Market & Portfolio Update - May 2023
May saw global share markets deliver a flat return in local currency terms. Worries over the US debt ceiling made headlines; however, a deal between Republicans and Democrats was reached shortly after month-end, and the crisis was averted.
California-based Fisher Investments led the way, supported by their holdings in a number of technology companies. For example, Nvidia jumped 40% after it raised its outlook above expectations thanks to demand for its AI processor chips. At the time of writing, the stock is up over 160% year to date.
In May, we saw the release of the latest NZ budget, with the release pointing toward increased debt issuance, more spending and a significant cash deficit. Global credit rating agency S&P reiterated their previous warning around NZ debt levels, indicating a credit rating downgrade may be in the works if we stay on this same path with respect to government spending.
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The global share market (represented by the MSCI World Gross Index) returned +1.4% in New Zealand dollar terms, despite many listed software companies facing pressure during the month. Investors are questioning how durable some software companies’ competitive advantages really are, as developments in artificial intelligence (AI) may make it easier to replicate their software. Nonetheless, the broader market tone was more resilient as investors continued to favour industries related to AI infrastructure.
Lifetime Book Club: The Almanack of Naval Ravikant by Eric Jorgenson
In a world that often confuses busyness with success and income with wealth, this book offers a different perspective. One that suggests true wealth is freedom. Freedom over your time. Freedom over your decisions. Freedom to live life on your own terms.