Impact Investing: Responsible investing’s latest frontier
What is Impact Investing? Responsible investing has evolved over time, from simple portfolio exclusions such as alcohol and tobacco, through to only selecting investments that meet certain Environmental, Social and Governance (ESG) criteria, and investment managers engaging with company management to try to effect positive change in these ESG areas.
Impact investing has become a buzzword of late and has evolved to mean slig...
Contact’s closure cuts carbon
Contact Energy has announced the retirement of a gas-fuelled power station
Contact’s direct carbon emissions expected to be reduced by 20% p.a.
Re-deployment opportunities will be available for affected workers to support a just transition
Generation shortfall expected to be met by new renewable energy, helping to achieve their climate strategy
With the proliferation of new climate change commitments made by governments and co...
Controlling inflation is a key pillar to calm markets
Central banks are focussed on bringing down inflation
The Reserve Bank of New Zealand amongst the earliest to hike rates and now others are moving rapidly
Sharp interest rate rises are now largely baked into financial markets
Lowering inflation is the best outcome for businesses and ultimately households
We think expectations of a cash rate of 4.6% by May 2023, is excessive although markets will continue to monitor inflation ...
The end of the “Great Moderation”?
Most economists expect historically high inflation to moderate over the next year, but the near-term outlook is uncertain.
Over the long term, changing structural inflation forces may create even greater uncertainty for investors.
The possible end of the great moderation – the period of relatively benign economic cycles - that has prevailed for most of the past 40 years - may see fixed income investors seek greater compensat...
Harbour Outlook: Cycling at warp speed … recession priced in?
Key points
The MSCI All Country World (global shares) Index fell -0.2% over the month in both NZD-hedged and -unhedged terms.
The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down -4.8%, whilst the Australian equity market (S&P ASX 200) fell -2.6% in AUD terms (-1.9% in NZD terms).
Bond yields tracked downwards through May with a partial re-tracing through the last week of the month. As a res...
Harbour Navigator: Lukewarm Plan for Global Warming
- The New Zealand Government has announced their emissions reduction plan for de-carbonising the economy through several policy initiatives
- Transport will play a key role in driving change through new light fleet and freight targets, supported by a ‘scrap and replace’ scheme
- Energy and agriculture sectors will receive significant funding to help de-carbonise and accelerate research into clean technology solutions
- Regulation and Government incentives will provide both positive and negative financial impacts to companie
Harbour Outlook: Tricky turbulent transition
Key points
The MSCI All Country World (global shares) Index fell -7.0% in NZD-hedged terms in April and, with the New Zealand dollar weakening in the past month, the same Index fell -1.4% in unhedged terms.
The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down -1.9%, whilst the Australian equity market (S&P ASX 200) fell -0.9% in AUD terms (+0.5% in NZD terms).
Bond markets continued to come ...
Time to get real - Listed Real Estate, Rate Hikes and Real Returns
- While listed real estate returns may struggle early in central bank interest rate cycles, historically they have performed better as rate hike cycles mature
- REITs have the potential to offset the impact of higher borrowing costs with higher rents over time
- Investing in REITs is not just about generating real income but also long-term, low volatility capital growth
Harbour Outlook: Stagflation risk, real rates & the land(s) down under
- The MSCI All Country World (global shares) Index rose +2.4% in NZD hedged terms in March and, with the New Zealand dollar strengthening in the past month, the same Index fell -0.6% in NZD terms over the month.
- The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 1.1%, whilst the Australian equity market (S&P ASX 200) rose 6.9% in AUD terms and 7.6% in NZD terms.
- Prompted by shifts towards faster rate hikes from offshore central banks and combined with large mortgage-based hedging flows domestically, market interest rates pushed relentlessly higher through the month, with the New Zealand 10-year Government bond yield ending at 3.2%, an increase of 0.5%.
- Potential easing of the conflict in Europe and a clearer path for US Federal Reserve (Fed) interest rate increases saw equity markets recover through March; while production disruption and Russian sanction constraints contributed to an increase in commodity prices with the price of oil increasing another 7% over the month.
Central banks forced to prioritise inflation over growth
Inflation has risen sharply over the past year. What was initially expected to be transitory has become more widespread and persistent, with signs that price rises are being seen as the new norm.
The Russian invasion of Ukraine is adding to already-high global inflation, while also reducing growth prospects.
With inflation dangerously high, central banks (including the Reserve Bank of New Zealand (RBNZ)) are backed into a corn...
