Harbour Investment Outlook - Ukraine invasion heightens already elevated volatility

We are appalled and saddened by the humanitarian disaster unfolding in Ukraine. Our hearts and thoughts are with all those people who are suffering. Our investment team is actively monitoring the situation and the implications for our clients’ portfolios.

We can confirm that no Harbour fund has any specific stock exposure in Russia. Our compliance system has also been coded to ensure no Russian securities can be added.

Key points

1. The MSCI All Country World (global shares) Index fell -2.5% in NZD hedged terms in February and, with the New Zealand dollar strengthening in the past month, the same Index fell -5.5% in NZD terms over the month.
2. The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month up 0.75%, whilst the Australian equity market (S&P ASX 200) rose 2.1% in both AUD and NZD terms.
3. The Reserve Bank of New Zealand (RBNZ) delivered a hawkish statement along with a 25bp hike to 1.00% in February, retaining the option to move in 50bp increments and revising its OCR forecasts higher than implied by market pricing.
4. Russia’s invasion of Ukraine has become a humanitarian disaster. The geopolitical environment is now vastly changed with a wide range of potential outcomes. It has also added further upward pressure to global energy prices and inflation.