webbanner16

Ethical investing: walking the talk

In recent times, perhaps more visibly prior to COVID-19, it has been satisfying to see growing interest in, and demand for, ethical investment products.  Ethical is the term most often used by New Zealand investors[1], whereas fund managers like Harbour use terminology such as “ESG” (Environmental, Social and Governance) and others might refer to “Responsible Investing”.

Taxonomy issues aside, what one investor considers ethi...

READ MORE
Ainsley McLaren
Ainsley McLaren | Posted on Apr 24, 2020
webbanner3 v2

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.
READ MORE
Shane Solly
Shane Solly | Posted on Apr 21, 2020
webbanner12

QE in New Zealand – A rising tide lifts most boats

Key Points

  • The RBNZ’s quantitative easing (QE), Large Scale Asset Purchase (LSAP) programme has kicked off to a very promising start.
  • In a tug-of-war between massive Reserve Bank purchases and NZ Treasury issuance, the Reserve Bank is winning.
  • The New Zealand Local Government Authority raised $1.1billion in new bonds issued today – a record amount.
  • Along with better COVID-19 news in New Zealand and a rebound in equities, we are starting to see better activity in high grade NZ credit.
  • The market is hoping this will flow through to the broader credit market. Early signs are encouraging, but the jury is out on the poor cousins at the lower end of the credit spectrum.
READ MORE
Mark Brown
Mark Brown | Posted on Apr 9, 2020
webbanner11

Panic doesn’t pay: Tips from professional investors

Harbour’s investment team has decades of experience in managing Australasian shares and New Zealand bonds.  Whilst over time, investors generally experience favourable market conditions allowing us to generate positive returns, it tends to be the downturns that people remember most. The table below illustrates this, as New Zealand share market returns were positive for around three quarters of the years shown: 

Annual returns...

READ MORE
Ainsley McLaren
Ainsley McLaren | Posted on Apr 9, 2020
webbanner8

Harbour Outlook: At Home

Key points

  • COVID-19 continues to spread globally with cases recently reaching over 1 million.
  • Governments and central banks’ stimulus measures are helping mitigate the impacts of a sudden stop in economic activity.
  • Equities posted losses as investors digested the impact of reduced economic activity on company profits, while bond yields in many countries rose as investors baulked at the large increase in bond supply which is required to fund expanding government deficits globally.
  • Russia’s refusal in early March to back an OPEC production cut resulted in Saudi Arabia dramatically increasing supply to “punish” the country. Combined with reduced global demand, oil prices have fallen more than 50% year to date.
READ MORE
Harbour sails 3
Harbour Team | Posted on Apr 8, 2020
webbanner6

COVID-19: Building the bridge across the void

Key Points

  • Extraordinary global fiscal and monetary policies are starting to build a bridge across the void
  • Markets are beginning to look beyond COVID-19 case trends, and towards solving the pandemic with tests, a new standard of care and vaccinations
  • Quality companies, with strong balance sheets, are performing well
  • This is a time to stay at home and be kind, it is also a time to pay close attention to discipline in investment decisions
READ MORE
Andrew Bascand 1
Andrew Bascand | Posted on Mar 31, 2020
Webbannertest v2

Faster please, to avoid the void

As we all battle COVID-19, some spending is stopping, suddenly.

For many businesses it is like stepping into the void. Already in a few days New Zealand has over 27,000 wage subsidy applications. That is a lot and it’s just the start. Sadly, higher unemployment will happen as many of us battle in the grandstands against something we can’t see while we all wish the very best for our brave medical specialists at the front line....

READ MORE
Andrew Bascand 1
Andrew Bascand | Posted on Mar 24, 2020
webbanner12

How vulnerable is our housing market?

Key Points

  • Housing affordability continues to be a major challenge for many households. Initiatives to increase supply and to manage risks to the financial system have helped to contain house price rises, but they have not been able to hold the market back from strong price gains across the country. Our analysis had suggested that house prices could keep rising in the near term, supported by falling mortgage rates and a buoyant economy. However, risks of price declines are growing. The coronavirus outbreak has elevated the risks.
  • The drivers of strong price gains over recent years have been positive migration, falling mortgage rates and strength in the jobs market. We see limited scope for these factors to add to housing market strength over the medium term. Coronavirus could be a catalyst for weaker prices if the economic impact is significant and unemployment increases.
  • Prior to COVID-19 we had considered whether a housing market bubble might exist. We judged that this was not the case, although some traditional features of bubbles are apparent.
  • Recently announced policy responses from the Reserve Bank of New Zealand and our Government are meaningful and we expect them to mitigate risks to a considerable degree. The key issues for housing will be the jobs market and whether any mortgage payment flexibility is forthcoming.
READ MORE
Mark Brown
Mark Brown | Posted on Mar 17, 2020
IncomeFund banner v3

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.
READ MORE
Harbour sails 8
Harbour Team | Posted on Mar 13, 2020
webbanner8

Harbour Outlook: Short term uncertainty reigns

Key points

  • The spread of COVID-19 outside of China dented sentiment during February, causing global interest rates and equity prices to fall sharply.
  • US political risk was elevated during the month, as polling and early primary results saw Bernie Sanders emerge as the frontrunner in the race to become the Democratic candidate for the US Presidency. He since has dropped to a clear second favourite, behind Joe Biden. Sanders is not considered a “market friendly” candidate due to his views on (anti) trade, plans to break up big tech and unconventional views on monetary policy.  
  • The US earnings season saw 491 companies report. 359 companies (73%) delivered earnings in excess of consensus estimates, with the best performing sectors being technology where 94% of companies beat expectations. The sectors which performed poorest were telecommunications (50% beat rate), and oil and gas (44% beat rate).
  • In New Zealand, the December company reporting season was weaker than expected with more misses against expectations in results, versus beats. Company outlook statements were cautious. Consensus earnings forecast downgrades exceeded upgrades.
READ MORE
Harbour sails 6
Harbour team | Posted on Mar 9, 2020