Harbour Outlook: Trade tensions impact global growth
Global equity markets retraced from their highs in May with the MSCI World index (in local currency) returning -6.0%. Risk aversion picked up almost entirely due to the breakdown in trade talks between the US and China. This resulted in the US increasing tariffs on US$200 billion of Chinese goods; China promptly retaliated.
New Zealand and Australian equities weathered the volatility in global markets well...
READ MORE5G to enable new technology platforms
Investors need to factor in the opportunity and potential disruption of new technology and changing consumer preferences for mobile and fixed broadband communication. Fifth generation mobile networks (5G) provide a transformational shift in the telecommunications landscape. Why is this change so important?
It enables new technologies, like driverless cars, mobile medicine, the Internet of Things
It may accelerate the transiti...
Housing Market Risk Reduced
"Dad still can’t work out how he got it so cheap. It’s worth almost as much today as when we bought it".
- Dale Kerrigan, from cult Australian Film, The Castle
With the median Melbourne house price down 10% from its peak, many Victorians will be envious of the value held by Darryl Kerrigan’s Strathmore home. And even more envious Sydneysiders with house prices down 15% in the largest city (according to Core Logic).
In our...
Harbour Outlook: More bright spots emerge
Global equity markets continued to strengthen in April with the MSCI World index (in local currency) returning 3.8%. Markets were buoyed by the trifecta of a strong US earnings season, signs that Chinese stimulus have had a positive economic impact and, perhaps not unrelated, eurozone growth rates coming in above expectations...
READ MOREHarbour's Submission to the RBNZ on the Proposal for Changing Capital Adequacy
Submission to the RBNZ on the Proposal for Changing Capital Adequacy for New Zealand BanksHarbour[1] has written two short research papers on the RBNZ’s proposal to lift capital held in New Zealand by banks (see here and here). These reports highlighted that higher lending rates, lower deposit rates and potentially lower risk-weighted asset growth could be expected outcomes that might be associated with lower investment and GD...
READ MOREHarbour Macro Research Day
In recent years, Harbour’s internal six-monthly Macro Research Day has been an important part of our research calendar. It provides an opportunity to undertake a thorough review of the medium-term outlook for the macroeconomy and its implications for fixed interest, equity and multi-asset portfolios.
Our Macro Research Day last week commenced with presentations by economists from two of New Zealand’s largest banks discussing key drivers of the New Zealand economy. This included business confidence and the potential impact of the Reserve Bank capital requirements which has recently been one focus of our research agenda.
READ MOREHarbour Outlook: Records broken
Global equity markets continued to strengthen in March with the MSCI World index (in local currency) returning 1.6%, bringing the return for the quarter to 12.6%. Markets were buoyed by a dovish statement from the Fed, whose “patient” approach is unlikely to see any rate rises for some time. A “great” trade deal has been touted between the US and China, which has breathed further life into investment markets...
READ MOREBond yields hit record lows; but a rate cut is not a done deal
New Zealand government stock yields fell to record low levels across all maturities last week, as the Reserve Bank acknowledged the weaker global economic outlook and the ensuing risks to the domestic economy. We think:
The economy has slowed but is still growing.
Bond yields appear to be pricing in a recession, which seems unlikely.
Rate cuts in New Zealand are not a done deal.
The decline in yields has been dramatic this ye...
Capital Gains Tax: Unanswered questions for managed funds and KiwiSaver
Key pointsWe don’t know yet which measures suggested by the Tax Working Group will be adopted by the Government. There is still a lot of water to go under the bridge.
The proposed capital gains tax makes investing in New Zealand and Australian share markets less attractive, yet there is no proposed change to the tax regime for other share markets.
While managed funds like KiwiSaver will be required to calculate their tax bill ...
Slowing but still growing
Key points
- Share markets continued their new year rally, aided by positive noises from trade negotiations and further dovish rhetoric from the US Federal Reserve (the Fed)
- Economic data released during the month continue to portray lower economic activity, especially in Europe and China, though China has looked to combat this through a range of stimulatory measures
- Domestically, the economic outlook is continuing to soften, though at this point, the transition appears to be from strong to moderate growth, with risks to the downside