NEWS

We recently hosted an excellent presentation from Michelle Perkins, Director of Wealth Research at Craigs Investment Partners, who shared her insights on what’s driving global and local markets right now. For those who couldn’t make it, here’s a short summary of what you missed.

Tariffs, Trump, and the Global Growth Slowdown

You can’t talk about markets without talking about tariffs — and right now, they’re front and centre. Michelle shared a striking graph showing the US effective tariff rate on all imports since 1982, which highlights that the early April 2025 rate was at its highest level since the 1930s.

This rise in tariffs has been one of several factors contributing to slower growth worldwide. The global growth rate is now expected to be around 3% in 2025, reflecting a more cautious environment for both businesses and investors.

The AI Revolution – Still in Its Early Days

Artificial Intelligence is reshaping industries at a pace we’ve never seen before. Michelle noted that there’s massive investment in AI across all markets, with the highest adoption in information, professional, and educational services.

Interestingly, even with all this investment, adoption rates are still relatively low across many sectors — suggesting we’re only at the beginning of what could be a decades-long transformation. As Michelle put it, this technological shift could be as significant as the Industrial Revolution.

Investment Shifts – Defence, Infrastructure, and Gold

AI isn’t the only area attracting capital. NATO countries are increasing investment in defence and infrastructure, driving significant funding into those sectors.

Another interesting trend is the rise in the price of gold, which tends to move in line with uncertainty. As markets navigate change and unpredictability, many investors are turning to gold as a safe-haven investment.

Closer to Home – New Zealand Outlook

Back in New Zealand, growth remained sluggish throughout 2024 and into this year. The 300 basis point cut in the OCR is yet to fully filter through the economy, largely because many homeowners have fixed-rate mortgages for two to five years. As those roll off, the impact of lower rates should start to be felt.

That said, we’re not expecting a major rebound in house prices anytime soon. The recovery is likely to be gradual rather than dramatic.

Why We Invest – The Power of Compounding

Michelle wrapped up her presentation with an important reminder of why we invest in the first place. Her analysis showed that a balanced investment portfolio — particularly one including NZ shares — has historically delivered around an 8.8% annual return.

That compares with:

• 0% return if you keep your money “under the mattress”, and
• 4.6% from bank deposits — which doesn’t keep up with inflation currently at 5.6%.

 

The takeaway? To stay ahead of inflation and build long-term wealth, investing in a well-diversified portfolio continues to be the smart move.