Informed Investor - Autumn 2024 - The Green Economy by Informed Investor

FUTURE IN FOCUS Make money while saving the planet

THE STATUS QUO More of the same for housing in 2024

HYPE AND HOPE The true potential of artificial intelligence

Investor sentiment survey inside!

KING OF THE ROAD Mercedes new luxury EV exceeds expectations

BITCOIN ETF Has the mainstream woken up to crypto?

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GLASS HALF EMPTY Are you a victim of “money dysmorphia”?

I N F O R M E D I NVESTO R

Contents IN THIS ISSUE 10. Contributors Meet some of our expert contributors.

12. What We Like A book to help you budget and a luxury lodge to spend your savings on.

14. Essentials Fire and forest tones greet the new season.

18. A New Driver in the Global Economy Seat As the world tries to steer away from fossil fuels the opportunities for New Zealand could be huge, writes Amy Hamilton Chadwick.

24. Going Up, Going Down Economist Cameron Bagrie has the latest on the NZ economy.

26. Taking the Pulse of the Market We reveal the results of our inaugural investor sentiment survey, powered by InvestNow.

32. The Doom Merchants can Move Over New Zealand’s own AI ‘overlord’ has shrugged off the doom merchants and believes it’s the right technology at the right time for some industries, writes Nick Smith.

36. Beware of ‘Money Dysmorphia’ Crippling insecurity over money is creating a generation living in fear, writes Victoria Harris of The Curve, but a financial plan will ease those feelings.

38. When the World Heads to the Voting Booth In a year that will see half the globe summoned to vote, CMC Markets New Zealand general manager Chris Smith picks some of the stories to watch in 2024.

42. Thank-you, Mr Spiller, Now we Have ESG From small beginnings responsible investment has become pro-active around three key points, writes Martin Hawes.

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46. Time to Take a Closer Look at

New Zealand’s Biggest Fintech Companies Ben Tutty examines the top six and exactly what they offer investors.

50. Will Rates Fall or Carefully Step Down? Investors are expecting interest rates to come down sharply this year in the US, Europe and most other developed economies. But there is a risk they will drop more slowly, writes Andrew Kenningham.

54. Snapshot What’s impacting the global economy right now?

56. The Benefits of Bitcoin ETF Approval Janine Grainger, founder and CEO of Easy Crypto, provides a simple guide to what it means for the industry and how New Zealand investors can get a piece of the action.

58. Real Fighters Needed in the Green Corner Two decades of scalable and renewable energy efforts have had little impact on fossil fuel reliance, but this is no time to hang up the gloves, writes Sam Stubbs.

60. PIE Time InvestNow senior portfolio manager, Jason Choy, explains the impact of the imminent 39 per cent tax rate on trust income – and why PIE managed funds can cushion the blow.

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I N F O R M E D I NVESTO R

Contents 62. Price Growth Could be Patchy Kelvin Davidson warns while mortgage rates stay high, expectations should stay low.

64. The Advantages of Sustainable Buildings

The PMG team explains why sustainability is the key to maximising long-term growth for commercial property investors and tenants.

66. The Flood Factor: How to Avoid Buying Flood-Prone Properties

A rare one-in-200-year storm caused widespread damage and flooding last summer. A year on, investors are very wary of flood threat. Andrew Nicol explains how property investors can navigate some risk.

68. It’s all in the Footprint and Long-Term Value

Unlocking investment opportunities in commercial property using ESG frameworks to deliver sustainable returns.

72. Fighting the Good Fight Against Fraud

Insurance fraud is a persistent and costly problem affecting not only insurance companies and the insurance industry, but anyone who holds a policy.

74. Fashion Update The colours and styles of autumn 2024.

76. When Opulence & Performance is Simply Electrifying

Liz Dobson gets behind the wheel of a MercedesBenz EQE SUV and enjoys a world of cutting-edge technology and meticulous craftsmanship.

78. A Year of Nostalgia Mary-anne Tobin, of Design Addiction, outlines the ultimate luxe interior offerings for 2024.

80. Make Convenience the Key to Healthier Living

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Health and wellness contributor Joelene Ranby offers tips on ways we can all make our health resolutions stick.

EDITOR’S LET TER

Going Green can be a Money Machine Incentivising green technology is key to addressing climate change and it needs investors – visionaries who can see how such technologies can change the world and make them millions in the process. The United States’ Inflation Reduction Act brought into federal law what has been called the most important climate action since 2015’s Paris Agreement. Its stated aim is to curb inflation by reducing government budget deficit, lowering prescription drug prices and promoting clean energy. Its scope is unprecedented. So is its potential for investors. IRA represents carrot, rather than stick, with tax breaks offered to companies using green technology instead of penalties for those who don’t. According to an online Time story, published last August, the impact of the act has been swift. Greg Matlock, head of Ernst and Young’s Americans Energy Transition division, stated: “Within a week we noticed tangible movement on investments from clients. It was quick, it was immediate, and it doesn’t appear to be slowing down.” Incentivising the development and implementation of green technology is key to addressing climate change. And green technology needs investors – visionaries who can see how such technologies can change the world and make them millions in the process. Our autumn issue is dedicated to green investment. Amy Hamilton Chadwick explores the topic in her excellent article on page 18, outlining the potentials of the transition away from fossil fuels. In it, she states: “Global clean energy investment rose 17 per cent in 2023 to reach US$1.8 trillion, driven not only by renewable energy generation and EVs, but also by hydrogen technology and carbon capture, according to Bloomberg.

has set up a $2 billion green energy investment fund, and renewable energy consumption and supply reached record highs in 2023.” The potential is huge. We have an abundance of natural energy sources and the chance to reduce our dependence on oil and coal, but it needs government incentives and significant investment to make it work. This autumn issue also features the results from our inaugural investor sentiment survey, powered by InvestNow. Nearly 500 investors took part, and the results were fascinating. New Zealand investors come in all age ranges and income levels. Forty-six per cent of our respondents were female; nearly 70 per cent lived outside Auckland. The majority (66 per cent) prefer to use apps and digital platforms to invest; and 66 per cent were positive about their investments in 2024. Surveys are useful as they provide a snapshot of a time and place – and an anchor point from which to analyse future sentiment. They also give us insights into our readers’ thoughts, feelings and behaviours. These insights allow us to create engaging content that helps our readers make better, more informed decisions around investment. We hope you enjoy reading this issue of Informed Investor as much as we enjoyed creating it. Take care and happy investing.

