Harbour Outlook: Central banks easing as markets broaden
Key market movements
Global equities continued their strong run in August, returning 2.5% in unhedged NZD terms and 2.0% NZD-hedged, their fourth month in a row of gains. Equity market performance broadened, with investors rotating away from the mega-cap technology companies and into small-cap stocks.
The New Zealand equity market posted a modest gain, with the S&P/NZX 50 Gross Index (including imputation credits) returnin…
Harbour Navigator: Bank capital proposal to support growth (and competition)
The Reserve Bank of New Zealand (RBNZ) has launched a review of capital risk weights and adequacy.
The review responds to concerns that the 2019 capital framework was seen in many quarters as overly conservative, potentially constraining credit supply and competition. The new framework aims to balance financial stability with efficiency and competitiveness, aligning New Zealand with peer jurisdictions rather than targeting a “…
Harbour Navigator: REIT all about it – two reasons to invest in listed property
Stronger earnings and a helpful income boost relative to cash rates could help New Zealand (NZ) listed property securities – known as Real Estate Investment Trusts (REITs) – deliver better returns.
New Zealand REIT returns have improved over the last year, and we believe that earnings and lower interest rates may continue to provide future support for the New Zealand REIT asset class returns.
Earnings growth: A turning point
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Harbour Navigator: Open Your Wallets – Biotech Conference Highlights Capital Intensity
The biotech sector, both private and public, has a plethora of new drugs and treatments in the pipeline courtesy of large capital injections 5–7 years ago.
However, there needs to be another capital infusion to bring these opportunities to market. The key question is who will fund these opportunities and who will capture the anticipated returns.
We recently attended an Australasian biotech conference that featured over forty …
Harbour Outlook: Balancing caution with conviction
Key market movements
Global equities extended their rally in July, returning 4.2% in unhedged NZD terms and 2.2% NZD-hedged, supported by continued momentum in technology shares and growing investor confidence. The MSCI All Country World Index posted its third consecutive monthly gain, taking the 3-month return to 12.6% in unhedged NZD terms.
The New Zealand equity market continued to climb, with the S&P/NZX 50 Gross Index (…
Harbour Navigator: Technology, competition and risk are reshaping Australian banking
Competitive pressures in both business and consumer banking are driving operational, credit, and pricing shifts. Mortgage broker aggregation continues to be a source of pricing competition.
Technology and AI are central to banks’ transformation agendas, but progress varies widely.
Private credit and non-banks are reshaping the commercial lending market, possibly prompting some banks to re-evaluate risk appetite for business …
Back in vogue: lower tranches of securitised debt
Market pricing on lower tranches of credit has tightened meaningfully
In some cases, collateral (investor protection) has at the same time fallen
Harbour continues to favour stronger rated credit exposures with, in our view, better future risk-return characteristics
Black-listed after the GFC, investor demand for securitised (asset-backed) debt has recently increased significantly, driving notable changes in pricing, and, in …
Harbour Outlook: Positive momentum amid easing tensions
Key market movements
Global equities continued their momentum from the previous month, posting a solid return of 2.8% in unhedged NZD terms, and 3.8% for NZD-hedged investors. Information technology and communication services once again led performance for the month, while the consumer sectors lagged.
Locally, the New Zealand equity market performed well with the S&P/NZX 50 Gross Index (including imputation credits) delive…
Harbour Navigator: The business recovery waits… again
The big surprise from today’s Quarterly Survey of Business Opinion (QSBO) was that firms reported a further reduction in their ability to lift prices, despite higher costs - likely appeasing the RBNZ’s concern of higher near-term inflation.
The underlying driver is a better appreciated dynamic – weak demand and large amounts of spare capacity, as flagged by the PMIs dropping in to contractionary territory.
While there is ho…
Harbour Navigator: Insights from the ground in the US
Our recent US trip offered valuable perspectives on how the AI boom is reshaping investment approaches, amid ongoing uncertainty around trade and tariffs.
Interviews with US managers
Watch the interview with David Siino, TD Epoch:
Watch the interview with Scott Berg, T. Rowe Price:
How top global managers are positioning for the AI era
At the end of 2022, ChatGPT was made available to the public. This was a watershed mome…