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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...

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Lewis Fowler | Posted on Feb 12, 2024
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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...

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Andrew Bascand | Posted on Feb 9, 2024
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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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Lewis Fowler | Posted on Jan 10, 2024
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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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Hamish Pepper, Chris Di Leva | Posted on Dec 13, 2023
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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...

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Hamish Pepper | Posted on Dec 11, 2023
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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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Lewis Fowler | Posted on Dec 8, 2023
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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...

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Chris Di Leva | Posted on Dec 1, 2023
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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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Simon Pannett | Posted on Nov 17, 2023
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Harbour Outlook: Economic Crosscurrents

  • The MSCI All Country World Index (ACWI) continued its decline, posting a -2.7% loss in New Zealand dollar-hedged terms (and a 0.2% gain in unhedged NZD terms). Despite three consecutive months of negative returns, the 12-month return figure for the index stands at 9.5% in NZD-hedged terms and 10.4% in unhedged terms.
  • Returns for the month were similarly weak in local markets, with the S&P/NZX 50 Gross Index (with imputation credits) falling -4.8%, and the S&P/ASX 200 Index falling -3.8% (-2.4% in New Zealand dollar terms).
  • Bond indices were also negative over the month. The Bloomberg NZ Bond Composite 0+ Yr Index fell -0.2%, whilst the Bloomberg Global Aggregate Bond Index (hedged to NZD) also dropped -0.7% over the month. This came as the US market saw 10-year government yields increase to 4.9%, a level not seen since 2007, with resilience in US economic data prompting the market to largely unwind an expectation that the Federal Reserve would be cutting rates in 2024.
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Lewis Fowler | Posted on Nov 8, 2023
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The Future of Wealth: Part two - The future of investing: bridging the gender gap

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, Executive Director, Ainsley McLaren, discusses the opportunities that lie in underst...

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Ainsley McLaren
Ainsley McLaren | Posted on Nov 2, 2023