Shane Solly: Harbour Asset Management expert on the Performance of Services Index taking a dive

The BNZ - BusinessNZ Performance of Services Index has slowed down, according to new data.

Reports show it fell by 1.5 points to 46.9, sparking concerns about the future of the economy.

Harbour Asset Management expert Shane Solly explained further.

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Episode Transcript

Speaker 1 (00:00):
Bryan Bridge.

Speaker 2 (00:02):
This gets to the markets nineteen after six for Shane
Solly Harbor Raset Management Shane good evening, get it right,
so do well. Bit of a surprise for the markets today,
wasn't it with the announcement the statement from the governor
at the Reserve Bank.

Speaker 1 (00:14):
Yeah, so new governor and a Bremen dilvid probably a
little bit of an early Christmas present for markets and
indeed the economy. By calling the risk of rate hikes.
What she said was in quite strongly worded comments, very
much sort of designed to push back on market pricing
of interest rate hikes. Next year, Governor Bremen reinforced the
official cash rate likely to remain at two twenty five

(00:37):
for some time. She said, the New Zealand economy is
in line with Novemburg expectations that market conditions have tightened
more than the manager policy statement imply so a bit
of a reprieve there. Markets reacted quite positively. We saw
probably the most important one for a mortgage holders, a
three year swap rate shoes as a reference point for
some bank mortgages. It fell just under zero point one

(00:58):
percent zero point nine to be act to three thirty
one still well above their recent love mid October and
two point six percent. New Zealand dollar pulled back a
little bit from its recent high as against the US
started to close at fifty seven to seventy. New Zealand
Shire market quite liked it almost one percent, led by
strength and fishing and Bocal Healthcare, which has benefiting from

(01:19):
unfortunately an outbreak of flu in the northern hemisphere looks
bad at milk and a bit of a bounce back
from recent weakness. And Auckland Airport was up on improving
traffic treams. So yeah, certainly the market's liked that update.

Speaker 2 (01:30):
Well, it's just refreshing, isn't it really to have?

Speaker 1 (01:33):
Yeah, yeah, that's actually very your helpful. It's a good
timing to be.

Speaker 2 (01:36):
Doing this, absolutely, particularly because we've got to wait until
February before we get our next meeting. Now the PS
signed this is our performance of services in dix and
New Zealand. Data was released a bit soft again today.

Speaker 1 (01:49):
Yeah, it's just telling us this service industry remains pretty mild.
Fell to forty six point nine and they've got down
from forty eight point four in October. Look, it's it's
reading below fifty that means we're contracting services index is
now read below fifty for twenty one straight months. This
is a real you know a lot of people out

(02:09):
there will know this, but this data remains pretty pretty challenging.
And so when we mix that with last week's stronger
manufacturing data, that sort of composite indicator suggests that we're
still going to see downside risk to even a modest
New Zealand growth number for early twenty twenty six. Governor
Breman's comments tonight today, we're pretty timely.

Speaker 2 (02:32):
Yeah, absolutely much much needed given the state of play there,
and of course services is a big chunk of the economy.
To the US, the share market down last week. This
is on the soft tech results, yeah.

Speaker 1 (02:44):
And down quarter percent zero point two five percent, but
really weighed by some of the artificial intelligence heavyweights like Auricon, Broadcom.
So we've seen some deflation in this US semiconductor share
price bubble that people are quite rightly focusing on. So
the semiconductor in DIX includes big companies like a Video
was down at six percent last week and that magnificent

(03:06):
seven group of companies, So it's quite a big chunk
of global shear market benchmarks that most qbs have a
growth and balance funds have an allocation too. But it's
been a really good place to invest Ryan over the
last twelve months. Indeed, you know that semiconductor in Dix
is up eighty one percent year to day, so a
little bit of a pullback after a big role. What
we are seeing the RYAN is a rotation of performance

(03:26):
to either industry seek the centers that benefit from lower
US federal interest rates strong reconod make it to be
things like financial as commodities industrials. So they are providing
a bit of a one office to the US tech pullback.
So you know, we can sort of breathe easily at
this stage. And there are other things still providing some
support for qbs however, and of course we've got chat

(03:48):
GPT five point two released overnight. It's got people very excited,
so you never know, you never know, all right.

Speaker 2 (03:55):
We live in hope and also hope for a big
twenty twenty six on the stock market, hopefully the local
economy as well. Shane, good to have you on the
program has always Shane's Soley Harbor Acent Management. For more
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