How should investors strategies change?

By | Insights
On what seems like a daily basis, investors are being bombarded by sanctions, restrictions, and blockages that would have been unthinkable even six months ago. In this environment it is...
On what seems like a daily basis, investors are being bombarded by sanctions, restrictions, and blockages that would have been unthinkable even six months ago. In this environment it is tempting to follow news without forming a coherent backdrop. However, from an investing point of view this will likely prove to be short-sighted. The attempted separation between China and the rest of the developed world is getting deeper and it is unlikely to be fully bridged in the near term. This will apply to all aspects of life, from politics & military affairs to trade, technology, immigration to capital. While... Read more

Markets remain volatile in the run up to September

By | Insights
Markets are nervously trading around steady news flow of infection rates, Trump tweets and political posturing. The perceived disconnect between terrible economic and healthcare outcomes, and market valuations, continue to...
Markets are nervously trading around steady news flow of infection rates, Trump tweets and political posturing. The perceived disconnect between terrible economic and healthcare outcomes, and market valuations, continue to dominate the headlines. As the US elections draw nearer, the inevitable paralysis is setting in, with a possibility that the next financial stimulus could be delayed. This is not even to mention Hong Kong or the absolute certainty that China will feature prominently in the US elections, from both sides of the political spectrum. With all that is going on, how can markets ignore rising infection rates and likelihood of... Read more

Covid-19 – What happens when oil futures go negative?

By | Insights
Volatility across the different asset classes in financial markets has been remarkably stable in the last couple of weeks when we consider the amount of ‘unknowns’ and economic risks in...
Volatility across the different asset classes in financial markets has been remarkably stable in the last couple of weeks when we consider the amount of ‘unknowns’ and economic risks in global markets from COVID-19. However, this low volatility environment has masked a significant move lower in commodity prices, and notably oil, with Brent crude back below US $26.00 a barrel, a ~62% drop in price year to date. Many sources of Oversupply Furthermore, there has been an almost unbelievable fall in the US West Texas (WTI) oil price overnight, with the soon-to-mature futures contract trading to as low as -$40... Read more

Ten Year Government bonds, Investment or Insurance?

By | Insights
The last couple of weeks has been something of a rollercoaster ride for investors, with volatility spiking as the world and financial markets try to come to grips with COVID-19,...
The last couple of weeks has been something of a rollercoaster ride for investors, with volatility spiking as the world and financial markets try to come to grips with COVID-19, and both the human and economic implications. Unsurprisingly, we have seen a co-ordinated global central bank response. In simple terms, the US, Canada and Australia have all come out and lowered interest rates, with it widely expected that the United Kingdom and New Zealand will follow suit. What has been somewhat lost in the ensuing chaos, is the yield or return of a New Zealand ten- year government bond is... Read more

Nature is no match for liquidity

By | Insights
While it is too early to predict how deadly the Coronavirus might become, the explosion of new cases and its relatively high death rates (~2%-3% vs usual influenza of less...
While it is too early to predict how deadly the Coronavirus might become, the explosion of new cases and its relatively high death rates (~2%-3% vs usual influenza of less than 0.1%) are unnerving the markets. Also, unlike SARS, China is today far more important at both the forefront of global supply chains and consumption, and has a far greater impact on the global economy. The rush for safety in financial markets and erosion in growth expectations is already flattening interest rate curves, reinforcing US dollar strength (as a safe-haven currency) and sapping global sentiment. Indeed, if it becomes evident... Read more

Can someone please explain variable rate home loans in NZ

By | Insights
In the wake of the Royal Commission into the banks in Australia and the ongoing saga with the ANZ David Hisco dismissal in New Zealand, it has been nothing short...
In the wake of the Royal Commission into the banks in Australia and the ongoing saga with the ANZ David Hisco dismissal in New Zealand, it has been nothing short of ‘open season’ on the domestic banks. Recent commentary has now turned its focus to topics such as the level of interest rates charged on credit cards. Kiwibank has front footed this recent issue to some degree, dropping its zero cash interest rate on their credit cards to 13.95% per annum from 22.95% and its gold purchase interest rate dropping to 13.95% per annum from 17.90%. We could argue whether... Read more

Don’t rely on the current government for growth

By | Insights
If you believe the current economic commentary in New Zealand; then the general consensus is that we are in the midst of an economy in a slowdown phase. The ANZ...
If you believe the current economic commentary in New Zealand; then the general consensus is that we are in the midst of an economy in a slowdown phase. The ANZ Business Outlook survey highlighted that residential construction intentions had plummeted (-27.3% drop). A fall in residential investment of that magnitude is suggesting the potential to knock a full percent off GDP growth. When looking offshore, governments have been prepared to commit to large quantities of fiscal stimulus in an attempt to stimulate growth and activity, quantitative easing or legislated growth for want of a better term. The theory being, government... Read more

Continuing to lower interest rates is a policy misstep

By | Insights
At the end of March, the Reserve Bank of New Zealand released their latest statement to the market expressing their view that ‘the more likely direction of our next official...
At the end of March, the Reserve Bank of New Zealand released their latest statement to the market expressing their view that ‘the more likely direction of our next official cash rate move is down.’ The market subsequently priced in two interest rate cuts from here and the major banks have since lowered mortgage rates. Whilst households may have breathed a sigh of relief as the cost of servicing debt goes lower, retirees and income dependent investors likely preferred to look the other way. The bigger question here is, does the state of the underlying New Zealand economy really warrant... Read more

The value of bonds in an equity market downturn

By | Insights
When equity markets are buoyant and stock market indices are seemingly reaching new market highs on a daily basis, it’s easy to question why people should advocate investing in bonds....
When equity markets are buoyant and stock market indices are seemingly reaching new market highs on a daily basis, it’s easy to question why people should advocate investing in bonds. After all, in the current interest rate environment, it’s difficult to find returns materially above four percent, and in a lot of cases, lower still. However, the last month is hopefully a timely reminder as to why we look at investing from an overall portfolio perspective, which includes multiple asset classes (equities, bonds, property and cash). The NZX50 returned -6.15% for the month of October 2018, which is the eighth... Read more

The Independent Financial Adviser.

By | Insights
When you’re unwell, you visit your doctor. You meet with a lawyer if you have a legal issue and when you need to borrow money, you go to your bank....
When you’re unwell, you visit your doctor. You meet with a lawyer if you have a legal issue and when you need to borrow money, you go to your bank. So when you need financial advice, you should seek it from an independent financial adviser. A financial adviser is a professional who provides financial guidance to clients based on their needs and goals. In the NZ context, they typically provide clients with access to various investment products and services, planning or advice related to retirement, mortgages, estate planning, taxes and more.  Financial advisers are required to meet a fiduciary standard... Read more