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Harbour Investment Outlook: Treading water amid uncertainty?

Key market movements
MSCI All Country World Index (ACWI) was stable in May with a return of 0.2% in New Zealand dollar-unhedged terms for the month. Returns in NZD-hedged terms were considerably better at 3.7% after a combination of US dollar weakness, and New Zealand dollar strength on the back of supportive Chinese policy. Performance (unhedged) was mixed from a sector perspective, with only information technologies, utiliti...

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Lewis Fowler | Posted on Jun 11, 2024
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Harbour Investment Outlook: Choppy waters ahead

Key market movements
After a strong first quarter, the MSCI All Country World Index (ACWI) fell in April with a return of ‑2.3% in New Zealand dollar-unhedged (-2.7% in NZD-hedged) terms for the month. Performance was broadly negative from a sector perspective, with only the utilities and energy sectors in the black. Information technology was a standout on the negative side with a -5.6% return.
Locally, market returns for the...

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Lewis Fowler | Posted on May 8, 2024
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Harbour Navigator: Global Divergence

After years of most of the world sharing the common sudden stop and recovery associated with COVID-19, there are now significant differences in economic prospects across countries. These differences have led to some central banks lifting policy rates (à la Bank of Japan) while others, such as the European Central Bank, US Federal Reserve and the Bank of England have hinted at cuts. The Swiss National Bank has gone one step fur...

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Chris Di Leva, Hamish Pepper | Posted on Apr 22, 2024
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Harbour Navigator: Hot sheds - Growth in data centre demand and the real estate investment opportunity.

Global demand for data centre space is set to increase significantly and the compute density of GenAI significantly increases the electricity required to keep computer capacity cool.
Real estate is a key determinant of a successful data centre, with data centres having specific locational requirements making land with access to electricity a crucial enabler for data centres.
In our opinion, the DC megatrend tail wind may remai...

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Shane Solly | Posted on Apr 17, 2024
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Harbour Investment Horizon: Long Term Investment Return Assumptions

Investors anchor long-term strategic asset allocation by considering a range of assumptions for key asset classes 
Harbour’s long-term return assumptions are one of many inputs into considering strategic asset allocation across multi asset portfolios, such as conservative, balanced and growth mandates 
Our return assumptions are market valuation aware and, as a result, our most recent forecast is for a narrowing in th...

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Lewis Fowler | Posted on Apr 11, 2024
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Harbour Investment Outlook: Turning Point for Earnings?

Key market movements 
The MSCI All Country World Index (ACWI) rounded off the first quarter with a third positive monthly return at 5.1% in New Zealand dollar-unhedged (3.5% in NZD-hedged) terms for the month. From a sector perspective performance was broadly positive, with energy the outstanding performer at 7.6%, followed by materials (5.5%) and utilities (4.8%). 
Locally, market returns for the month were also strong with t...

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Lewis Fowler | Posted on Apr 9, 2024
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Harbour Navigator: Bank share price surge- sprinting ahead?

The touchstone for Australasian banking sector trends is the Commonwealth Bank of Australia (CBA), and CBA’s recent share price surging towards $120 has provided another catalyst for many to ask about the outlook for bank share price performance. For equity analysts, we think about the price to earnings ratio as an indicator of valuation; CBA’s has now topped 21 times expected earnings, a mark that most analysts say make the b...

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Andrew Bascand, Simon Pannett | Posted on Apr 8, 2024

Harbour Navigator: Bank competition - Innovation trumps more capital

The Commerce Commission’s draft market study into New Zealand’s personal banking services made 17 recommendations which, if implemented, would likely have some impact on bank competition.
But they likely entail compromises to financial stability
In Australia, Macquarie Bank’s highly digitized banking solution offering has reinvigorated competition in the deposit and mortgage markets.
The learnings from this Australian experien...

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Andrew Bascand, Simon Pannett | Posted on Apr 5, 2024
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Harbour Navigator: Is bank lending too cautious?

You might think that our title is provocative, and a fringe view. But this was a consensus question from investors and analysts after our research visit to Australia in the week before Easter. 

Regulation has encouraged bank lending to become more conservative, more housing focused and increasingly outsourced through broker channels. 

Regulators seem to want even less bank risk and more financial stress tests.  

As a result...

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Andrew Bascand, Simon Pannett | Posted on Apr 3, 2024
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Harbour Navigator: Interest rate pain intensifies

Lenders have experienced only modest defaults on loan portfolios, underpinning an argument that monetary policy is yet to really bite.

However, we note arrears and KiwiSaver hardship withdrawals are rising before loan losses are felt, demonstrating consumer stress, and portending further spending reductions.

Unemployment is typically the final penny to drop, and indicators of the labour market suggest consumption will contin...

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Hamish Pepper, Simon Pannett | Posted on Mar 27, 2024