InvestNow News 16th August – Pathfinder – July 2019 Update
MARKET COMMENTARY
NZ’s domestic outlook is far from weak, however the RBNZ worries about the global picture. Governor Adrian Orr said the RBNZ is ready to do “whatever it takes” – echoing the famous words of ECB president Mario Draghi in the midst of the European Debt Crisis. Be prepared for an uncharted future – negative interest rates in NZ have not been ruled out.
Trade wars: August has seen the US-China trade dispute deteriorate significantly. The US declared negotiations were progressing too slowly and announced new tariffs on the remaining $300 billion of imports from China without tariffs.
Retaliation: China didn’t stand still – the People’s Bank of China let the Chinese Renminbi depreciate below the key 7-per-dollar level for the first time since 2008. Chinese firms also suspended buying US agricultural products. The result – a sharp increase in equity market volatility and investor uncertainty.
Market volatility: Tensions have escalated, and there are growing risks around the potential impact on global economic growth. With no sign of a solution, volatility is likely to remain elevated. We have little exposure to China through our global funds and are also underweight emerging markets.