Harbour Outlook: Transition Period for Markets
Key market movements
The MSCI All Country World Index (ACWI) continued its positive run with a 5.4% return in New Zealand dollar-unhedged (4.7% in NZD-hedged) terms for the month. From a sector perspective performance was broadly positive, with utilities the only negative sector at -0.8%. Leading the way was consumer discretionary at 7.8% and information technology at 6.1%.
In contrast local market returns for the month wer...
Harbour Navigator: New Zealand households to remain challenged
New Zealand households have experienced a significant increase in their cost of living over the past four years, led by higher interest rates, transport, food, and housing costs.
Total consumption has been able to grow 8.5% over this time due to large increases in household income and wealth, alongside record net migration.
The per capita picture, however, is much weaker and likely reflects the impact of monetary policy tigh...
Harbour Outlook: Bumps in the road on the way to lower rates?
Key market movements
The MSCI All Country World Index (ACWI) started the year off with a 3.5% (1.3%) return in New Zealand dollar-unhedged (hedged) terms for the month. From a sector perspective performance was mixed, with information technology leading the way at 3.2%, followed by communication services at 2.9% and healthcare at 2.2%. On the other side of the ledger materials was the worst-performing sector at -5.4%, whilst u...
Harbour Navigator: Time to revisit banking in New Zealand?
“The only thing worse than a very profitable banking system is a very unprofitable banking system.”
- Jonathan Mott, 2010, from his presentation to the Australian Senate Economic References Committee inquiry into Competition within the Australian banking sector
Major bank profitability as measured by return on equity is not exceptional compared to history or alternative listed investments.
Further strategic moves seem like...
Harbour Outlook: Strong finish to the year, but can it continue?
The US Federal Reserve performed an unexpected dovish pivot at its December meeting and markets now anticipate a "soft landing" where inflation returns to 2% without the Fed having to inflict severe economic damage, opening the gates for a flood of cash into equity markets. The so-called ‘Fed pivot’ saw capital markets quickly focus on when and by how much the Fed and other central banks would cut interest rates. After a lower-than-expected core inflation reading capital...
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Top 10 Risks and Opportunities for 2024
When establishing our core investment views for the near- and medium-term, we are conscious that markets often skew towards tail risks, and also towards factors that are already observable but uncertain.When our research team considers technology disruption in sectors and the macro-environment, we have to be aware that the range of outcomes may provide investment opportunities as markets can react both slowly to news and rapid...
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Harbour Navigator: Understanding the RBNZ’s recent hawkish shift
The Reserve Bank of New Zealand (RBNZ) surprised many at its November Monetary Policy Statement (MPS) with a more hawkish view of recent economic developments. While we don’t necessarily view the skew in economic risks the same way, we recognise the high degree of uncertainty in the economic outlook and the importance of understanding the central bank’s point of view.
At the heart of the RBNZ’s hawkish shift are two factors: h...
Harbour Outlook: Inflection Points
Global share markets delivered one of their strongest monthly returns as market expectations moved from a ‘higher for longer’ interest rate environment to a ‘soft-landing’ for the US economy. The fall in long term bond yields was driven by softer economic data, renewed signs of slowing inflation, and a lower-than-expected US Treasury funding requirement. The continued fall in inflation data allowed central bankers to deliver ‘hawkish pause’ (not lifting rates but ready to if inflation re-emerges) type comments during the month. This weak inflation data contributed to markets beginning to price in cuts to official interest rates over 2024. Given the rise in bond yields was the key headwind for equities in prior months, the fall in yields drove a sharp rally in equity markets.
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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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