Harbour Commentary: Stable Government and economic recovery

•         New Zealand equities ended down 1.9% in November, but was one of the stronger performers globally. The NZ market out-performed Australian equities which fell 4.1% in Australian dollars. Global equities ended down 2.7% in US dollars, after rallying 3.7% on the final day of November.

•         Investors remained focussed on Europe, attempting to read various reports and untangle the political mix. Visibility remained low; however, it is strongly evident that investors were bearish as to potential outcomes and any small positive steps forward were welcomed by markets. The co-ordinated Central Bank easing on the 30^th of November provided another pointer toward easing liquidity concerns. Perhaps more importantly, subsequent US data (especially housing, business confidence and employment) was stronger than expected.

•         The main New Zealand focus was on the General Election and the likely potential now of three further years of stable government. In addition, there were several positive economic data outcomes as well, with clear signs of an improvement in the housing sector and strong agricultural growing conditions. Telecom was split in the month, with significant trading in debutant Chorus.

•         In Australia, economic outcomes were mixed and the Reserve Bank of Australia commenced an easing cycle, while the market reacted negatively to both European developments and a sense that Chinese demand was softening.