Market & Portfolio Update - August 2023
Global share markets gave back some of their gains in August, declining 1.8% in local currency terms, but with the NZ dollar weakening against most major currencies, returns were positive for NZ-based investors.
During the month, investors assessed weaker economic data coming out of China. China’s latest industrial production, retail sales, and fixed asset investment reports all came in below expectations, prompting a surprise rate cut from the People’s Bank of China. Policymakers have been attempting to spur growth and spending in the world’s second-largest economy throughout the year.
The developments in China contributed to the weakening New Zealand dollar over recent months. As noted above, a weakening New Zealand dollar supports the value of overseas investments for New Zealand-based investors. It also helps support the New Zealand economy. When the New Zealand dollar falls, it makes the prices of our exports more competitive on the global stage.
The Reserve Bank of New Zealand (RBNZ) left New Zealand’s Official Cash Rate (OCR) unchanged at 5.5% at its meeting in August. The RBNZ’s economic growth and inflation forecasts were little changed, and it continues to expect OCR cuts in the second half of 2024.
Lifetime Book Club: Mind Over Money by Claudia Hammond
Welcome to the Lifetime Book Club - this month, we’re exploring the fascinating connection between money and psychology with Mind Over Money by Claudia Hammond. If you’ve ever wondered why you make certain financial decisions - or found yourself repeating money habits you wish you could change - this book is an eye-opener.
The Art of Weathering Market Turbulence
As seasoned investors know, share prices can move up and down a lot. It’s what investment professionals refer to as ‘volatility’. Sometimes price volatility may be relatively low, but over the last 3-4 weeks volatility has spiked and global shares, especially those in the US, have fallen rather sharply.