Over the past several weeks you would have noticed an increase in market volatility due to growing uncertainty around COVID-19 and the economic impact it is having both in New Zealand and abroad.
This uncertainty has seen a fall in global share markets, which may have resulted in a decline in your KiwiSaver or Investment Funds balance. As the situation continues to unfold, we will continue to keep investors up-to-date.
A coronavirus update
The coronavirus outbreak has now spread to well over 100 countries accounting for more than 15,000 deaths. In New Zealand, the Minister of Health said on 25 March that there are 205 cases in the country, adding they are seeing spread by community transmission.
Then on Thursday 26 March, New Zealand was put into ‘lockdown’ for at least four weeks, meaning all non-essential businesses closed, including bars, restaurants and parks. Additionally, all schools were closed as the country attempts to limit community transmission.
What has happened in financial markets?
Since mid-February we have seen a decline in share prices, with the NZX 50 falling around 20% as of 25 March. The decline is a result of concerns for the economic outlook for New Zealand. With borders and supply chains closed, some of New Zealand’s biggest economic windfalls, dairy and meat exports and tourism, have been hit hard.
In the following days, we saw a small rebound in equity markets as the US $2 trillion stimulus package headed to the Senate for a final vote.
Government and central bank response
In response to the coronavirus and its economic affect, we have seen an unprecedented response by both the New Zealand government and the central bank.
On 17 March, the New Zealand government announced a $12.1 billion fiscal package, aimed at small businesses, welfare packages and healthcare. And in an effort to keep interest rates low, the Reserve Bank of New Zealand cut the Official Cash Rate by 75 basis points to 0.25% and begun quantitative easing.
What does this mean for you and your investments?
We understand this period is unsettling for many of you, and that the moves in equity markets may mean you’re checking your balance on a regular basis. However, it is important to remember these investments are long-term savings vehicles and while we have seen declines in 2020, it is coming off strong gains in 2019.
Everyone’s situation is different and things change over time. Your fund choice should be based on your personal circumstances, for example your investment goals, timeframe and how much risk you’re willing to take. We recommend you regularly review your fund choice to make sure it’s still the best choice for you – use our Risk Profile Tool to help or talk to your financial adviser. If you do decide to switch to a different fund, you can do so online via ANZ Internet Banking or by completing our online change form.