“Here in Aotearoa, investment giant BlackRock

Joanna Mathers Editor

Editor Joanna Mathers

Resident economist Ed McKnight

Art Director Mark Glover

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Subscriptions Jill Lewis – subscriptions@informedinvestor.co.nz This magazine is subject to NZ Media Council procedures. A complaint must first be directed in writing, within one month of publication, to the email address, stephanie@informedinvestor.co.nz. If not satisfied with the response, the complaint may be referred to the Media Council PO Box 10-879, The Terrace, Wellington 6143; info@mediacouncil. org.nz. Or use the online complaint form at www.mediacouncil.org.nz. Please include copies of the article and all correspondence with the publication. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 8

Published by: Opes Media Informed Investor 33 Federal Street, Auckland Central, Auckland. www.informedinvestor.co.nz

Informed Investor is an investment magazine published quarterly by Opes Media. You need Informed Investor’s written permission to reproduce any part of the magazine. Advertising statements and editorial opinions in Informed Investor reflect the views of the advertisers and editorial contributors, not Informed Investor and its staff. Informed Investor’s content comes from sources that Informed Investor considers accurate, but we don’t guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk: Informed Investor magazine is not liable to anybody in any way at all. Informed Investor does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. Informed Investor magazine does not give any representation regarding the quality, accuracy, completeness or merchantability of the information in this publication or that it is fit for any purpose. To advertise in Informed Investor, you must accept Informed Investor magazine’s advertising terms and conditions. Please contact Stephanie@informedinvestor.co.nz about advertising. Informed Investor is printed on environmentally responsible paper. The paper is produced using elemental chlorine-free pulp, sourced from sustainable and legally harvested farmed trees. The magazine is recyclable. PRINT ISSN 2744-6085 DIGITAL ISSN 2744-6093

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UP FRONT

Meet Some of Our Contributors CAMERON BAGRIE

KELVIN DAVIDSON

Cameron is the managing director of Bagrie Economics, a boutique research firm. He was previously chief economist at ANZ, a position he held for over 11 years.

Kelvin joined CoreLogic in March 2018 as senior research analyst, before moving into his current role of chief economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.

MIKE HEATH

ANDREW KENNINGHAM

Mike has been leading the InvestNow service since launch, March 2017. Over the past 20+ years he has held senior management roles for some very well-known NZ and international businesses and brands – TAB, Contact Energy, Reuters and Rabobank.

Andrew is the chief Europe economist for Capital Economics. He was previously an economic adviser for the United Kingdom Foreign Exchange.

CHRIS SMITH

SAM STUBBS

Chris is the general manager at CMC Markets. He has more than 15 years’ investing experience in financial markets, global equity, commodity, and forex markets.

Sam is the founder and MD of Simplicity, New Zealand’s only low-cost, nonprofit funds manager. Previously from the banking world having worked for Goldman Sachs and NatWest Markets in London and Hong Kong, Sam believes the finance industry should be as much a force for good as a source of profit.

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C ONTRIBUTORS

VICTORIA HARRIS

MARTIN HAWES

Former portfolio manager at Devon Funds, Victoria is co-founder of The Curve, a digital platform aimed at educating women around money.

Martin is the chairman of the Summer KiwiSaver Investment Committee. He’s an authorised financial adviser and offers his services throughout New Zealand.

RICH LYONS

ANDREW NICOL

Rich is the retail investment manager of Oyster Property Group. He is responsible for overseeing both retail and wholesale equity raising for transactions, the growth of Oyster’s investors, and continuing to improve Oyster’s service offering to investors.

Andrew is an authorised financial adviser and the managing partner of Opes Partners. He has more than 15 years’ experience in banking, finance, and property.

MARY-ANNE TOBIN

BEN TUTTY

Former senior underwriter turned qualified interior designer, Mary-Anne Tobin is constantly viewing the latest international trends and incorporating these into her designs. She also blends modern day aesthetics with practical solutions.

Ben is an Auckland-based but not Auckland-bound property investor and freelance writer. He’s travelled and worked across Asia, Europe, and Australasia, writing for some of the biggest names in property and finance.

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UP FRONT

What We Like A book to help you budget and a luxury lodge to spend your savings on.

Be the boss of your budget Budgeting can feel arduous and boring, but Cameron Wislang’s new book Budgeting Like a Legend gives it a fun new twist. The 26-year-old from Kapiti Coast has helped people with serious mental health issues find work and manage their money, and now he’s turned his attention to the general public. In the book he explains how to get ahead with money by tracking what you spend, what you earn, and your financial literacy. He’s a funny guy and a money master and Budgeting Like a Legend could be just what you’ve been after.

Budgeting Like a Legend, Cameron Wislang, Harper Collins NZ, RRP $35.

WIN We have five copies of the book to give away – just head to our Facebook page (Informed Investor magazine), like the page, and tell us why you need this book in your life.

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W H AT W E L I K E

Escape to the countryside Luxury lodge Wharekauhau Country Estate, located in the Wairarapa, has curated an escape that encapsulates the best of a Kiwi countryside “farm stay” with all the luxury trimmings. The Country Hideaway package features five days and nights exploring rolling farmlands, soaking up breath-taking coastal vistas, quad biking over black sand beaches and indulging the best of neighbouring Martinborough’s renowned wines, accompanied by award-winning fine dining.

Wharekauhau sits just 90 minutes by car (or 10 minutes by helicopter) from Wellington, at the foothills of the looming Remutaka ranges. Situated on over 3,000 acres of land, the lodge was founded on the original homestead of an 1840s beef and lamb station that is still working to this day. All the expected amenities that come with a luxury lodge stay will be at your fingertips (including a bespoke bubble bath menu), but the Country Hideaway experience will also allow you to get an appreciation of the “jeans, boots and

labradors” ethos that makes Wharekauhau one of a kind. The County Hideaway package starts from $11,950 including five nights’ accommodation, daily four-course dinners, private fireside dining, daily full country breakfasts, ATV quad bike tour of the estate, tour of the Martinborough wine region and a bottle of Billecart-Salmon champagne on arrival. For reservations, visit wharekauhau.co.nz

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ESSENTIALS

All the Colours of Autumn

Fire and forest tones greet the new season.

9 4

8 7

1. Medowlark Afrodite ring - medowlark.co.nz, 2. The Shilo candle holder - superette.co.nz, 3. Bohzali Paola & Joy Cora table lamp - archipro.co.nz, 4. Citta Atlas of Furniture Design - www.cittadesign.com, 5. Leisure Boucle chair - nedcollections.co.nz, 6. Maison Francis Kurkdjian ud eau de parfum - www.mecca.com, 7. Stanley Quencher 2.0 - superette.co.nz, 8. Fazeek Wave cutlery - superette.co.nz, 9. Jarvis glass vase - homelabstore.co.nz, 10. Citta canvas weekend bag - www.cittadesign.com AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 1 4

Make it Count

Resene Bianca

Resene East Bay

Resene Fire 17

16 15

Resene Half Forest Green

Bright accents and cooling whites for hip home highlights.

