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10 Risks to Watch in 2019

When investing in an uncertain world, it is useful to distinguish between a core view of the most likely outcome for economies and markets, and the key risks that could challenge that assessment.

In our most recent monthly Harbour Outlook we set out our core view. [1] Markets have experienced goldilocks conditions over the past 5 years, with solid economic growth, low inflation and low interest rates. Through 2018 we have see...

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Harbour Team | Posted on Dec 17, 2018
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Postcard from Colorado – outdoor retailers

Harbour’s Managing Director Andrew Bascand and Senior Research Analyst Oyvinn Rimer travelled to Denver, Colorado for the Retail Outdoor conference.

Why did we attend the Outdoor Retailer Winter Market?

The Outdoor Economy in the U.S. alone is 3x bigger than the entire GDP of New Zealand
The Outdoor Economy is growing and is a source of global growth
Trade war and tariffs are impacting on the Outdoor Economy directly
Innovat...

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Oyvinn Rimer, Andrew Bascand | Posted on Nov 14, 2018
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Investment Horizon: Harbour Macro Research Day

Our internal Macro Research Day is a chance to re-visit the research that anchors our medium-term view.
Locally, we expect economic activity to moderate rather than slow sharply, and the RBNZ to remain on hold for a considerable time ahead to provide the best chance for core inflation to lift above 2%.
Globally, we see interest rates rising, but with monetary policy still supportive for financial markets while global inflation...

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Harbour Team | Posted on Oct 17, 2018
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Harbour Investment Horizon: Fiscal Policy Outlook

There is growing coverage in the media that a slowing economy could force a fiscal tightening to stay within the government’s fiscal responsibility rules.
There is little evidence that the market is concerned with this risk, with the New Zealand government bond yields trading below the US for the first time in 25 years.
While providing important political discipline, there is also some flex in the fiscal responsibility rules, ...

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Christian Hawkesby | Posted on Aug 17, 2018
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Investment Horizon: Interest Rate Cycles - Endings and Beginnings

As expected by the market, the US Federal Reserve lifted the US Fed Funds Rate this week to 1.75%-2.00%.  This was the second hike in 2018 and a continuation in a cycle that began in late 2015.  In a post-GFC environment where interest rates are eventually expected to settle at lower levels, it’s natural to ask how far away the US Federal Reserve is to the end of its interest rate cycle.  At the same time, in New Zealand, the ...

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Harbour Team | Posted on Jun 14, 2018
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The state of Infant Milk Formula in China

Harbour Senior Research Analyst Oyvinn Rimer recently took a trip to China, to investigate the state of the Chinese consumer milk market.
Disclosure: Harbour owns a2 Milk in a number of portfolios.

Having regularly visited China for a decade now, it never ceases to amaze me the sheer scale and speed of their development. Despite frequent visits, there are always noticeable changes to the land and cityscapes.

Two weeks ago, ...

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Oyvinn Rimer | Posted on May 9, 2018
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The Changing Face of the New Zealand Credit Market

Over recent years the New Zealand credit market has been going through something of a quiet revolution. The borderline between bank lending and fund management is becoming blurred. Fund managers are stepping into areas traditionally dominated by banks, as regulatory reform has imposed higher capital costs on banks. Fund managers are broadening their investment choices and the range of bonds issued has become more varied. There...

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Mark Brown | Posted on Apr 30, 2018
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Quantitative or qualitative equity research?

At Harbour, we believe it is best to use a mixture of quantitative and qualitative equity research to make investment decisions. Quantitative research is used as a filter to break down the investment universe, pick potential outperformers and underperformers, and support analyst and portfolio manager views with tangible numbers. Our qualitative research looks at a firm’s business model, competitive advantage, corporate governa...

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Susanna Lee | Posted on Mar 16, 2018
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Goldilocks: Not too hot, not too cold

After strong year for returns from Australasian equity markets, investors are asking: what does 2018 offer? Are the ‘goldilocks’ conditions of solid economic growth, low inflation and easy monetary policy settings likely to continue to support equity market returns?

While we believe the near-term outlook for local equity returns remains positive, two scenarios may challenge these goldilocks ‘not too hot, not too cold’ conditi...

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Shane Solly | Posted on Dec 29, 2017
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Dispelling the myth that a dual mandate implies easier monetary policy

In the economy section of the new NZ government’s Coalition Agreement, the top of the list is “Review and Reform of the Reserve Bank Act”. Given the preference of Labour and NZ First to give the RBNZ a dual mandate for both inflation and employment, the market has interpreted this as implying lower interest rates to encourage job growth.  In our view, while the inclusion of a full employment objective will enable the governmen...

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Harbour Team | Posted on Nov 6, 2017
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Lessons from RBOHA

On 8 October, a large number of retail investors will breathe a sigh of relief, as they receive their principal of $900m back on what was New Zealand’s largest retail bond issue when launched ten years ago. It has been a bumpy ride for these investors. Many lessons have been learnt. In a world of low yields and interest rates, they will face one remaining question of how best to put their principal back to work to generate inc...

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Harbour Team | Posted on Sep 22, 2017
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Quantitative Investment Styles and when they perform

Factor investing as a style has become increasingly popular in the last decade with the rise of Smart Beta funds globally. These strategies are expected to outperform the market over the long term. Each different strategy selects companies based on favourable characteristics defined by the strategy. There are many different factors such as risk based factors (value and size) that command a premium, fundamental factors (growth ...

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Susanna Lee | Posted on Aug 18, 2017
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Raising Inflation Targets?

At the press conference following the US Federal Reserve (US Fed)’s most recent interest rate decision, Governor Janet Yellen made an admission that marks a significant change in tone from the US Fed.  She acknowledged that the debate over whether to raise inflation targets is “one of the most important questions facing monetary policy”[1], and encouraged further research. While we still believe there is a low chance of the US...

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Harbour Team | Posted on Jun 30, 2017