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ESG & COVID-19 – Did the long term add value in the short term?

  • Whilst Environmental, Social and Governance (ESG) policies take time to impact investment returns, we present evidence that ESG policies added value in the volatile first half of 2020
  • Companies with better ESG credentials fell by less when the market dropped in the first quarter of 2020 and kept up with the market when it rallied in the second quarter of 2020
  • Companies with lower ESG credentials dropped more in the first quarter, recovered less in the second quarter and underperformed the market over the first half of 2020.
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Shane Solly
Shane Solly | Posted on Jul 22, 2020
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‘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?
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Craig Stent | Posted on Jul 9, 2020
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Listed Property – Known knowns, and known unknowns

Key Points

  • Listed property assets have not yet fully recovered.
  • Diverse impact of COVID-19 may create investment opportunities.
  • A wide range of outcomes are possible, and we review current evidence on rental abatements and deferrals.
  • It is reasonable to assume rentals falling by between -5% for industrial assets, through to -20% plus for secondary retail malls.
  • Banks have been supportive refinancing and extending debt facilities.
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Shane Solly
Shane Solly | Posted on Apr 21, 2020
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How this could be different to the GFC

Key Points

  • Headlines around COVID-19 outside of Asia have continued to worsen and, coupled with the oil spat between Russia and Saudi Arabia, have sharply reduced investment sentiment and created pockets of financial stress.
  • While sentiment is clearly downbeat, we need to recognise that there is still a wide range of outcomes that can occur.
  • In the event COVID-19 does result in recession, note all recessions have been different.
  • While this volatility is unsettling, it is important to put this sell-off in historical context.
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Harbour Team | Posted on Mar 13, 2020
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Electricity demand smelting away?

Key points

  • The probability of closure versus 2013 has increased

  • Weak commodity prices, energy and transmission costs are the main issues

  • As in 2013, the electricity industry may bow to Rio Tinto’s pressure, but possibly not the Government this time

  • Higher volatility in share prices and wholesale electricity prices is likely near term

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Craig Stent | Posted on Oct 23, 2019
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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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Kevin Bennett | Posted on Sep 30, 2019
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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...

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Chris Di Leva | Posted on Jul 12, 2019
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Three things the Equity Risk Premium is telling us about investment markets

One of the key decisions that investors must make is how much to respectively allocate to equities and bonds. This decision is made in the knowledge that over time equities have generated superior investment returns. Compensation for the additional volatility, the additional return equities earn over bonds is known as the Equity Risk Premium (ERP). The ERP, while persistent over the long term, varies over the short to medium term, with the direction of the variance having broad implications for investment portfolios.  

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Chris Di Leva | Posted on Feb 12, 2019
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Australian Royal Commission: Final report shakeup

After a year long review the Hayne Royal Commission (RC) into Misconduct in Financial Services has laid out recommendations. This reshaping of the financial services industry has significant implications and received strong political support, ahead of a likely election by 18 May 2019. It is possible that the Labor Party may have a harsher interpretation of potential changes than the RC recommends.

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Andrew Bascand, Simon Momich | Posted on Feb 5, 2019
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New Zealand equity market debt trends

One of the driving factors behind the global financial crisis (GFC) was high levels of company debt. High leverage and lower earnings coverage of interest costs heightened risk in the US equity market. Recently published research by a global investment bank[i]  suggests that US company debt levels may be creeping up again. But are we seeing the same thing happen in New Zealand?

Research by Harbour indicates that the median N...

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Andrew Bascand, Shane Solly | Posted on Jan 28, 2019