11. Frank Green bottle - superette.co.nz, 12. Rattan lounge chair - homelabstore.co.nz, 13. Città feather blanket - cittadesign.co.nz, 14. 100% french linen tea towel - homelabstore.co.nz, 15. Città Halo serving bowl - www.cittadesign.com, 16. Carhartt Work Varsity Kinto To Go tumbler - superette.co.nz, 17. Caterpillar sofa - korhome.co.nz, 18. Sardina candlestick - homelabstore.co.nz, 19. Città Otto vase - www.cittadesign.com

resene.co.nz/colorshops

Green /ɡriːn/

‘Make less harmful to the environment’ Merriam-Webster Dictionary

‘Investing in green initiatives is more than a financial strategy; it’s a commitment to a sustainable future’ – Olive Coulson

GREEN ECONOMY

There’s a New Driver in the Global Economy Seat As the world tries to steer away from fossil fuels the opportunities for New Zealand could be huge, writes Amy Hamilton Chadwick.

It’s more expensive to buy a battery electric vehicle (EV). It costs more than the equivalent petrol car, you’ll probably want to install a charger, and you’re going to need to learn about the charging network and change the way you plan trips. So, it’s fairly costly. But once the money has been invested, and you’ve adjusted to a different way of powering your car, your ongoing costs are much lower. Recharging is much cheaper than buying petrol; maintenance and repairs are lower; and your emissions are close to zero. On a much larger scale, this is analogous to what’s happening in the global economy. As the world tries to move away from fossil fuels, the upfront costs are astonishingly large. Mind-boggling sums of money are required to create the kind of energy generation, infrastructure and technology we need. But once the facilities, systems and innovations are in place, the total cost of powering our world should be much lower. Ideally, energy generation will be cheaper, emissions will reach net zero, and the green economy will create billions of jobs. So, what does this mean for New Zealand and the average Kiwi investor?

New green economy inevitable In 2023, the world generated 50 per cent more renewable energy than it did in 2022, and this year global electricity emissions are set to fall for the first time, according to independent energy “think tank” Ember. Clean electricity is at a tipping point, which will have a major impact on emissions as we continue to electrify activities that were previously powered by fossil fuels, like heating our homes, driving and some manufacturing. Global clean energy investment rose 17 per cent in 2023 to reach US$1.8 trillion, driven not only by renewable energy generation and EVs, but also by hydrogen technology and carbon capture, according to Bloomberg. Here in Aotearoa, investment giant BlackRock has set up a $2 billion green energy investment fund, and renewable energy consumption and supply reached record highs in 2023. As the United Nations’ Secretary-General, Antonio Guterres, put it in January: “Let me be very clear again: the phase-out of fossil fuels is essential and inevitable. No amount of spin or scare tactics will change that. Let’s hope it doesn’t come too late.”

‘Clean electricity is at a tipping point.’ AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 1 9

F E AT U R E S

‘For New Zealand, our isolation presents some issues when it comes to climate change.’

Challenges ahead for Aotearoa In a shift of this magnitude there will always be massive problems to tackle and enormous opportunities to capitalise on. For New Zealand, our isolation presents some issues when it comes to climate change. We rely heavily on the shipping and aviation industries to move ourselves and our goods around, to trade internationally and bring tourists to our shores. Unfortunately, this leaves us heavily reliant on oil, and long-distance travel and transport are among the hardest sectors to decarbonise. In the short term, this means we are vulnerable to rising oil prices or higher carbon prices, or both. “Disruptions to shipping have quite profound effects on New Zealand, and they highlight our critical dependency on travel of various kinds – goods and people,” says Dr Kevin Trenberth, climate scientist and honorary academic in physics at the University of Auckland. “When you look at the international marketplace for selling goods, I’m not sure the cost of transportation is adequately factored in. It’s already significant, but it is likely to become more so.” The cost of transportation is also likely to rise for travellers, he says. “The cost of flying is almost sure in the longer term to go up. It’s very difficult to decarbonise the fuel for planes. I don’t see, in the near term, that there will be major advances on air travel and for shipping. Although there are prospects for various other fuels, and the marketplace may improve, I think we should expect them to become more expensive than they have been – tourism is an industry that is somewhat at risk, and it’s unclear how it’s going to evolve.” Michael Worth, sustainability and impact AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 2 0

GREEN ECONOMY

‘Burning fossil fuels will become the more expensive choice, driving up your cost of living.’ jobs and make a sizeable contribution to the economy. Trenberth says he would like to see government incentives to help the push towards more self-sufficiency when it comes to energy and manufacturing, reducing our reliance on imports. And if we produce more than enough renewable energy for our own needs, we could potentially become a net exporter of green energy, which would be profitable and drive productivity. Worth believes there’s also an opportunity for our timber industry to create positive environmental impact and employment in high-skill work, while helping solve our housing crisis.

lead at Grant Thornton, agrees, adding that tourists also contribute a high carbon footprint travelling to New Zealand, and place a load on our infrastructure and environment. Tourism might become even more of a luxury item in future. We face additional, more mundane, challenges too; improving our electricity infrastructure for instance, so the grid can cope with our more electrified homes and businesses. Trenberth would like to see a national scheme to allow households to feed solar power back into the grid from home systems and to help optimise electricity use overall.

Opportunities to capitalise There are also opportunities for a country with abundant natural sources of renewable energy. We have renewable electricity generation sites popping up across the country, taking advantage of our wind, hydro, geothermal and solar resources. This is an excellent chance to improve our energy security. Reducing our reliance on oil by generating more energy at home means we aren’t at the mercy of price spikes or shortages in oil or coal. The investment required to make this happen is substantial, but it could create

“In 1948, Finland got the best designers together to make lovely homes using local wood, then worked out how to flat-pack them. They could then easily move them around a long skinny country. After that, they started exporting them. That’s a wonderful idea for us and for our timber industry. We can use that resource, add value, create energy-efficient, warm, dry homes and fix our housing problem. Then we can export. Depending on how you do it, you are sequestering carbon in the timber for long enough that it makes a real difference. We could fix our own problems, and export both the products and the knowledge.” Cost of fossil fuels At an individual level, it tends to be slightly more expensive to choose the greener option in 2024 – so it’s easier and cheaper to keep living like you’ve always done instead of investing in new ways to move around and use ethical products. But that is changing. Burning fossil fuels will become the more expensive choice, driving up your cost of living. Not only will travel and imports become more expensive, but the price of petrol, diesel and natural gas are forecast to rise. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 2 1

