have a better year in 2022, after a flat performance last year. This will be a result of the increased focus on growth among companies after adjusting to pandemic-induced restrictions, although recovery is expected to be uneven, leaving investors on their toes.
“It’s going to be another year where people are going to have to be on their toes, it’s not one for resting back and just letting things happen – we will have to work again this year to generate returns,” Shane Solly, Director and Portfolio Manager at Harbour Asset Management, said. “There will be winners and losers.”
He pointed out that while the reopening of borders are expected to benefit to travel-related companies like Auckland International Airport, certain firms like Fisher & Paykel Healthcare, which boomed during the global health crisis, may do less well. “It’s going to be another year where you could have reasonable swings,” Solly noted. “It’s going to be another tough sort of blend of factors for investors to think about. We think volatility is going to be there, but in the back of all this, our companies are actually growing earnings.”
According to the portfolio manager, if bond yields do not increase as aggressively as expected, and the rate of global growth is not as robust, the Pacific island’s more defensive market of electricity generators and other utilities may do okay. “It’s going to be a year of lots of underlying drivers,” he added.
Economic growth in New Zealand’s key trading partners like Australia and China will also be on the radar of investors, Solly said. He is of the view that better results can be expected from companies for the latest reporting period to the end of September, since they were able to respond to lockdowns better than expected. For 2022, “it’s going to be another period where there’ll be positives, negatives, green lights, red lights, and a little bit rocky but we can navigate this,” he said. “There’s definitely a tale of better earnings and that’s what drives the stock markets ultimately, it’s all about can companies continue to grow their profitability.”
