As the global rate-hike cycle slows, investors in New Zealand may be in for some good news if the international share market experiences a surge.
Investors’ expectations of a slowdown in interest rate hikes and benign inflation have led to a spike in global share markets.
Kiwis are also benefiting from this month’s surge in domestic share prices.
The impact of this will be felt by many Kiwis in their KiwiSaver accounts, which have increased in value during the last week.
After two years of “pretty lean returns,” Felix Fok, portfolio manager at Milford Asset Management, told the sources that investors in New Zealand are finally starting to feel some relief.
Fok said to AM co-host Ryan Bridge on Thursday, “It’s particularly pleasing for investors who have stuck to their guns and stayed invested.”
“Markets have been doing very well lately. As you pointed out, the US markets are leading it; part of this can be attributed to investors expecting a shift, possibly in the form of interest rate hikes by central banks.
“The cost of money has been rising at one of the fastest rates in history, as we have just seen. Therefore, the value of your assets, such as real estate, stocks, or bonds, will generally decrease as borrowing costs rise.”
However, Fok stated that asset prices are rising and we are beginning to see some relief as that cycle comes to an end.