Harbour Navigator: Global Divergence
After years of most of the world sharing the common sudden stop and recovery associated with COVID-19, there are now significant differences in economic prospects across countries. These differences have led to some central banks lifting policy rates (à la Bank of Japan) while others, such as the European Central Bank, US Federal Reserve and the Bank of England have hinted at cuts. The Swiss National Bank has gone one step fur...
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Harbour Navigator: Hot sheds - Growth in data centre demand and the real estate investment opportunity.
Global demand for data centre space is set to increase significantly and the compute density of GenAI significantly increases the electricity required to keep computer capacity cool.
Real estate is a key determinant of a successful data centre, with data centres having specific locational requirements making land with access to electricity a crucial enabler for data centres.
In our opinion, the DC megatrend tail wind may remai...
Harbour Investment Horizon: Long Term Investment Return Assumptions
Summary
Investors anchor long-term strategic asset allocation by considering a range of assumptions for key asset classes
Harbour’s long-term return assumptions are one of many inputs into considering strategic asset allocation across multi asset portfolios, such as conservative, balanced and growth mandates
Our return assumptions are market valuation aware and, as a result, our most recent forecast is for a narrowing in th...
Harbour Investment Outlook: Turning Point for Earnings?
Key market movements
The MSCI All Country World Index (ACWI) rounded off the first quarter with a third positive monthly return at 5.1% in New Zealand dollar-unhedged (3.5% in NZD-hedged) terms for the month. From a sector perspective performance was broadly positive, with energy the outstanding performer at 7.6%, followed by materials (5.5%) and utilities (4.8%).
Locally, market returns for the month were also strong with t...
Harbour Navigator: Bank share price surge- sprinting ahead?
The touchstone for Australasian banking sector trends is the Commonwealth Bank of Australia (CBA), and CBA’s recent share price surging towards $120 has provided another catalyst for many to ask about the outlook for bank share price performance. For equity analysts, we think about the price to earnings ratio as an indicator of valuation; CBA’s has now topped 21 times expected earnings, a mark that most analysts say make the b...
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Harbour Navigator: Bank competition - Innovation trumps more capital
The Commerce Commission’s draft market study into New Zealand’s personal banking services made 17 recommendations which, if implemented, would likely have some impact on bank competition.
But they likely entail compromises to financial stability
In Australia, Macquarie Bank’s highly digitized banking solution offering has reinvigorated competition in the deposit and mortgage markets.
The learnings from this Australian experien...
Harbour Navigator: Is bank lending too cautious?
You might think that our title is provocative, and a fringe view. But this was a consensus question from investors and analysts after our research visit to Australia in the week before Easter.
Regulation has encouraged bank lending to become more conservative, more housing focused and increasingly outsourced through broker channels.
Regulators seem to want even less bank risk and more financial stress tests.
As a result...
Harbour Navigator: Interest rate pain intensifies
Lenders have experienced only modest defaults on loan portfolios, underpinning an argument that monetary policy is yet to really bite.
However, we note arrears and KiwiSaver hardship withdrawals are rising before loan losses are felt, demonstrating consumer stress, and portending further spending reductions.
Unemployment is typically the final penny to drop, and indicators of the labour market suggest consumption will contin...
Harbour Navigator: Climate Clarity - Developments in climate and sustainability reporting
Many New Zealand listed companies will be reporting against new climate disclosure regulation for the first time this year.
The U.S. SEC has recently approved new mandatory climate reporting rules, following in the footsteps of New Zealand and other countries.
Globally, sustainability reporting standards have been developed under the newly formed International Sustainability Standards Board, involving the consolidation of ex...
Harbour Outlook: Transition Period for Markets
Key market movements
The MSCI All Country World Index (ACWI) continued its positive run with a 5.4% return in New Zealand dollar-unhedged (4.7% in NZD-hedged) terms for the month. From a sector perspective performance was broadly positive, with utilities the only negative sector at -0.8%. Leading the way was consumer discretionary at 7.8% and information technology at 6.1%.
In contrast local market returns for the month wer...