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Harbour Outlook: Quality growth through a turning point?

Key points 
The MSCI All Country World (global shares) Index rose 6.1% over the month in NZD-unhedged terms, and 7.1% in NZD-hedged terms.

The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 5.7%, whilst the Australian equity market (S&P ASX 200) rose 5.7% in AUD terms in the month, and 6.3% in NZD terms. 

Bond yields declined over the month with New Zealand 10-year government bond yields e...

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Harbour team | Posted on Aug 8, 2022
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Harbour Outlook: From stagflation to low growth?

Key points 
The MSCI All Country World (global shares) Index fell -4.1% over the month in NZD-unhedged terms, and -7.7% in NZD-hedged terms. The index ended the quarter -5.7% in NZD-unhedged and -14.3% in NZD-hedged terms. 

The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down -3.9% (-10.3% for the quarter), whilst the Australian equity market (S&P ASX 200) fell -8.8% in AUD terms in the mon...

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Harbour sails 7
Harbour team | Posted on Jul 8, 2022
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Harbour Outlook: Cycling at warp speed … recession priced in?

Key points
The MSCI All Country World (global shares) Index fell -0.2% over the month in both NZD-hedged and -unhedged terms.
The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down -4.8%, whilst the Australian equity market (S&P ASX 200) fell -2.6% in AUD terms (-1.9% in NZD terms).
Bond yields tracked downwards through May with a partial re-tracing through the last week of the month. As a res...

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Harbour sails 6
Harbour Team | Posted on Jun 9, 2022
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Harbour Outlook: Stagflation risk, real rates & the land(s) down under

  • The MSCI All Country World (global shares) Index rose +2.4% in NZD hedged terms in March and, with the New Zealand dollar strengthening in the past month, the same Index fell -0.6% in NZD terms over the month.
  • The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 1.1%, whilst the Australian equity market (S&P ASX 200) rose 6.9% in AUD terms and 7.6% in NZD terms.
  • Prompted by shifts towards faster rate hikes from offshore central banks and combined with large mortgage-based hedging flows domestically, market interest rates pushed relentlessly higher through the month, with the New Zealand 10-year Government bond yield ending at 3.2%, an increase of 0.5%.
  • Potential easing of the conflict in Europe and a clearer path for US Federal Reserve (Fed) interest rate increases saw equity markets recover through March; while production disruption and Russian sanction constraints contributed to an increase in commodity prices with the price of oil increasing another 7% over the month.
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Harbour sails 4
Harbour Team | Posted on Apr 8, 2022
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Harbour Outlook: Ukraine invasion heightens already elevated volatility

  • The MSCI All Country World (global shares) Index fell -2.5% in NZD hedged terms in February and, with the New Zealand dollar strengthening in the past month, the same Index fell -5.5% in NZD terms over the month.
  • The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 0.75%, whilst the Australian equity market (S&P ASX 200) rose 2.1% in both AUD and NZD terms.
  • The Reserve Bank of New Zealand (RBNZ) delivered a hawkish statement along with a 25bp hike to 1.00% in February, retaining the option to move in 50bp increments and revising its OCR forecasts higher than implied by market pricing.
  • Russia’s invasion of Ukraine has become a humanitarian disaster. The geopolitical environment is now vastly changed with a wide range of potential outcomes. It has also added further upward pressure to global energy prices and inflation.
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Harbour sails 4
Harbour Team | Posted on Mar 8, 2022
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Harbour Outlook: Down by the elevator, up by the stairs?

  • The MSCI All Country World (global shares) Index fell -4.9% in USD in January, and with the New Zealand dollar weakening in the past month, the same Index fell -0.9% in NZD terms over the month.
  • The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down ‑8.8%, whilst the Australian equity market (S&P ASX 200) fell -6.4% over the month (-5.3% in NZ dollar terms).
  • The New Zealand 10-year bond yield rose to 2.60% from 2.39% during January, while the US 10‑year bond yield rose from 1.51% to 1.78%. These moves led to global bond indices declining over the period.
  • A sharp lift in interest rate expectations and strong inflation prints contributed to a broad ‘risk off’ move in markets. The pricing of high growth stocks was hit hard, albeit hardly any company was spared by the broad market sell-off.
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Harbour Team | Posted on Feb 9, 2022
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Uncertainty around hawkish central banks has led to volatility

  • Global equity markets were strong in 2021 benefiting from accommodative central banks and record earnings growth to spur on returns
  • Loose monetary and fiscal policy, implemented in response to the COVID-19 pandemic, has led to an increase in inflation, which central banks now need to combat
  • Uncertainty around the exact extent of future interest rate changes has led to a volatile start to 2022 in markets
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Harbour Team | Posted on Feb 1, 2022
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Harbour Outlook: Tricky transition favours stock picking

  • The MSCI All Country World (global shares) Index rose 4.0% in USD in December, taking the three-month return to 6.7%. The same Index rose 3.1% in NZD terms over the month, and with the New Zealand dollar weakening in the past quarter, the three-month return in NZD was stronger at 7.5%.
  • The New Zealand 10-year bond yield dropped to 2.39% from 2.49% during December, while the US 10‑year bond yield rose from 1.44% to 1.51%. The move in New Zealand yields contributed to positive performance across domestic bond indices, whilst global indices fell.
  • Interest rate yield curves flattened over December as central banks globally (the Reserve Bank of Australia being the laggard) acknowledged inflation may be more than transitory and began lifting official rates. At the same time, ongoing shortages and maturing of the economic recovery contributed to the global equity market earnings revision upgrade ratio slowing, to be only slightly positive. This lift in rates and slowing earnings revisions is likely to contribute to a lift in equity market volatility.
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Harbour sails 4
Harbour Team | Posted on Jan 12, 2022
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Top 10 risks (and opportunities) for 2022

Looking back on 2021 it is interesting to ponder how it will go down in history. Could it be seen as the year that inflation had a momentary resurgence before fading back into the background, or the year that entered us into a new normal? Could it be seen as the year that the 2021 United Nations Climate Change conference (COP26) brought about meaningful climate change mitigation? Could it be seen as the year that sent Chinese stocks into a bear market or the year that provided the buying opportunity of a generation?

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Harbour sails 1
Hamish Pepper, Chris Di Leva | Posted on Dec 17, 2021
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Harbour Outlook: Push and pull factors dictate equity returns

  • The MSCI All Country World (global shares) Index fell -2.5% in USD in November, taking the 3-month return to -2.0%. Returns in NZD were positive due to a weakening domestic currency, delivering 2.9% in November whilst the 3-month return was 2.0%.
  • Global equity markets fell materially on the combination of Omicron COVID variant headlines, the challenges of northern hemisphere lockdowns and the likely upward trajectory of interest rates following strong inflation data.
  • While the Reserve Bank of New Zealand (RBNZ) raised the official cash rate (OCR) by 0.25%, their accompanying commentary was more balanced, reducing the risk of aggressive monetary policy tightening.
  • Globally bond yields fell on news of the Omicron variant; the New Zealand 10-year bond yield drew back to 2.48% from 2.63%, while the US 10-year bond yield fell from 1.55% to 1.44%. This contributed to positive performance across bond indices.
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Harbour sails 3
Harbour Team | Posted on Dec 8, 2021