Market & Portfolio Update - October 2022
October provided a much needed reprieve for global share markets, rising 7.2% (in local currency terms). The month saw a number of companies report their latest earnings numbers, which at a broad level, were better than expected.
The NZ share market ended the month up 2.5%. Performance of the listed travel-related companies was particularly strong, with Tourism Holdings and Auckland International Airport up 32% and 7%, respectively. During the month, both companies upgraded their profit guidance due to increased certainty on revenues and tourism numbers.
The latest data shows New Zealand’s annual inflation rate to the end of September was 7.2%. This was a slight moderation from 7.3% in June but remains well above the RBNZ’s 1-3% target. Market expectations are now for the RBNZ to progressively raise the OCR to around 5% by May next year (currently 3.5%).
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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.