9th Dec 2019

Key points

• Equity markets rallied on the back of positive trade developments, better than expected earnings and improved activity indicators.
• The New Zealand market performed strongly on the back of a strong AGM and reporting season. Notably, the more defensive stocks which have outperformed in 2019 delivered weaker returns due to an increase in interest rate expectations.
• Lead economic indicators have improved, but it is too early to call a turning point.
• RBNZ left interest rates unchanged, despite a 75% chance of a cut being priced in.

Key developments

Investors’ appetite for risk assets further increased in November, as improving activity indicators, a better than expected earnings season and positive news flow on a US – China trade deal gave investors reason to feel optimistic.  The MSCI World index returned 3.2% (in local currency) over the month, driven by the high growth IT and health sectors, while defensive utilities and real estate sectors retraced as global bond yields drifted higher.

Since first coming to Japan in 2007, I’ve seen a lot of changes. Each trip entails new experiences. While I missed the devastating Typhoon Hagibis, a major storm meant an eight-hour trip from the airport to my hotel. I also witnessed queues of several hundred for the gents and only a handful for the ladies. The bathroom facilities at Yokohama stadium were no match for the renal efficiencies of the Bok, Kiwi, Pom and Welsh rugby supporters. This was also my first experience of a live game where the sport wasn’t the main topic of discussion (at least amongst the male audience).

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