F E AT U R E S

‘Congestion charging is an obvious thing for all our major metros.’ Even getting around our major cities by car may soon become prohibitively expensive as congestion charges are on the cards for Aucklanders, road toll prices rise, and parking spaces become rarer in most centres. “Congestion charging is an obvious thing for all our major metros,” says Worth. “Parking in town? It’s nuts. If you want to exercise that privilege, you pay for using that asset and space.” Councils now approve apartment buildings with no carparks, and often prioritise pedestrians and cyclists over drivers when they redesign public spaces. Despite many objections, the overall shift at national and local level is towards more efficient transport solutions, not simply electrifying our traffic jams. At home, our appliances are going electric, and we may soon have new ways to mitigate high power bills. Aotearoa has lagged in its uptake of solar energy, but prices for solar photovoltaic modules have fallen 42 per cent since 2020, according to Bloomberg, so expect to see more solar farms and solar panels on homes and businesses. That will allow households to sell power back to the grid, or store it for their own use, which should help keep your electricity bill down. “There is a tremendous amount of opportunity for New Zealand in solar energy,” says Trenberth. Long-term ESG thinking In the meantime, as all these green projects are gaining momentum, fossil fuel producers are aiming to squeeze every bit of juice out of the lemon, says Jason Choy, senior investment portfolio manager at InvestNow. “The writing is on the wall for high emission businesses, so they are doubling down and doing as much digging and drilling as they can to maximise profits AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 2 2

before the music stops. This has led to high returns recently for traditional vanilla funds, so they’ve been good performers in the short term. For ESG [responsible] funds, things have moved more slowly, but with potentially better long-term returns.” He believes the long-term outlook for ESG investing is strong. Increasing ESG regulations and reporting – particularly in the European Union and United States – are slowly forcing businesses to operate in more ethical ways: “Ultimately, regulators will step in, and companies will have to play the game or they’ll be out of business. It will get to the point where there’s no other choice.” But Kiwi investors need to start putting their money where their mouth is,

instead of adopting a set-and-forget approach to their KiwiSaver and other investments. “The RIAA surveyed Kiwis and 59 per cent said they would move their investments towards their values,” says Choy. “But FMA research shows that 75 per cent fail to actually walk the talk. People say, ‘Of course I want to change the world’ but then you ask them whether they paid for the carbon offset the last time they booked a flight on Air New Zealand – and very few have.” Fees for ESG investment funds can be higher, but Choy says that gap is closing. If you do want to take the long-term view on your investments, start by finding out what funds you currently invest in and how

GREEN ECONOMY

‘Climate change is a megatrend that is very long-term by its nature.’ they perform from an ethical perspective. It’s possible that switching to an ESG fund will mean sacrificing some short-term gains for better long-term outcomes, but that tends to be part and parcel of making good decisions for a long-time horizon. “Climate change is a megatrend that is very long-term by its nature,” Choy adds. “We may not even see the benefits of decarbonising in our lifetime – maybe it will benefit your children or your grandchildren. It’s hard to think like that, but this is only going to keep growing.”

We’ve just cut fees for all KiwiSaver and diversified investment funds to 0.25%. It’s our 6th fee cut in 6 years. As a nonprofit, we aim to pass on the benefits of scale.

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KiwiSaver Plan | Investment Funds | Mortgages Simplicity NZ Ltd is the issuer of the Simplicity KiwiSaver Scheme and Investment Funds. For Product Disclosure Statements, please visit our website simplicity.kiwi. The Manager’s basic fee for all Simplicity KiwiSaver funds will be reduced by 0.04% to 0.25% with effect from 1 February 2024. For more on our fees, go to simplicity.kiwi/fees. For more on our past fee changes, go to our blog at simplicity.kiwi/learn/updates. Mortgage loans available to Simplicity KiwiSaver members buying their first home, subject to lending criteria.

F E AT U R E S

Going Up, Going Down Economist Cameron Bagrie takes a good, hard look at New Zealand and how we’re going as a nation.

Continuing to bite Some fixed borrowing rates may have eased back from their peak, but many people are still facing higher interest costs. There is around $200 billion of mortgages to refinance in the coming year. At the end of November, the weighted average yield on a fixed loan was 5.6 per cent, well below current fixed loan rates.

Local authority rates

Relief With the New Zealand economy contracting three out of the past four quarters, annual growth turning negative, a clear sign of a recession, the unemployment rate moving up and inflation easing, the case looks solid for interest rates to come down. Financial markets are anticipating the Official Cash Rate (OCR) could fall 150 basis points over the coming 18 months.

Follow the leader Expectations for lower interest rates are a global theme, with the US Federal Reserve, Bank of England, Bank of Canada, European Central Bank and Reserve Bank of Australia all expected to cut their cash rates in 2024. The key driver is moderating inflation.

Could 10 per cent-plus be the new normal for annual increases in local authority rates over the coming decade? It looks so. Councils’ operating expenditure is exceeding operating income by around 8 per cent and plugging that gap means 15 per cent higher rates. Interest costs are adding to expenses, and we have decades of under-investment and poor maintenance of infrastructure to address.

Sticking point The path to lower interest rates faces a hurdle. New Zealand’s headline inflation has fallen to 4.7 per cent but domestic, or what is called non-tradable inflation, is exceeding expectations, proving to be sticky and sits at 5.9 per cent. As the Reserve Bank commented last November: “Members noted that tradable inflation can be volatile and cannot be relied upon to achieve their inflation target. Non-tradable inflation is easing only gradually and, while all measures of core inflation have declined, they are still elevated.” AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 2 4

Good news or not good news? Migration has surged with Statistics NZ reporting a net inflow of 127,400 in the past year. That has helped alleviate labour shortages and provides a base for demand, which we are seeing in indicators such as rents and construction costs which have accelerated. The latter puts pressure on inflation and dampens prospects for lower interest rates.

MARKET INSIGHTS

Enticing

Pick your driver

Term deposit balances with banks have surged, enticed by 6 per cent term deposit rates. An additional $27.7 billion has been put on term deposit in the past year and $56.9 billion in the past two years, taking total term deposits to $214 billion, just under half of all bank deposits.

Migration, interest rates, access to credit, the Reserve Bank’s loan-to-value ratio policy and debt-to-income rules are all pointed to as factors driving house prices. But what about Tobin’s Q, the market value of an asset compared to replacement cost? With construction costs up sharply in the past two years, and house prices falling 16 per cent from their peak, the economic incentive might have shifted to buying the existing stock (and renovating).

Positive again Household net wealth is rising again, helped by a slight increase in house prices, lifting $5 billion in the September 2023 quarter, the first rise in six quarters. Household net wealth rose to $2,293 billion in the September 2023 quarter, although is down from its December 2021 peak of $2,761 billion. Household net worth fell by an average of $33.6 billion over the previous six quarters, feeling the impact of falling house prices.

Welcome Minister 2#

Household cost of living The cost of living is a huge concern to households and most attention is on consumer price inflation, which stands at 4.7 per cent, down from a peak of 7.3 per cent. While the decline is welcome, it is still a long way from two per cent, which is the target. Household cost-of-living inflation is seven per cent. Household living-cost indexes include interest costs, but excludes construction costs. Interest payments have increased 31 per cent for the average household over the past 12 months (note that is the average household).

New Zealand faces longstanding challenges beyond low productivity, a key influence on living standards. Two other challenges are education and housing. “Student achievement is declining and will exacerbate intergenerational disadvantage and inhibit productivity growth. Housing affordability is among the worst in the OECD, creating pressure on households and distorting investment flows.” Eyes will be on the substance in the policy platform to address these challenges.

