KiwiSaver and the magic of compounding returns
3 JUL 2020 BY MARTIN HAWES
When KiwiSaver started in 2007, there was a stampede to sign up. There was the $1,000 kickstart dropped into your account and that, along with the contributions from government and employers, had people asking “why wouldn’t you?” There was no sensible answer to that question and so people joined in droves. (There are now over 3,000,000 members)..
Ryman Healthcare: An interview with Gordon MacLeod
26 JUN 2020 BY MATT HENRY
Ryman Healthcare is a New Zealand success story. It is the country’s largest retirement village and aged care operator, and in 2014 it opened its first village in Victoria, Australia, where it continues to expand. Ryman listed on the NZX in 1999, raising NZ$25 million at a market capitalisation of NZ$135m. Since then it has grown to now be valued by the market at NZ$6.5 billion.
Mainfreight: Special People, Special Company
19 JUN 2020 BY ANDY BOWLEY
Mainfreight listed on the NZX on 14 June 1996, at 96c per share. Since then, and after adjusting for a 1 for 10 bonus issue in 2002, its share price has climbed by an average annual compounded rate of +17% before accounting for the added benefit of dividends. It has the second highest (marginally behind Ryman Healthcare) total shareholder return of any stock on the NZX since initial public offering (IPO) that has been listed since 2000. For every NZ$1 invested in its IPO, investors would now have a whopping NZ$149 compared to a little under NZ$10 if they’d put the same NZ$1 into the market index. Read more about the Mainfreight story...
Investing or speculating?
12 JUN 2020 BY MATT HENRY
Overnight we saw the largest drop in equity markets since 13 March. Investors’ pursuit of safety has pushed up the price of defensive assets. The yield on United States 10-year Treasury bonds has tightened from 0.95% to 0.65% over the last week (remember, when bond prices rise, the yield on offer falls).
The changing face of retail
5 JUN 2020 BY GUY HOOPER
Lenin said nothing can happen for decades, and then decades can happen in weeks. Although not quite a decadal shift, there is no doubt that the COVID-19 pandemic has pulled forward the future of retail. Consumer purchasing behaviour has changed, effectively overnight. While many consumer behaviours will revert once the COVID-19 threat eases, we expect that recent changes in the way people shop could prove enduring.
Are negative interest rates on the way?
29 MAY 2020
The concept of “negative interest rates” is one many of us will struggle to comprehend. Will I have to pay the bank to hold my cash? Will the bank pay me to have a mortgage? These two common questions almost seem surreal, however the reality is that not much is likely to change. Negative retail interest rates for both depositors and borrowers are still very uncommon in countries that have negative central bank interest rates.
Accelerating the digital revolution
22 MAY 2020
Lockdown measures around the world have forced many people and businesses to change how they communicate, how they buy and sell goods and services, and how they spend leisure time. While we expect most will largely return to previous ways of living and working once restrictions are lifted, we do expect some lasting change.
Budget 2020 - The Government responds to a global pandemic
15 MAY 2020 BY KEVIN STIRRAT
"Houston we have a problem”, might well have gone through Grant Robertson’s mind as he crafted the government’s 2020 Budget in response to the COVID-19 global pandemic. Like most of the world, New Zealand has been severely impacted as the virus placed extreme pressure on the global economy. Few escape when borders are closed and non-essential businesses are shut-down for several weeks. Because the Budget was drafted at the height of a crisis, it’s unlikely to be perfect.
Trade War 2.0
8 MAY 2020 BY BERNARD DOYLE
Although Covid-19 dominates the headlines, the US Presidential election, due November 3rd, creeps closer. The election looked tight before the Virus Crisis. Now it’s on a knife edge. A tight race and rebounding share market may tempt President Trump to reignite a trade confrontation with China to, amongst other things, emphasise his global heft to voters.
The gang’s all here: “Mr Market”, “Tina” and “FOMO”
1 MAY 2020 BY MATT HENRY
Well, for most of us it’s been a unique month. We’ve been isolated within our bubbles, maybe socialising over Zoom, binge-watching Netflix, home-schooling the kids, or (by the looks of it) desperately craving takeaways. And, if you hadn’t noticed, equity markets had their strongest month in over 33 years.
Contain or eliminate?
24 APRIL 2020 BY KEVIN STIRRAT
A COVID-19 mass vaccination campaign is unlikely for at least a year to eighteen months. But an antibody therapy or experimental vaccine that’s proven safe may be available sooner, and be able to be produced in sufficient quantities to protect high-risk people. Regardless, New Zealand’s goal to eliminate the virus has implications for our economy, with major implications for businesses that rely on demand from sectors such as travel, tourism, education, and migrant labour.
A post-pandemic world
17 APRIL 2020 BY KEVIN STIRRAT
Signs are emerging that the global infection rate from COVID-19 may have peaked. While some countries are further ahead than others in the battle against the pandemic, the overall trend is looking more promising.
Will Tina Play an Encore?
9 APRIL 2020 BY MATT HENRY
The past week has been a good one for equity markets, responding to slowing new COVID-19 cases in hot spots like Italy, Spain, and potentially New York. Here in New Zealand it appears the lockdown is working – fingers are crossed that measures may be eased sooner rather than later.
Living in a bubble
3 APRIL 2020 BY MATT HENRY
It really is quite remarkable how quickly the world can change. Two months ago most New Zealanders were happily enjoying summer. Most of us had never heard the terms coronavirus, social distancing or self-isolation before. Today we’re living in our bubble, hoping it’s only for three more weeks, but nervously suspecting it might be longer. The future is uncertain. If it wasn’t, investing would be easy.
20 MARCH 2020 BY MATT HENRY
For the vast majority of people the current COVID-19 crisis is unprecedented. The human and societal impacts are sobering. Financial market volatility has remained extreme. Investor anxiety at such a time is entirely understandable. And it is human nature to want to seek safety. History firmly underlines that acting on these instincts is detrimental to long-term investment returns.