InvestNow News 13th Sep – Pathfinder – Monthly Update – August 2019
Market volatility returned in August, triggered by US/ China trade war tensions with new tariffs and import restrictions. Geopolitical tensions globally also fueled investor nervousness – especially tensions in Hong Kong and the ongoing (and increasingly chaotic) Brexit saga.
September is calmer with a number of positive developments: 1) US and China agreed to meet in October for another round of trade negotiations, 2) Hong Kong is set to withdraw the extradition bill that sparked violent protests, 3) political rivals in Italy agreed to form a coalition government and 4) the UK Parliament voted to prevent a no-deal Brexit.? These are all positives for stock market sentiment.
But volatility will remain elevated given there is no solution in sight for the trade & technology tensions between the US& China. Larry Kudlow (an economic adviser to President Trump), downplayed expectations for a trade war resolution, saying “the stakes are so high, we have to get it right, and if that takes a decade, so be it”. China is able to play a ‘long game’ given they are not under the same democratic political pressure as the Trump administration.
NZ was a stand out during the August volatility – behaving like a global safe-haven and outperforming major markets. The NZX 50 surged to a new all time high, breaking the 11,000 index level. Part of NZ’s allure for local and offshore investors is our defensive and high dividend yield stocks, with power and infrastructure companies rallying particularly strongly.