From the Treasury’s Briefing to the Incoming Finance Minister (BIM): “The economic and fiscal situation will be challenging over 2024. The New Zealand economy has entered a period of slow growth in response to tighter monetary policy necessary to tackle inflation, and other economic headwinds such as slower global growth. The outlook is for the Official Cash Rate to remain around current levels for some time. A substantial fiscal consolidation is required to bring revenue and expenses back into balance and support fiscal sustainability.” Buckle up. While Bagrie Economics uses all reasonable endeavours in producing reports to ensure the information is as accurate as practicable, Bagrie Economics shall not be liable for any loss or damage sustained by any person relying on such work whatever the cause of such loss or damage. Data and information have been gathered from sources Bagrie Economics believes to be reliable. The content does not constitute advice. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 2 5

Correct as at 14 February 2024.

Welcome Minister

S U R V E Y R E S U LT S

Taking the Pulse of the Market We reveal the results of our inaugural investor sentiment survey, powered by InvestNow. New Zealand investors are digitally savvy, confident in their ability to make decisions around financial products and positive about the future. Their salaries vary – from below $50,000 to over $250,000 – gender is slightly skewed male, and they love using online platforms and apps to generate wealth. These are some of the key take outs from Informed Investor’s inaugural investor sentiment survey, powered by InvestNow. The survey of around 500 people put forward a wide range of questions to gauge how Kiwis view and engage with the investment market, and the results are enlightening. New Zealand investors can’t be stereotyped.

What are your primary reasons for investing? Retirement security

342 resp. 79.7%

Growing wealth for my family

285 resp. 66.4%

Generation of income

230 resp. 53.6%

Keeping my assets safe

108 resp. 25.2%

Speculation – to raise funds quickly

20 resp. 4.7%

It's a family tradition

10 resp. 2.3%

Sixty eight per cent of respondents were aged under 55. Investment used to be viewed as the pursuit of affluent males; in this survey 46 per cent of respondents were female. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 2 7

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How do you prefer to buy shares? KiwiSaver

241 resp. 56.8%

Managed Funds

200 resp. 47.2%

Directly

187 resp. 44.1%

ETFs

187 resp. 44.1%

Via a broker

87 resp. 20.5%

Do you use an app or online platform to buy shares? Yes

287 resp. 66.1%

147 resp. 33.9%

Do you feel positive or negative about your returns in 2024? Positive

289 resp. 66.1%

Not sure

120 resp. 27.5%

The past 20 years have seen a transformation of the investment market in New Zealand; KiwiSaver and digital technology are pivotal to this. The introduction of KiwiSaver in 2007 saw investment transformed from esoteric art into everyday activity. It gave Kiwis access to managed funds and the wealth they create, opening a portal to wider financial wellbeing. Concurrently, the rise of fintech - platforms and apps - made markets more accessible.

Negative

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28 resp. 6.4%

“It removed barriers, democratised the financial markets and demystified the process,” says Mike Heath, general manager of InvestNow. “People are confident investing online.”

S U R V E Y R E S U LT S

‘It’s no surprise that KiwiSaver comes out tops when it comes to buying shares. But managed funds, direct buying and ETFs are also popular.’

Here’s a snapshot of some of the key results from the survey. They can be viewed in their entirety at informedinvestor.co.nz

77 per cent of respondents claimed that they were “reasonably” or “very” confident around decision-making around KiwiSaver.

How do you prefer to buy shares? It’s no surprise that KiwiSaver comes out tops when it comes to buying shares. But managed funds, direct buying and ETFs are also popular. Online platforms provide investors with the opportunity to choose from a range of fund types, which they can monitor in real time. Only 20 per cent of investors use a broker for their stock purchases.

When it came to direct shares, the responses were markedly different. Only 33 per cent claimed they were reasonably confident, with 15 per cent saying they were very confident in their ability to make good investment choices.

Investor confidence When asked to rate their confidence in decision making around term deposits, 72 per cent of respondents answered they were “reasonably” or “very” confident. Around

Motivation to invest Retirement security, generation of wealth for family, and generation of income were the top three motivations for investors responding to this survey. Protection of assets came out fourth – but it seems that not many of us are speculators – just under 5 per cent of recipients listed this as a reason they invested. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 2 9

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‘Given the disruptions of the past few years, the positivity expressed by the investors involved in this survey is refreshing.’ What will we be investing in? Shares, managed funds, and residential property are New Zealanders top choices when it comes to future investments. We’re not that keen on crypto (only 10 per cent planning to purchase crypto assets), and the esoterica of derivatives and futures appeal to just 1.4 per cent of us.

What assets are you most likely to invest in? Shares

272 resp. 62.4%

Managed funds

211 resp. 48.4%

Residential property

192 resp. 44%

ETFs

190 resp. 43.6%

A business

56 resp. 12.8%

Commercial property

55 resp. 12.6%

Dulani Jayasuriya is a lecturer at University of Auckland in Accounting and Finance. She says that apps and online platforms have brought trading opportunities to the masses.

Crypto

44 resp. 10.1%

“Previously, people had to have prior knowledge of markets and access to the right banks to invest in overseas markets – now people can access multiple markets: EFTs, crypto markets – and anyone can invest."

Precious metals

27 resp. 6.2%

Not sure

19 resp. 4.4%

Farming

15 resp. 3.4%

Derivatives or Future

6 resp. 1.4%

Online trading Given the age range of participants (with 68 per cent of respondents under 55) it makes sense that a healthy majority use apps and online platforms to buy shares.

Looking ahead Given the disruptions of the past few years, the positivity expressed by the investors involved in this survey is refreshing. Only 6.4 per cent felt negative about their possible returns in 2024, with 66 per cent feeling positive. Heath believes this makes sense given the high level of investor confidence around decision-making when it comes to KiwiSaver and term deposits. But he believes that 2024 will “largely follow on from 2023. Sure, there has been a change in government. And we are all looking to the Reserve Bank for movement on interest rates. But from a macroeconomic perspective, it’s not looking very different.” AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 3 0

Make your money work hard now, so you can do the things you love when you retire. Join the online investment platform that empowers you to invest for the future you want.

investnow.co.nz/retirement

Or call now 0800 499 466

F E AT U R E S

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ARTIFICIAL INTELLIGENCE

The Doom Merchants can Move Over New Zealand’s own AI ‘overlord’ has shrugged off the doom merchants and believes it’s the right technology at the right time for some industries, writes Nick Smith. Artificial intelligence has a public relations problem; there’s is no shortage of mainstream media shock-horror headlines about the looming AI apocalypse. Last year, billionaire George Soros claimed AI was “impossible for ordinary human intelligence to fully comprehend” and impossible to regulate, but there would also be powerful incentives to cheat – and any regulations would be almost unenforceable. Al Jazeera reports on the real-world misapplications of AI, outlining how AI processes have declined loans, club memberships and jobs, often due to nuances that humans would easily pick up. Even the tech media has played its alarmist role in scaring the public, perhaps best typified by Wired magazine’s recent cover story: “Dear AI Overlords, Don’t F*ck This Up”. New Zealand’s own AI overlord, Tim Warren, shareholder, founder and former CEO of Ambit AI, shrugs at the doom merchants as if to suggest the media are making the sector seem far sexier than it deserves.

