Market Update to 31 July 2021 - August 2021 - wealthpoint.co.nz - Wealthpoint Town & Country
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Market Update to
31 July 2021
August 2021
wealthpoint.co.nz
Wealthpoint Market Update August 2021
What happened
Investors kept a close eye on the release and Australia rose at the fastest pace in
of economic data in July to assess the nearly 13 years, up 5.4% and 3.8%
ongoing recovery. Although exports and respectively. Likewise, in New Zealand
imports from China increased much faster inflation hit 3.3% in June, close to a 10-
than forecast, in the United States the year high. However, many investors
unemployment rate unexpectedly considered these high inflation reads as
transitory, in particular in the United
increased. The second quarter gross
States.
domestic product (GDP) grew at a rate of
6.5% over the year, nearly 2% lower than
Some concerns about the reopening of
forecasts. This led to a 0.2% drop in the US
economies began to grow over the month
10-year yield over the month, providing
due to a resurgence in COVID-19 cases
positive returns for bond investors.
related to the contagious delta strain.
Bond yields dropped by a similar margin in Nevertheless, global share markets closed
New Zealand over the month, although the month at all-time highs on the back of
the Reserve Bank signalled that it would strong second quarter earnings. The New
cease quantitative easing via the Large- Zealand share market, however, continued
Scale Asset Purchase (LSAP) programme. to underperform with the NZX 50 ending
The RBNZ stated that the downside risks lower over the month.
of deflation and high unemployment had
During the month the National Bureau of
receded. The halt in quantitative easing
Economic Research in the United States
was a surprise to investors, and bond
also announced that the US experienced a
markets are now pricing in a rate hike in
recession for only two months in 2020,
August.
making it the shortest recession in history.
June data issued also revealed that
inflation over the last 12 months in the US
Prepared by Makao Investments on behalf of Wealthpoint Limited.
Wealthpoint Market Update August 2021
Global share markets closed
the month at all-time highs on
the back of strong second
quarter earnings
© Makao Investments Limited, all rights reserved.
Wealthpoint Market Update August 2021
Asset class performance to
31 July 2021
Global
NZ Fixed NZ Australian Global Global
Fixed
Income Shares Shares Shares Property
Income
Month 0.9% 1.3% -0.5% 1.1% 0.7% 3.9%
3 months 0.4% 2.0% -1.1% 5.8% 4.1% 7.4%
One year -2.8% 0.2% 7.4% 28.6% 33.1% 35.1%
One year
Poor Poor Normal Great Great Great
vs. history
Source: Refinitiv Datastream, Makao Investments
Looking back
Returns from offshore share markets sell-off in March 2020.
over the rolling year continue to be
outstanding compared to history, Although fixed income gained as yields
further supported by continued strong dropped over the month, this was not
returns over the last three months. enough to offset the relatively poor
This is not the case for New Zealand performance experienced over the last
shares, however, as the market year. New Zealand fixed income has
continues to be hampered by poor been hit particularly hard, as yields
performance in a few large cap stocks. have risen faster, in part because of
The global listed property market the relatively successful management
outperformed global shares, but only of COVID-19 in the country.
recently exceeded its peak prior to the
© Makao Investments Limited, all rights reserved.
Wealthpoint Market Update August 2021
New Zealand Dollar to
31 July 2021
NZD/USD NZD/EUR NZD/JPY NZD/GBP NZD/AUD
Month 0.0% 0.3% -0.9% -0.6% 1.8%
3 months -3.4% -1.5% -2.8% -3.4% 1.7%
One year 4.5% 4.5% 9.7% -1.6% 2.1%
Source: Refinitiv Datastream, Makao Investments
Although the New Zealand dollar rallied after the announcement by the RBNZ that
quantitative easing would come to an end, the Kiwi ended the month mixed relative to
other developed market currencies. Over the last year the New Zealand dollar has
appreciated against most of these currency pairs in tandem with the recovery in
financial markets and bullish sentiment, however. In contrast, the New Zealand dollar
continued to depreciate against the British pound amid the loosening of pandemic
restrictions in the United Kingdom.
© Makao Investments Limited, all rights reserved.Wealthpoint Market Update August 2021
New Zealand shares
July 2021 performance, in %
Mainfreight (MFT) was a standout performer for the month of July, rallying after an upbeat annual
shareholder meeting. Over the last year Mainfreight has been one of the strongest performers
among the S&P/NZX 10 Index, second only to Fletcher Building (FBU).
Infratil (IFT) lost ground over the month ahead of the completion of the sale of a majority stake in
the windfarm operator, Tilt Renewables. The stock mostly recovered these losses in early August,
however, when the formal announcement was made.
A2 Milk (ATM) retreated from a bounce in its stock price last month, as changes in executive
management were announced. The A2 Milk share price began a relatively consistent decline in
August 2020 in relation to supply chain disruptions in China, and the stock is now down over 70%
from last year.
© Makao Investments Limited, all rights reserved.Wealthpoint Market Update August 2021 Disclaimer The information in this document is provided for general information only and is not intended as advice. Past performance is not necessarily a good indicator of future returns. Data for this document has been sourced from Refinitiv Datastream, however the information contained herein is not guaranteed and does not purport to be comprehensive. © Makao Investments Limited, all rights reserved. wealthpoint.co.nz
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