International equity markets have experienced a challenging past few sessions with global indices falling as fears the coronavirus outbreak will tighten supply chains and weigh on global growth and international trade.
Given the developments in global markets, ANZ Investments would like to provide an update on the situation and the actions we are taking.
Market reaction
The market decline was particularly sharp in the final week of February, with the major indices in the US and Europe entering into ‘correction,’ defined as a 10% fall from a recent high. In New Zealand, share markets fared a little better, with the NZX 50 falling less than 7% in the final week of February.
Despite the decline in equity markets, as at 29 February, most indices we track are still comfortably higher over the past 12 months. In addition, the ANZ diversified portfolios hold high- quality bonds, which can act as protection in times of market uncertainty. Over the final week of February prices of high-quality bonds rose.
In response to February’s decline, central banks appear ready to offset any market concerns through stimulus and monetary policy. We have now seen the RBA cut by 25bp and the US Fed cut by 50bp in response. This rhetoric has seen equity markets regain some losses over the past 48 hours.
What is ANZ Investments doing?
In February we sold some international equities and continue to actively look to take advantage of opportunities as they may arise.
As the situation unfolds, some areas we are focusing on are; the effectiveness of Chinese authorities to manage the spread of the virus; the rate of increase in cases outside of China, and the impact the virus has on global supply chains.
Elsewhere, the growing number of cases in Italy, Iran, South Korea and Japan are also of note to us.
What it means for you
Despite the decline in equity markets, it is important to remember that volatility is all part of investing and doesn’t have to be a cause for concern. We believe, as an investor, it is important to focus on your long-term goals and not make any sudden changes to your portfolio. Moreover, periods of uncertainty can serve as good buying opportunities should the right valuations and fundamentals arise.
As an active manager, ANZ Investments have the capability, and more importantly, the right people in place to navigate these challenging times. As an endorsement to this, ANZ Investments recently received Morningstar’s New Zealand Fund Manager of the year 2020 in the below categories:
Overall New Zealand Fund Manager of the Year
New Zealand Fund Manager of the Year: KiwiSaver category
New Zealand Fund Manager of the Year: Global Equities category for our OneAnswer International Share Fund
If you have any questions, please don’t hesitate to contact your Private Banker. And as the situation unfolds, we will keep you informed of any further developments.
Disclaimer: This information is issued by ANZ Bank New Zealand Limited (ANZ). The information is current as at 3 March 2020 and is subject to change. The information is general in nature and does not take into account your personal objectives, needs and financial circumstances. You should consider the appropriateness of the information, having regard to your personal objectives, needs and financial circumstances. This information is not to be construed as personal advice, and should not be relied upon as a substitute for professional advice. Although all the information in this document is obtained in good faith from sources believed to be reliable, no representation of warranty, express or implied is made as to its accuracy or completeness. To the extent permitted by law ANZ does not accept any responsibility or liability arising from your use of this information. Past performance is not indicative of future performance. The actual performance any given investor realises will depend on many things, is not guaranteed and may be negative as well as positive.