Even investors are not immune from the excitement generated by AI, he says. The ‘cool’ factor Warren detects a lack of seriousness from investors in AI, suggesting private investors are more interested in the “cool” factor of the industry, with money a secondary concern. “There’s an element of group-think going on in the investor community, with private investors following each other’s lead in their investment decisions,” he notes. “There’s a celebrity allure to AI and start-up technology, which is not always supported by market fundamentals.” He also has a gripe about investors’ shortterm focus in the technology industry and start-ups in particular. “I’ve invested a lot in this sector, and I don’t ask for that money back when the road to profitability proves longer. If I can, I invest again because you need to build these companies up if they are to succeed.” Investors need to be comfortable with the risk inherent in start-up financing, he says. If the risk is too high for your personal taste, his advice is don’t invest. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 3 3

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Ambit AI is a conversational AI platform used by some of New Zealand and Australia’s largest organisations across industries to ensure customers “are always having the right conversation at the right time,” as the marketing blurb goes.

potential impact of his technology on the important health sector, public and private.

Ambit AI’s technology is practical and designed to solve real-world problems and provide organisations, particularly those which are human-resource deficient, with easy-to-use solutions for their businesses.

In health, the GP sector in particular is in crisis at a time when public funding for this essential service is at a premium.

It is the right technology at the right time. “All companies and public organisations are struggling with the cost of customer relationship management, resourcing the quality interaction with clients that they need,” Warren says. “All companies will be automating over the next decade. AI is a huge growth area; it’s happening, and Ambit AI has a definite early-mover advantage by being right at the beginning of it.” Health sector He is particularly passionate about the AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 3 4

Front-line staff, specialists, back-room analysis and administrative support are all overwhelmed by public demand for their services, he says.

Medicine, says Warren, is an evidencebased, information-rich sector tailor-made for AI applications. Ambit AI is partnering with GPs and medical centres around the country to develop bespoke AI solutions to the myriad of issues faced. Warren says AI will play an essential role in reducing the workload of frontline staff, managing patient requirements, improving triage response and increasing the efficacy of New Zea; health’s diagnostic capabilities. Kiwis expect and deserve a first-world health service, with access for all citizens, not just those who can afford private

insurance, Warren says. “These are fundamental rights and the government’s ability to fund the growing demand for health sector services is increasingly constrained,” he says. “This is not a New Zealand problem; it’s a global issue affecting every country on Earth and requiring an ‘all-hands-on-deck’ response, especially from the technology sector.” Massive challenges “I’m incredibly excited about the future of Ambit AI technology, and our competitors and the companies to come, in solving these massive challenges,” he says. “If we can play a role in improving the professional lives of health sector workers, then that will be a job well done.” Tim Warren is no longer operationally involved in Ambit AI, but he remains a strong supporter of the company and the wider AI industry. He is now an independent tech and AI commentator and presenter.

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VICTORIA HARRIS

Beware of ‘Money Dysmorphia’ Crippling insecurity over money is creating a generation living in fear, writes Victoria Harris of The Curve, but a financial plan will ease those feelings. We’ve all read the doom-and-gloom headlines: “Mortgage rates are at record highs”, “Cost of living crisis hits hard” or “Inflation is at unprecedented levels”. The financial challenges facing us today are real, but they can also lead to an unhealthy narrative in our heads that the world is worse than it is. Compared to older generations, we have constant access to information, in the news and on social media. This makes younger generations, like Millennials and Gen Z, live in constant fear. Constant fear that another pandemic will happen and they’ll be out of a job; constant fear they won't ever be able to buy a house on top of their student loan payments; constant fear of being able to afford to have children. Adding to this anxiety are videos on TikTok featuring people showing off luxury handbags, flying first class on expensive holidays and dining in fancy restaurants. We are inundated. We keep hearing how tough it is. How hard and expensive it is to buy a home; how much it costs to raise children and secure childcare; how big companies, once seen as beacons for young, ambitious people, are now slashing jobs. These headlines can easily overshadow the reality that the New Zealand economy is pretty healthy, at least for now. Flawed perceptions That’s why it might not be surprising that a recent study has found mixed and confusing signals about the economy have made it super tough for young adults to know where they stand financially. About 43 per cent of Gen Z and 41 per cent of Millennials say they suffer from a flawed perception of their

finances. Am I saving enough? Should I have enough for a house deposit by now? Do I need to start a baby fund? This crippling insecurity when it comes to money is creating a generation living in fear, and it’s a real problem. It’s called "money dysmorphia" - a feeling of insecurity around your finances even when there isn’t anything to worry about. Just like body dysmorphia, when people constantly compare themselves unfavourably to their peers, money dysmorphia is when someone’s selfperception regarding their money doesn’t match reality. It’s a distorted view that we have around money that causes us to make poor decisions and hinder us from growing our wealth. Of course, we’re not saying the world is entirely rosy at the moment and there isn’t anything to worry about - there are real scaries. But money dysmorphia is worrying about money even when you don’t need to. Stormy days When you start to have a pessimistic view of your own financial future, it can be hard to change that narrative and that can seriously impact your outlook on life. At The Curve, we always emphasise how important it is to have a financial plan. Make sure you have an emergency fund with at least one month’s salary in there. This will help you navigate those stormy days should they come. The more planned you can be with your finances, the less stressful it will be when life doesn’t go to plan. Next time you feel that pang of worry, take a deep breath, practise some gratitude and ask yourself, am I worrying for no reason?

‘Make sure you have an emergency fund with at least one month’s salary in there.’

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F E AT U R E S

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CMC MARKETS

When the World Heads to the Voting Booth In a year that will see half the globe summoned to vote, CMC Markets New Zealand general manager Chris Smith picks some of the stories to watch in 2024. Nearly half the world’s population will head to the polls to cast a vote in national elections in 2024. The United States, the European Union, India and Russia are just a handful of the 64 countries that will make this the year of elections. Some of these elections will no doubt have a bigger impact than others, but as the votes trickle in around the world, investors will be watching closely to see which way things might go. For investors, the US election will be a marque event no different to 2020. An election year always leaves investors debating the impact of policies on their strategy. This uncertainty ups the nerves of the market, and we are likely to see some moments of caution reverberate around the world. History shows the major moves tend to happen after the event, which makes sense with polling often unreliable. But with the forecast of lower interest rates and inflation in 2024 and global economies potentially mastering a soft landing vs hard recessionary fears, there is also a sense of optimism underscoring the general mood. Governments do have a major challenge of the debt build-up from Covid, though, and how to pay that back with higher interest costs and a weary consumer. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 3 9

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‘You essentially have a repeat of the 2020 election; each candidate divides the country vote, vying for control of the richest country in the world.’

