‘New Zealand has one of the strongest growth rates in the developed world’, Harbour Asset Management | Video
World Finance speaks to Andrew Bascand and Jody Kaye of Harbour Asset Management to discuss what investment opportunities New Zealand offers
New Zealand is known for its idyllic landscapes, but an established investment community is also adding to the country’s curb appeal. World Finance speaks to Andrew Bascand and Jody Kaye of Harbour Asset Management to discuss what opportunities New Zealand offers to investors.
World Finance: Andrew, how have a strong GDP as well as a rising interest rate helped to make New Zealand such an in-demand market for investors?
Andrew Bascand: At over 3.5 percent, New Zealand has one of the strongest growth rates in the developed world, and that growth has translated through to strong fiscal surpluses for the government, and great healthy profits. So if you are a global investor looking into New Zealand, those fundamentals look terrific, they look really strong. And higher interest rates in New Zealand are actually a sign of a balanced economy. Not a stressed economy, or worries about inflation. So you put that all together, we’ve got a very vibrant capital market, with new listings, with strong, real interest rates, and that looks pretty attractive from a global investment perspective.
[W]e’ve got a very vibrant capital market, with new listings, with strong, real interest rates, and that looks pretty attractive from a global investment perspective
World Finance: Jody, can you tell me what some of the improvements that can be made to regulating the corporate environment are?
Jody Kaye: The current regulation of the New Zealand financial services industry has been at probably somewhat of a lower threshold than developed country, global investors would experience within their own jurisdictions. So there is scope for improvement, so New Zealand has been working very hard at rectifying this over the past five years. So, encouragingly, within the Financial Markets Conduct Act 2013, there is a raft of measures that have been introduced to add more rigour to the regulation of New Zealand, and one example of this is now New Zealand managers are required to be licensed. So the managing licensing is being brought up to global best practice standards and focuses on five key things, being: fit and proper in terms of the directors and senior staff, the capability of the investment team, the organisation infrastructure that delivers the services, the financial strength of the company, and the compliance and governance framework that the companies operate within. So the Financial Markets Conduct Act is changing the landscape by mapping out a series of regulatory improvements, all designed to promote confidence when investing, and to New Zealand.
World Finance: So do you both find that there’s a growing contingent of investors turing to New Zealand?
Andrew Bascand: Since the 1980s, when New Zealand had structural market reforms, global investors have been really interested in the New Zealand economy. We’re now three decades later, and we’re still seeing investors attracted by strong GDP growth, by a lack of corruption, by improving standards in terms of investment practices, and by New Zealand’s place in the Pacific Rim. All those things add up to an attractive environment for global investors.
Jody Kaye: Supporting Andrew’s comments that New Zealand does have very strong macro-economic fundamentals which provide global investors with quite a compelling proposition. So we’re visiting Europe once again this year to meet with global investors, who are aware of the sustainable growth within the New Zealand economy and are looking for ways to actually access these opportunities.
World Finance: Now Andrew, many companies of course claim to offer best practices when it comes to ethical investing. What really sets your company apart?
Andrew Bascand: Harbour was a very early signatory to the United Nations Principles for Responsible Investment, and in addition to that, in New Zealand every year, we conduct an annual corporate behaviours survey, and that survey covers the environmental, social, and governance matters related to investing. And it gives us an opportunity to engage with the companies we may invest in, and talk with them about ethical concerns. That engagement, I think, it part of being a responsible fiduciary for your clients’ money.
Harbour was a very early signatory to the United Nations Principles for Responsible Investment
World Finance: Andrew, now let’s talk about the Australasian Equity Fund. Can you tell me, what’s driving its success?
Andrew Bascand: I think at the first instances it’s the sectors that we’re really attracted to. We’re principally a growth investor, and when you look at the world today, let alone New Zealand, there are some significant medium and longer term forces at work. You know that demographics are changing and that it’s a very enduring thing. Not only do we have an ageing population, but we have growing rates of obesity, and a changing nature of where that growth is coming from, it used to be developed world and now it’s Asia principally. In addition, advancing technology, biotech, they’re really important growth areas for investors. On top of that we’ve got some mega-trends in travel, the globalisation of travel, and we’ve got the rise in the consumer in Asia. You package all that together, with still probably enduring low interest rates, and investors can capture those themes in portfolios which I think will run for some time. If you set aside the sectors where we don’t have those things going on, utilities, property, and traditional consumer stocks, I think you’ve got an opportunity to really drive portfolio performance by focusing on where the growth is likely to continue to come from, relative to where growth is going to be just a harder structural thing to occur.
World Finance: Very fascinating indeed, thank you so much for the insight Andrew and Jody.
Jody Kaye: Thank you.
Andrew Bascand: Thanks for the opportunity today.