Hawke’s Bay Foundation’s investment portfolio continues to be managed prudently by the Investment Committee with support of Jarden. We have a very long-term investment horizon (forever), but also acknowledge that the current global economic environment is highly uncertain.
In the year to date, society has probably experienced as much change as would typically be expected over a decade due to the flow on effects of Covid-19. Furthermore, that ignores the dramatic shorter-term impact of efforts to manage the impact of Covid-19 (such as lockdowns, quarantining and social distancing) and longer term changes yet to be implemented, such as significant changes to the work force, as automation makes many jobs redundant and supply chains change to make them more resilient.
The adverse economic impact of Covid-19 has been cushioned by central bank and government stimulus many times bigger than was employed during the global financial crisis. This has resulted in government debt skyrocketing. As a result, we expect interest rates to remain at very low levels for a long time and central banks being much more tolerant of higher inflation. We believe that until a vaccine is developed and deployed to a large portion of the world’s population, significant uncertainty will likely remain, even though the world’s population is getting accustomed to living with Covid-19.
As we race toward the end of the year, elections will be held in New Zealand and the US. In New Zealand, we will expect major policy announcements after the October election from the newly formed government. Due to the impact the US has on the world, the outcome of the US election is important. Should Joe Biden clinch the Presidency and the Democrat party gain full control of the Senate and House of Representatives, some of Donald Trump’s equity market friendly policies are likely to be under threat.
For further information on our investment policies and objectives click here.