All eyes on the US No election will be watched more closely than the US presidential race in November. You essentially have a repeat of the 2020 election; each candidate divides the country vote, vying for control of the richest country in the world. This race comes at a time when the US is still bouncing back after the economic strain of the last year, with high postCovid inflation followed by a period of high interest rates. As the months lead into the election, nerves in the investment community will grow. According to Reuters, Goldman Sachs has warned that the US election could be a “major market event”. Which comes as no surprise if we recall the Trump trade wars with China. Other analysts suggest the election will ultimately draw attention to the policy platforms of the two candidates, with Trump campaigning on tax cuts and tariffs while Biden will likely continue environmental spending. Investors across the board will be looking closely at where the government money is most likely to flow under these two leaders and if they will ever look at cutting spending with constant debt ceiling votes. Despite the impending uncertainty of the protracted US election, investors are currently betting on the US Federal Reserve easing interest rates this year and into 2025 as the cycle turns on monetary policy, leading to a strong start of the S&P 500 so far. The question now is whether the rhetoric coming from US politicians will ultimately squeeze the optimism out of that buoyant mood and cut away some of these gains. The elephant in the room The US isn’t the only country sparking intrigue around the world. Investors are also keeping a close eye on the globe’s most AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 4 0

populous nation, India. Some analysts are suggesting that investors are currently in a wait-and-see pattern, wanting to gauge how things could proceed. Indian politics can be notoriously tempestuous, but there are signs the next election could be a relatively predictable affair. Prime Minister Narendra Modi won three major state elections in December last year and is confident of also claiming a third term. Modi has long had the support of India’s business class and tycoons across the country again heaped praise on him at the start of this year. Should the election go that way, bankers are predicting that we’ll

see a continuation of the inflow of global capital into the Indian economy. This would also have resonance in the local market, given Prime Minister Christopher Luxon’s ambitions to establish closer ties with India. While the world has been keeping a careful eye on China’s dragon over the last decade, we are now also seeing the growing stature of India’s elephant. Interest rates and inflation All signs point to inflation and interest rates tracking down throughout 2024, with the market applauding these forecasts and watching key data closely on timings.

CMC MARKETS

Locally the market is forecasting August for the first easing along with Australia’s RBA in August.

At this stage, we can only hope that 2024 is not quite as tumultuous as the last few years have been.

started rolling out a subscription model called Co-Pilot (chat GPT) into its product set.

The problem with predictions of this nature is that they are still subject to the illogical whims and fancies of global events. In the past year we’ve seen global climate catastrophes, war at the doorstep of Western Europe and increased bloodshed across the Middle East.

AI on your iPhone Beyond the geopolitical rumblings and the election bonanza, artificial intelligence remains the topic du jour in business circles.

Placing generative AI into the hands of consumers via the digital device they use most frequently will lead to an exponential rise in the practical application of this technology.

The spectre of geopolitical tension has risen to again dominate the global debate. And because of our reliance on global supply chains and international markets, events elsewhere have a greater impact than ever on what’s happening in New Zealand.

Behind the scenes, Apple has been on an acquisition streak to improve its capability in this space, and we’ll start to see what Apple’s involvement will be later in 2024. The integration of generative AI into iPhones will mark an important tipping point in the impact of this technology and how it can be mass used. Microsoft has

This could quickly lead to new opportunities ripe for clever innovators to capitalise on. We’ll likely see a few listed companies burgeon as they latch onto these opportunities, but it always pays to proceed with caution. The key will be separating the fads from businesses that could drive longerterm growth for shareholders. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 4 1

ESG

Thank you, Mr Spiller, Now we Have ESG From small beginnings, responsible investment has become pro-active around three key points, writes Martin Hawes.

Rodger Spiller was undoubtedly the father of Socially Responsible Investing (SRI) in New Zealand. For decades he banged away at the topic. Back in the 1990s he was way ahead of his time and although he got some publicity, he was pretty much a lone voice. Back in those days SRI was almost completely about what you would exclude from a portfolio ... you didn’t want to own sin stocks (things like gambling, land mines, tobacco and nuclear weapons). The basic idea was (and still is) that investors exclude these sinful things partly as a matter of conscience, and partly to help starve these companies of capital. SRI probably had less impact than we would have liked; it was adopted by few and lacked momentum. However, the mood has changed in the last decade. Today most people will not tolerate their money invested in the companies that do harm and, just as important, they want to invest in companies that do good. Avoiding sin stocks is a given. People are now more concerned with what they will

include in their portfolios. They want to ensure that what they own fits into the green economy that companies look after their people, and that they are well governed. So, now we talk about ESG (Environment, Social, Governance) investing. This is far more about what we include in a portfolio. We want investments that are likely to be sustainable and therefore we should buy companies that are kind to the environment, fit in well with society and have diverse governance. It makes sense to look at investment through an ESG lens. Environment A company that is kind on the environment, that contributes little to climate change, that uses minimal plastic, water or fossil fuels is likely to have a better reputation and thrive. Even better is one that actively assists to improve the environment or the climate – for example, there are companies involved in direct carbon capture which are looking for ways to strip carbon from the atmosphere and would, if successful, make very good investments.

‘If a company cannot keep up with the way people are thinking and feeling, it’s toast.’ AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 4 3

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‘Today, nearly every managed fund has an ESG policy, and many companies would get high ESG scores.’ If an investment you are considering cares for the environment and climate issues it’s likely to be more profitable and last longer than others. Social This measure is about how a company treats people – internally and externally. This means investors considering how a company deals with its staff and interacts with the community. A company that treats its people well can win the war for talent. That is good business, and such companies are likely to be more sustainable and profitable. Governance This mostly concerns the board of the company. Is the board comprised of a diverse bunch of people? Or is it some old cronies who all have much the same life experience and think the same. Many boards in the past were like this. Such businesses may sell to a diverse range of customers, but their boards had little insight into how customers think and feel. A company with a diverse board is likely to understand its customers and its staff better and, as such, make good investments. ESG analysis considers whether a business will survive and thrive in the long term. The zeitgeist comes and goes; companies may blossom or wither according to whether they can stay with trends and what is happening in the world. If you think about it, you would like your investments to have strong ESG attributes: you want them to use the environment and resources well, you want them to care for people (customers and staff) and want them to have good governance that is in touch with diverse markets and avoids “groupthink”. These are just the kind of things that make companies great. The economic, political and social climate also makes a big difference to companies. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 4 4

People with investment capital respond to what is going on very quickly. If a company cannot keep up with the way people are thinking and feeling, it’s toast. ESG analysis is now in the mainstream and widely used and there are many analysts who give investments an ESG score for quick assessment. This is very powerful. If people can quickly see it has a low ESG score it will not attract investment, its share price will be lower and its cost of capital higher. Climate change and other environmental problems will not be much solved by a few individuals using their cars less or going off-grid. The real progress is when there are

changes at a political or systemic level, so changes are wrought at scale. Today, nearly every managed fund has an ESG policy, and many companies would get high ESG scores. It was not like that in the olden days. Thankfully, we have moved on, which should give us all some hope. Martin Hawes is a financial author and speaker. He is not a financial advice provider nor a financial adviser. The information contained in this article is general in nature and is not intended to be financial advice. Before making any financial decisions, you should consult a professional financial adviser. Nothing in this article is, or should be taken as, an offer, invitation or recommendation to buy, sell or retain a regulated financial product.

