Harbour Navigator: Chinese economic recovery accelerating
Less than six months ago the Chinese economy was partly locked down with COVID restrictions and commentary remained bearish across a range of industries.
Fast forward to now and Chinese non-manufacturing purchasing managers’ index (PMI) readings are pointing to a very solid recovery in Chinese economic activity from 2022’s COVID lockdowns.
A core indicator, the China non-manufacturing PMI for March of +58.2 was well up fro...
Harbour Navigator: Fortress Australia
The banking system in Australia has multiple points of difference compared to the US, all pointing to a greater capacity to weather financial and economic stress. What we heard in our visit to Australia this week was exceptionalism and resilience in the banking system.
“A show of force” is how the Australian Financial Review subsequently described their Summit. In previous years you might have heard the regulators bemoan the ...
Harbour Navigator: What does global banking stress mean for the RBNZ?
The recent failure of Silicon Valley Bank (SVB) and rescue of Credit Suisse have tightened global financial conditions and reduced the need for monetary policy to be as restrictive.
As a small open economy with a heavy reliance on global investors to fund our current account deficit, New Zealand has a high sensitivity to the health of the global economy and international financial markets.
At this stage, we expect the...
Harbour Navigator: Harbour's solution to measuring carbon performance for fixed interest funds
An entity’s carbon intensity is an input into Harbour’s ESG assessment of a borrower, alongside an appraisal of behaviours and performance in other environmental, social and governance (ESG) aspects.
Carbon footprint is calculated as the weighted average of a portfolio’s ownership share of each holding company’s carbon output. This is a useful metric for equity fund investors, however fixed interest investors don’t have an ‘o...
Harbour Outlook: Inflation not giving up without a fight
Key points
The MSCI All Country World Index returned 1.3% in New Zealand dollar terms, and -1.9% in New Zealand dollar-hedged terms. At the sub-sector level, we saw a continuation of last month’s thematic with defensive sectors (utilities, materials) lagging as investors rotated into the more interest rate-sensitive sectors such as information technology and financials.
The New Zealand equity market (S&P/NZX 50 Gross with i...
Harbour Navigator: RBNZ not done yet but getting close
The RBNZ lifted the OCR by 50bps at the February MPS and continues to anticipate further tightening from the current 4.75% to 5.5% as inflation remains too high and labour markets are too tight for comfort.
The North Island floods are likely to add to inflation and activity in the medium term. Beyond the floods, the tension between strong historical data and weak forward indicators continues in New Zealand – we believe the...
Harbour Navigator: China on the mend
China’s economic and demographic imbalances have increased during COVID which may pose challenges for long-term growth. However, the near-term reopening of China’s post-COVID economy will likely have profound impacts for many New Zealand and Australian companies.
The Chinese consumer is cashed up with record deposit growth during the COVID era. Although the overall household balance sheet has seen asset price declines, ve...
Harbour Outlook: Investment markets feel the new year cheer
Key points
The MSCI All Country World Index returned 4.9% over the month and 6.4% in New Zealand dollar-hedged terms. Sub-sector performance was almost a mirror image of last year, with more defensive sectors, such as utilities and consumer staples, lagging as investors rotated to the more interest rate-sensitive sectors such as consumer discretionary, communication services and information technology.
The New Zealand equit...
Harbour Navigator: How the megatrends influence investment opportunities
Harbour’s core equity portfolios have a “growth” bias. Our investment process has multiple steps which includes assessing key secular trends that are underappreciated. Some people call these themes megatrends.
Secular trends tend to be long-lasting, as they transcend industry shifts and cyclical economic activity, and ultimately lead to sustained growth.
At Harbour our core equity growth investment process has a focus on the...
Harbour Navigator: After the tech reset
Technology and biotech companies are delivering on revenue
After a period when share valuations adjusted to higher interest rates, share prices of fast growing companies are performing following positive announcements on growth
These sectors may be less exposed to a slowdown in household spending and investors may become more comfortable with increasing exposure
As has been well documented, the share prices of long-dated ass...
