considerations. As a long-term proponent of incorporating ESG factors into our assessment of companies, Harbour is delighted to have been involved in Armillary Private Capital’s annual review of returns of the NZ listed sector for 2018 that was released last week.
This is Armillary Capital’s ninth annual Return on Cap...