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...
The turning tide: Why investors should go active
This piece was originally published in The Listener on 11 December.
Investment markets constantly change, so it’s best to be prepared. An active fund uses research to take advantage of market trends and maximise returns.
Investment markets constantly change. Sometimes almost every investment goes up in value, which can make investors complacent. The NZX and many investment markets around the world are currently sitting at re...
Nearing an end to the New Zealand Goldilocks?
Markets, both in New Zealand and globally, have experienced goldilocks conditions for the past 5 years of low inflation and solid economic growth. While markets performed strongly in November, there were increasing signs, particularly in New Zealand, that 2018 may involve a transition away from this goldilocks environment.
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A Prudent Response to Expensive Housing
With 60% of Australian bank lending housing related, banks are bound inextricably to the property cycle. Unlike the worst-hit global geographies, the Australian household did not go through a period of deleveraging post-GFC, as housing credit continued to outpace income growth. With this backdrop, regulators are now doing their utmost to increase banks’ resilience and the banks too are chipping in.
There is not only one Aust...
Adjusting to Change
Key developments ‘Adjusting to change’ continued to be a key theme driving markets in October, whether it was political change, normalising global interest rates or changing consumer behaviour reflecting disruptive technological changes.
New Zealand had the drama of watching election coalition negotiations unfold, which eventually enabled the Labour Party and New Zealand First to form a government, with supply and confidence ...
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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Xi's China: More of the same, or big changes ahead?
In what is undoubtedly the most significant change of global leadership in 2017, President Xi Jinping of China has consolidated his powers further into the next five-year term.
Source: Xinhuanet (official press agency of the People’s Republic of China)
Xi is now ranked as one of the most influential Chinese leaders since the Cultural Revolution and has staffed the Politburo Standing Committee with five close allies. The Stan...
A new NZ Government: Market Implications
After a long period in opposition, we now have a Labour-led government in coalition with New Zealand First, and with support from the Green Party. The most significant initial market reaction has been a fall in the NZ dollar by around 2 percent and NZ share market by 1 percent on the open, as markets priced-in the possibility of a deterioration in business confidence and nervous overseas investors. This Navigator will set out ...
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Normalising Global Interest Rates
Key DevelopmentsIn September, there were two main local market events in New Zealand which were somewhat overshadowed by the broader theme of normalising global interest rates.
The first was the hard-fought NZ election, which left no clear government formed on election night. Consistent with the last 8 MMP elections in NZ, it will likely take some time for a government to form. This process is not a surprise for local nor in...
NZ Election: Business as Usual
After the hard-fought NZ election campaign, markets are still left with some political uncertainty, with no
clear government formed on election night.
As the political parties enter coalition negotiations, an eventual National-NZ First Government appears
more likely than Labour-Greens-NZ First. However, it is still far too early to call. Consistent with the
last 8 MMP elections in NZ, it will likely take some time for a Gover...