The Future of Wealth: Part four - The future of portfolio construction
Is there really anything better than a 60/40 portfolio?The future of wealth is shaped by a new generation of investors - bringing new thinking, expectations, and standards. Across this four-part series, Harbour delves into the evolving landscape and strategies for generating customer value, poised to be the primary catalyst for both present and future transformations in the sector.
In part four, Portfolio Manager, Chris Di Le...
The Future of Wealth: Part three - The future of responsible investing
The future of wealth is shaped by a new generation of investors - bringing new thinking, expectations, and standards. Across this four-part series, Harbour delves into the evolving landscape and strategies for generating customer value, poised to be the primary catalyst for both present and future transformations in the sector.
In part two, Senior Credit Analyst, Simon Pannett, explains the responsible investment spectrum and the growing need for the industry to possess expertise in ethical and responsible investment choices for investors.
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The Future of Wealth: Part two - The future of investing: bridging the gender gap
The future of wealth is shaped by a new generation of investors - bringing new thinking, expectations, and standards. Across this four-part series, Harbour delves into the evolving landscape and strategies for generating customer value, poised to be the primary catalyst for both present and future transformations in the sector.
In part two, Executive Director, Ainsley McLaren, discusses the opportunities that lie in underst...
The Future of Wealth: Part one - The future of the wealth management firm
The future of wealth is shaped by a new generation of investors - bringing new thinking, expectations, and standards. Across this four-part series, Harbour delves into the evolving landscape and strategies for generating customer value, poised to be the primary catalyst for both present and future transformations in the sector.
In part one, Andrew Bascand explores the trends set to revolutionise the wealth management sector i...
Harbour Navigator: Harbour Listed Property Sustainability Survey 2023 - Taking care of sustainable business
Sustainability benefits for property owners: Research indicates that commercial properties with higher sustainability ratings have more consistent cash flow, higher occupancy rates, higher rents, and attract tenants with lower risk. Improving sustainability can enhance cash flow quality, reduce regulatory compliance risk, and improve market perception and brand value for listed property securities.
Harbour Listed Property Sus...
Harbour Navigator: Made in America
Technology is in place for the roll out of driverless cars and trials are underway. Head of Equities, Craig Stent got to test out the new Jaguar I-PACE first-hand in Phoenix.
There are various hurdles to overcome before we see more widespread adoption. Societal acceptance and regulatory restrictions may inhibit the uptake.
‘Made in America’ is back, with evidence of onshoring manufacturing occurring, however it is likely ...
Harbour Navigator: What you need to know about neutral interest rates
After declining between 1960 and 2020 due to growing working populations and decreasing productivity, neutral interest rates have stopped falling in recent years. This has prompted increased debate about where they go from here.
Neutral interest rates matter for financial markets because they help assess the impact of monetary policy and affect the valuation of financial assets based on discounted cash flows.
Future neutra...
Harbour Navigator: GLP-1 A healthcare breakthrough: hype versus reality
The GLP-1 drug class, which has predominantly been used to treat type 2 diabetes, has captured notable mindshare with healthcare specialists and macro investors due to initial findings from the Select study suggesting potential effectiveness of these drugs in addressing cardiovascular risk in obese patients.
The broader implications for obesity, cardiovascular events and other associated conditions within this drug class may ...
Investment Horizon: Top 10 risks and opportunities for 2023 – A mid-year reflection
At the risk of jinxing things and, barring a few weeks in March where the collapse of Silicon Valley Bank looked like it could create broader risks for the banking system, the first half of 2023 was relatively uneventful. Particularly when compared to the corresponding periods
in 2020 and 2022.
After a year of negative returns for both bonds and equities, “the scores on the board” look healthier for both. Equities have bounc...
Harbour Navigator: Global trends in taxonomies and what it means for New Zealand
Increasingly, countries around the world are developing sustainable finance taxonomies to classify environmentally friendly economic activities and prevent false claims of sustainability (“greenwashing”).
Europe has taken the lead in establishing a green taxonomy, and other countries like Australia are also making progress in this area.
New Zealand is beginning to explore the possibility of implementing its own sustainable...
Harbour Outlook: Catch-22 - Inflation vs. Earnings
Key points
At a headline level, stock markets appear to be in a “catch-22”, digesting lower inflation numbers while trying to assess how much of this inflation is down to lower growth, which may then flow through to earnings. See more under ‘what to watch’.
New Zealand equities and bonds both delivered strong returns over the month, with the S&P/NZX 50 Gross index (with imputation credits) returning 1.1% and the Bloomberg NZ ...
Keeping the lights on
- Decarbonisation and keeping the lights on will need significant investment
- Investment needs a stable policy environment
- Policy risk may have lessened with reviews targeted at better information sharing
Back to Core Banking
A virtual tour through Australian banking issues
- More tailwinds for the banking sector
- Medium term, the banking sector faces pressure to continue to invest heavily in their digital consumer platforms
- Differentiated strategies are appearing as banks rebuild their client focus
It’s not easy being green
- The Climate Change Commission’s final advice to the Government is due to be released next Wednesday. This follows a review of interested party submissions and feedback from the initial draft report.
- We do not see the key draft recommendations changing, but at the margin we might see some alterations to the Commission’s recommendations.
Are the lights going to go out?
- Hydro lake storage is at about 60% of normal levels; low lake levels may provide risks to the near-term earnings of the electricity sector.
- Commercial electricity users on spot power pricing are facing significant cost increases.
- Dry conditions may mean we burn more coal and gas, which highlights the importance of more investment in geothermal and wind energy projects.
‘Four More Years’
We’re staying
- Rio Tinto and Meridian have today announced an extension to the Tiwai contract through to December 2024.
- The government has not as yet needed to provide any support
- We would expect further announcements on project development with Contact progressing the Tauhara geothermal plant and Meridian developing their Harapaki wind farm.
Shadow banks shine light on mortgage deferrals
- Some of New Zealand’s non-bank mortgage lenders have provided detailed data that illustrates they appear well-positioned to weather an increase in non-performing loans when COVID-related loan deferrals expire
- Our various probes into the big banks indicate no cause for alarm, albeit we expect loss provisioning needs to rise and small to medium-sized enterprise (SME) lending trends need to be monitored
Are we ‘Thinking Big’ Again?
- Electrification of industrial and process heat makes sense
- Pumped storage would be a massive project, but could help achieve the Government’s 100% renewable objective
- Substantial challenges remain in terms of cost, engineering, and resource consenting
- Scoping study results unlikely to be published quickly with sector uncertainty to remain in the short term
‘Blame it on Rio’
Key Points
- Rio to leave, another Think Big Project bites the dust
- Rio Tinto has announced the closure of the New Zealand Aluminium Smelter (NZAS) from August 2021.
- Short term, the biggest impact on earnings will be felt by Contact Energy and Meridian Energy with stranded generation in the lower half of the South Island.
- Is it time to move forward and focus on transmission investment and de-carbonisation?
Electricity demand smelting away?
Key points
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The probability of closure versus 2013 has increased
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Weak commodity prices, energy and transmission costs are the main issues
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As in 2013, the electricity industry may bow to Rio Tinto’s pressure, but possibly not the Government this time
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Higher volatility in share prices and wholesale electricity prices is likely near term
The move to the public cloud accelerates
We try to attend at least one global technology conference each year to keep abreast of latest developments, market trends and hot topics. Over the last five years, speakers have focused on many exciting areas with large market growth potential (covering online migration and SaaS business models disrupting the old world), consumers going mobile, big data and Artificial Intelligence (AI), and the Internet of Things (IOT) to nam...
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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 ...
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...
