On Point

The last week of January will be a busy one, with central banks in focus as the Federal Reserve in the US and the European Central Bank are set to announce their latest monetary policy decisions. It'll be a holiday-shortened week across the Tasman with markets closed on Monday, while Wednesday's December inflation report might pave the way for a February RBA rate cut. A big week of international earnings releases also looms, with four of the Magnificent 7 set to report!

The Federal Reserve in the US meets next week, and there’s a good chance they do nothing. That would see the upper bound of the Fed Funds Rate, the US version of our Official Cash Rate (OCR), remain at 4.50 per cent. With our OCR at 4.25 per cent, the unusual situation of us having a lower policy rate than the US is likely to persist a bit longer. In fact, if financial markets are correct this gap is likely to widen significantly. How might this impact the NZ dollar, and what could turn things around?

There were plenty of lessons for investors in 2024, as is the case every time we close the book on a calendar year. The one that stood out for me was the need to ensure your investments were globally diversified. If you didn’t do that and instead hunkered down in New Zealand assets, you didn’t enjoy the success you could’ve. Let's delve into some of the 2024 returns, from here and abroad, and highlight why it was so important to have your wealth spread far and wide.

The shares or property debate remains alive and well, especially in housing-obsessed New Zealand. Some property people will never touch shares. Likewise, some share investors see property as far too much work for a relatively modest reward. Shares and property have many fundamental value drivers in common, but they are also very different. Let's crunch the numbers to see which stacks up best, and compare the pros and cons of each.

There’s a lot of excitement out there amongst borrowers, particularly those with a mortgage renewal coming up. The message boards are full of people speculating on how low rates will go, and strategising how to play it for maximum advantage. While the optimism is justified, some caution applies as well. If you’re in the midst of that refixing decision, there are a couple of important points to be aware of.

As a new year begins, there are a raft of questions over what to expect from financial markets in 2025. Will the New Zealand economy recover from recession, how much further will interest rates fall, and what will that mean for the housing market? Investors are also pondering the outlook for the ailing local sharemarket, while speculating if the might S&P 500 can keep rising or if it's due for a fall. We'll try and answer some of those questions, with a few market predictions for 2025.

There’s a lot of good investment wisdom out there. Ensure you’re well-diversified, stick to quality assets, don’t overtrade and keep fees to a minimum are but a few examples. One of the simplest but most important, especially it comes to shares (or any growth asset, for that matter) is to maintain a long-term view. That can be difficult, especially during periods of uncertainty (which come frequently). However, it really is non-negotiable. If you don’t feel you can stick it out for at least five (if not ten) years, the sharemarket probably isn’t the right place for your money

Talk of a capital gains tax (or a CGT) found its way back into the headlines during 2024. It’s hard to see a National-led government making any such changes to our tax system, but it could be back on the agenda when we inevitably see a change of government. Do we need a CGT here in New Zealand, and what are the drawbacks of implementing such a radical change?

Kiwibank has been in the news again, with the Government announcing it will consider tapping KiwiSaver funds and other large investors for another $500 million to inject into the business. Is this move a stepping stone on the path to a full-blown IPO and sharemarket listing, and would this be a good thing for the company, taxpayers and the market?

There's plenty to monitor across the world this week. Flash PMIs for December will be out early in the week, while another highlight will be the PCE inflation report in the US on Friday. There are three major central banks meetings taking place, with the Federal Reserve in the US expected to cut interest rates again on Thursday morning and decisions from the Bank of Japan and Bank of England later than day. Here in New Zealand, a highlight will be the September quarter GDP report, while we'll also get update on dairy prices, business confidence and the housing market. The Half Year Economic and Fiscal Update (HYEFU) is also out on Tuesday, and is likely to reflect a challenging position and a further increase in the Government’s borrowing requirements.