Insights

For 30 years, policy factors like falling corporate tax and interest rates were seen to have generated a bulk of corporate profits, reducing stock-selection opportunities. There are indications that this policy-driven earnings era is coming to an end, heralding darker days for the average firm. However, firms skilled at raising profitability in core business areas could benefit, thus creating new opportunities for skilled stock pickers.

We believe that the Official Cash Rate’s projected path to the 3% level, which we consider likely to be the lowest point of the Reserve Bank of New Zealand’s current easing cycle, may be more noteworthy than the interest rate cut in February.

February was a challenging month for New Zealand’s stock market following a weak corporate earnings season. Looking ahead, however, we remain confident about the market in 2025 and after. A key reason for this is the interest rate cutting cycle by the Reserve Bank of New Zealand that is currently underway.

We assess the factors behind the recent surge in Japan's long-term yields and its implications for equities; we also analyse the robustness of corporate earnings amid the structural economic changes taking place.

In March 2024, after the Nikkei Index reached an all-time high, we offered five structural reasons why Japan's economic resurgence was more than just a flash in the pan. Almost a year later, those five reasons remain just as relevant for investors considering an allocation to Japan.

Our focus on franchise and management quality allows us to look forward with optimism, whilst balance sheet quality and valuation discipline provide comfort for when the fireworks start for all the wrong reasons.

The focus in the media and amongst most analysts has centred around tariffs and a possible fiscal tightening in the USA – although we would argue that on a cash basis the latter is already happening quite aggressively. In some cases, it seems that even where the government has notionally incurred expenses, it does not seem to have distributed funds to its suppliers.

For January, we reduced our overweight position in growth while maintaining our overweight position in defensives. With respect to growth assets, Trump's second presidency ushers in a new era of US exceptionalism which has implications on the rest of the global markets.

In January, the Bank of Japan raised short-term interest rates to 0.5%, the highest level seen in 17 years, as it continued with its slow but steady withdrawal of accommodation. As the Japanese economy shows ongoing signals of recovery from decades of stagnation, we assess the impact the return of interest rates could have on the country’s households, firms and government.

The Indian healthcare sector is projected to become one of the top global markets by 2030, driven by demographic changes, rising incomes, and expanding insurance coverage, presenting long-term investment opportunities.