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The Third Scenario – The End of Goldilocks

While the RBNZ expects to keep the OCR on hold through 2019 and into 2020, in their past two Monetary Policy Statements they have outlined two alternative scenarios: one with stronger inflation pressures; and another with softer economic growth. In our view, the market is currently underestimating the chances of a third scenario, which is a combination of both stronger inflation pressures and softer economic growth.

One of th...

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Harbour Team | Posted on Nov 15, 2018
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Postcard from Colorado – outdoor retailers

Harbour’s Managing Director Andrew Bascand and Senior Research Analyst Oyvinn Rimer travelled to Denver, Colorado for the Retail Outdoor conference.

Why did we attend the Outdoor Retailer Winter Market?

The Outdoor Economy in the U.S. alone is 3x bigger than the entire GDP of New Zealand
The Outdoor Economy is growing and is a source of global growth
Trade war and tariffs are impacting on the Outdoor Economy directly
Innovat...

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Oyvinn Rimer, Andrew Bascand | Posted on Nov 14, 2018
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US mid-terms election results: it’s now Blue and Red

With Andrew Bascand on a company research trip in Denver, Colorado, he has shared his on the ground views of the US mid-term election results and their implications.

My impression is that the US equity markets are fairly sanguine following the US election result because right now it is not about the politics – the economic data remains helpful and on track for the economic expansion to continue through 2019.  The mid-terms ou...

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Andrew Bascand | Posted on Nov 9, 2018
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Outlook: Equity Market Pullback

Key developments

For much of the year, the main theme has been global bond yields inching higher as US Federal Reserve continues normalising interest rates; while at the same time equity markets also moved steadily higher, supported by solid global growth. However, finally in October equity markets experienced a noticeable and widespread pullback.

Chart 1. Equity market levels since the beginning of 2018

The New Zealand eq...

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Harbour Team | Posted on Nov 6, 2018
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ESG is good for your wealth

Public interest in environmental, social and governance (ESG) issues and the ensuing demand for these to be incorporated into investments has been noticeably increasing over time. In the eight years since Harbour Asset Management became a signatory to the UN Principles of Responsible Investing, a sea change has occurred as more fund managers seek to incorporate responsible investment approaches.  Increasingly, the expectation ...

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Harbour Team | Posted on Oct 24, 2018
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Investment Horizon: Harbour Macro Research Day

Our internal Macro Research Day is a chance to re-visit the research that anchors our medium-term view.
Locally, we expect economic activity to moderate rather than slow sharply, and the RBNZ to remain on hold for a considerable time ahead to provide the best chance for core inflation to lift above 2%.
Globally, we see interest rates rising, but with monetary policy still supportive for financial markets while global inflation...

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Harbour Team | Posted on Oct 17, 2018
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Outlook: Low Local Interest Rates

Key developments

In September we saw a continuation of the theme of low local interest rates in New Zealand, in a broader global environment where bond yields overseas have crept higher. This provided support for the local fixed interest and equity markets, while the NZ dollar remained at its recent low levels.

The tone in global markets has remained relatively cautious, with worries about trade tensions, pockets of strain ...

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Harbour Team | Posted on Oct 5, 2018
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Global Equity Growth: Investment Opportunities in the global market - T. Rowe Price

Scott Berg has developed an incredible investment performance history at T. Rowe Price since taking the helm of the Global Equity Growth Fund nine years and eleven months ago. Today, T. Rowe Price manages more than $1.5trn New Zealand dollars. There is a trend towards more concentrated global equity portfolios. With 130 to 150 stocks from across more than 30 countries, Scott’s portfolio bucks this trend. Diversification is a key tenant of Scott’s philosophy and is underpinned by his admission that he expects to get a handful of projections wrong each year. Scott made a number of projections for 2017 that didn’t transpire, yet the NZ PIE Fund outperformed its benchmark by over 10%; fairly strong support for Scott’s approach...

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Harbour | Posted on Sep 24, 2018
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Harbour Navigator: Postcard from China - The eCommerce growth model

I visited China last week and met with companies and commentators to dig beneath the data and get a sense of the current issues.

We visited many malls and shopping centres. In particular we went to mother and baby stores to experience the consumer in action, and witnessed the new eCommerce model. We also visited “wet markets”, hired bicycles with WeChat, and saw progress with a2’s new Chinese-labelled product. We saw first-ha...

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Andrew Bascand | Posted on Sep 14, 2018
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Harbour Outlook: Crisis of confidence

It was a strong month for absolute returns in New Zealand asset classes in August, with the NZX50 sharemarket index rising around 4.4% and the NZ Government bond index generating a return above 1.2%.   This strong performance of financial markets sat in sharp contrast to the continued weakness of New Zealand business confidence, which is shaping the political and policy-making environment. 

As usual there was a laundry list of global developments highlighting the ongoing risks to the global backdrop:  heightened US trade tensions, this time with Canada; wobbles in the Italian banking sector and sovereign bond market; emerging market strains in Turkey and Argentina; and political changes in Australia generating the 5th prime minister in five years.  Despite these developments and headlines, global macroeconomic data, particularly in the United States, continued to show a picture of solid actual economic activity running near economists’ expectations...

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Harbour Team | Posted on Sep 10, 2018