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An update on the coronavirus and the recent market volatility

16 March 2020

Over the past few weeks, financial markets have endured a period of increased volatility as the economic and social impact of COVID-19 (coronavirus) has worsened. This has seen a decline in equity prices both offshore and in New Zealand.

This may have resulted in a decline in your KiwiSaver or investment funds and, given this, we wanted to give you an update on the developing situation.

The coronavirus

The coronavirus was first reported in the city of Wuhan, China in late-December, 2019. Despite attempts to contain the virus, it has subsequently spread across the globe.

As of 14 March, the coronavirus has spread to over 100 countries, with a significant number of cases and more than 5,000 deaths. Over the past two weeks, the majority of new cases have come from outside of China.

On 11 March, in response to the growing number of cases, The World Health Organization declared the virus a pandemic.

 

Financial markets

The decline in equity markets accelerated in the week beginning 9 March as a number of countries began to close their borders in an attempt to contain the spread of the virus.

In New Zealand, Prime Minister Ardern has responded by announcing all travellers to New Zealand (excluding those from the Pacific Islands) will need to self-isolate for 14 days.

These moves will likely see a decline in global and local growth, at least in the short term, as consumer demand and international trade and tourism numbers fall. Last week, in the US, the S&P 500 fell nearly 10%, trading to its lowest level since late 2018, while in New Zealand, the NZX 50 declined to its lowest level in about 11 months. 

This has prompted fiscal stimulus packages. The New Zealand Minister of Finance Grant Robertson will announce local relief measures on 17 March, foreshadowing the likely approach of May’s 2020 Budget.

Central banks around the world have also cut interest rates or introduced monetary policy to ease business concerns. On 16 March, the Reserve Bank of New Zealand lowered the Official Cash Rate to 0.25%, a 0.75% cut.

 

What is ANZ Investments doing?

ANZ Investments is an active manager. Experienced investment professionals are monitoring market events and information to manage funds during this significant market volatility.

ANZ Investments has the capability and the right people in place to navigate these challenging times. ANZ Investments was named the 2020 overall New Zealand Fund Manager of the Year and Fund Manager of the Year – KiwiSaver category in the recent Morningstar Awards.

 

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’s important to remember that KiwiSaver and investment funds are long-term savings vehicles.

In saying this, now might be a good time to check our Risk Profile Tool, which will help you determine the right fund for your age, risk appetite and investment timeframe. 

If you’re still unsure, we recommend you speak to a financial adviser and explore more resources available on our website.

This article has been prepared by ANZ New Zealand Investments Limited for information purposes only and it should not be treated as financial advice. It is recommended that you seek advice from an authorised financial adviser which takes into account your individual circumstances before you acquire a financial product. Past performance does not indicate future performance. Performance is not guaranteed and may be negative as well as positive.