| Welcome to the November issue of the Select Wealth Management Dashboard Newsletter. I had to pinch myself when I realised that there is just over a month left until Christmas. Where has the year gone?! As a football fan, my Christmas came early with a fantastic weekend of football at the Stadium. First a proud All Whites performance, and then an emphatic Phoenix victory.
Given that election-day was nearly 2 months ago, it seems odd to still be talking about politics. But this is the first time I have written since the new government has been formed. The result is nothing short of miraculous when you consider that as little as 2 months prior to the election, the Labour Party was polling at a meagre 24%. Two months and a new leader later, and they are suddenly in government – an incredible turn-around. It's very early days, and ultimately time will tell if this is a flash in the pan, or if Jacinda and her team have what it takes to lead a strong government. In the meantime, you have to congratulate Labour on a most unlikely victory. Along with a change in Prime Minister, New Zealand has also had a change of Governor of the Reserve Bank. Graeme Wheeler has stepped down and been replaced by acting Governor Grant Spencer. This new look group of leaders may result in a new look mandate for the Reserve Bank. In the past, the Reserve Bank has been tasked with 1 clear mandate – to keep inflation in a range of 1% to 3%. The new government now want to change this to include a target for unemployment, and a target for exchange rates. These are ambitious objectives, and I struggle to see how this can be achieved. Until recently, there was consensus that interest rates in New Zealand were likely to stay low for a prolonged period, but any potential changes to the mandate creates uncertainty and makes it more difficult to forecast future movements. For now, the Official Cash Rate was left unchanged at 1.75% at the most recent review on 9 November, but watch this space for potentially interesting developments. Another major policy initiative for the new government that affects many Kiwis is the intent to restrict foreigners (non-residents and non-citizens) from owning residential property. The government hopes to pass this legislation by early 2018. Throw in the LVR restrictions, and the possible capital gains tax, and it should be no surprise that the slow-down in house price increases continues with the average house price only increasing by a meagre $420 (or 0.01%) over the past 30 days. The brakes have definitely been put on house price appreciation, and the new government will see this as a victory. In contrast, CPI (or broader inflation) has crept up to 1.9% per annum – slightly higher than forecast. Further abroad, the Federal Reserve Bank has also had a new Governor appointed. Janet Yellen steps down in February next year, and she will be replaced by Jerome Powell (appointed by President Trump). The Fed left their official cash rate unchanged at 1.25% on 30 November, but signalled that they will increase this at their last meeting of the year in December. This upward trend in US interest rates along with some political uncertainty in New Zealand has resulted in a sharp movement in the exchange rate between the NZ$ and US$. The NZ$ fell about 5% against the US$ over the past month. It also fell by 4% against the British Pound, and 2% against the AUS$. These are all great outcomes for New Zealand investors with investments domiciled in these currencies. Most share markets have continued to march on over the past month, the exceptions being the New Zealand and London stock exchanges that fell by about 1%. The Japanese Nikkei had a stellar month gaining 6%. The momentum continues based on a theme of "synchronised global growth", and more traction with President Trump's tax reform (which will see corporate tax in America nearly halved to 20%!) Here are the numbers: |
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In terms of your Select Wealth Management investment, performance over the past month has been strong – in line with the markets. In particular, portfolios with exposure to foreign currency have benefited by the sharp fall in the NZ$. There have been a few new investments approved for the menu over the past 30 days. These include 4 bonds and a new fund. You can see details of these here: 1) Wellington International Airport 12/05/2023 WIA030 2) GMB Bond Issuer 31/05/2024 GMB040 3) Kiwi Property Group 07/09/2023 KPG020 4) Sky City Group 28/09/2022 SKC040 5) antipodespartners.com/wp-content/uploads/Global-Monthly.pdf Finally, our current Giving Back campaign for the Wellington Free Ambulance is drawing to a close. Thanks to all your fantastic support, I am pleased to confirm that we will reach our target of donating $2,500 for this great cause. You can follow our progress at www.mifinancialplanning.co.nz/giving-back.html . We are still considering our options for a new campaign for the first 6 months of 2018, so if you have any suggestions that you would like to discuss with us, please feel free to make contact. I hope to see you at our Christmas drinks on the 13th of December, but in the meantime keep well and chat soon. Warm regards Dave and the team at Isaacs Financial Planning dave@mifinancialplanning.co.nz |
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This newsletter is intended for general distribution and does not constitute personal financial advice. Copy of my primary disclosure statement and secondary disclosure statement.