FINTECH

Time to Take a Closer Look at NZ’s Biggest Fintech Companies Ben Tutty examines the top six and exactly what they offer investors. New Zealand is home to one of the world’s fastest growing fintech sectors. In fact, its revenue has grown 32 per cent on average from 2017 to 2022 and the sector now pulls in more than $2 billion globally. One thing that many of our greatest fintech companies have in common is that their platforms are designed to help supercharge planning and goal-setting. With that in mind we took a closer look at six of the country’s biggest fintech companies, what they offer and how they can help you reach your financial goals. Kernel Kernel is a fully online investment platform born out of the frustration with the inefficiencies, lack of innovation and poor financial literacy holding back the NZ financial sector (and the financial futures of so many Kiwis). Their savings accounts offer competitive interest rates and their KiwiSaver and investments offer access to low fee, index funds. CEO Dean Anderson says the company is all about helping Kiwis reach their goals: “We are an outcomes-focused platform centred around helping people create good habits and work towards goals.” Anderson adds that at the end of the day investments are just a tool to help people reach a broad range of goals, from retirement to buying a home. Kernel is set up to turn plans into reality: “You can

create labels and target dates for funds to tie them to specific life goals, like a first home for example. It’s all set up to help you adopt good long-term habits that help you achieve your goals. There are plans to expand this functionally to help people better track their goals, so watch this space.” Hnry Around 400,000 Kiwis (like myself) work as sole traders, and being self-employed is great; it comes with freedom, flexibility and plenty of extra naps. But what isn’t so great is the financial admin. James Fuller, Hnry CEO and co-founder, says their world-leading platform is designed to take the hassle out of it all: “Being with Hnry means you never have to think about tax again. A digital accountant and tax automation tool, it calculates and pays taxes as you earn and provides on-demand support to ease any financial headaches.” Hnry doesn’t just handle tax. It also enables sole traders to automate payments to their savings or investments account each time they get paid. And because the incomes of most sole traders fluctuate, they can choose to allocate a percentage of their incomes towards savings or investments, making it easier to get ahead with an inconsistent income. If they’re not earning, the payments don’t go out. Fuller explains: “This reduces the burden of

financial planning while delivering peace of mind so sole traders can get on with doing what they love.” PocketSmith Money management can get complicated fast, especially if you’re juggling multiple incomes and life goals. PocketSmith is a household CFO that uses open banking technology to help you organise your finances and save hours of repetitive work. As a long-time user I can confirm it makes money management, goal-setting and long-term planning easier than ever. “We embrace your individuality and know that you deserve more than a cookiecutter approach to money management. PocketSmith adapts to your unique needs and grows with you by letting you design the system you need,” says Jason Leong, co-founder and CEO. PocketSmith is one of only a few global personal finance management tools online, connecting to nearly every bank in the world, with users in over 190 countries. Leong explains that the platform is all about helping people understand their money and communicate about it with those essential to their financial journey: “This is why we give our users a wide range of flexible tools and reports to organise and visualise their finances, like customisable dashboards, graphs and charts, a powerful search engine, and much more.” AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 4 7

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‘One thing that many of our greatest fintech companies have in common is that their platforms are designed to help supercharge planning and goal-setting.’ Xero Over 90 per cent of small business failures happen due to cashflow problems, according to D&B. Xero is a smart accounting platform used by almost four million businesses worldwide, now valued at over $16 billion, that makes managing cashflow easier (as a user myself I can confirm that). “Whether it’s sending invoices, giving customers more ways to pay, or tracking bills and paying them on time, Xero provides small business owners with the tools to accurately understand their numbers to keep cashflow moving,” says Bridget Snelling, Xero Country Manager, NZ. As well as helping small businesses figure it all out Xero encourages accountants and bookkeepers to work with their Xero clients to provide a personal trainertype service: “We understand that intimately knowing your numbers means a deeper understanding of your business, and working with your accountant or bookkeeper allows a business owner to stay ahead of the game and prepare for uncertain times, providing lifelines in tough times.” Tax Traders A few years ago, I had to pay provisional tax for the first year, which effectively meant my tax payments doubled. I considered firing my accountant (who is also my partner) but thought again when she had the solution: Tax Traders. Over the years, myself and thousands of other Kiwi sole traders and businesses of all sizes have used this platform to pay tax more flexibly: “It’s a great tool for when a tax deadline’s got away from you, and you need more time. But also a fantastic way for businesses to manage cashflow. Many businesses look at it as another source of working capital funding,” says Tim Kirkpatrick, co-CEO of Tax Traders. The IRD is rigid and inflexible, charging hefty fees if you pay late. With Tax Traders you can choose one of four ways to pay, at minimal extra cost: AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 4 8

1. A delayed lump-sum payment 2. A weekly, fortnightly or monthly instalment plan 3. Pay as you go, where you can pay however you like before a certain due date 4. A hybrid approach, enabling you to pay interest now and pay tax later to secure a slightly better interest rate. Additional to giving businesses more freedom to manage their cashflow, Kirkpatrick says Tax Traders frees up advisors to focus on adding value: “Why should an accountant spend hours doing something when a system can do it instantly? By using Tax Traders accountants and bookkeepers can automate and streamline their workflow, giving them more time to have human-to-human conversations, to plan for the future and really add value.” Hatch Hatch is an online investing platform that gives Kiwis easy access to international

shares and exchange traded funds (ETFS). It’s got no minimum deposit amounts, low fees and heaps of educational content to help you get your head around investing before putting money down. Hatch CEO Waimarie Marks is proud that the company is part of a sector that’s helping Kiwis reach their financial goals and says her company is unique in New Zealand: “We’re focused on delivering competitive access to the US share markets, shares our investors own, complete with voting rights, and a seamless digital experience. “We bust through investing jargon, speak in accessible language, and we add our unique Aotearoa context to put Kiwi investors at the centre of our weekly share market news and learn content.” They’ve got a Wellington-based support team on hand to help and are dedicated to empowering Kiwi investors: “We believe that when people are informed, they are empowered to make the best decisions to get their money working for them.”

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F E AT U R E S

AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 5 0

GLOBAL INSIGHTS

Will Rates Fall or Carefully Step Down? Investors are expecting interest rates to come down sharply this year in the US, Europe and most other developed economies. But there is a risk they will drop more slowly, writes Andrew Kenningham. The increase in global interest rates since 2022 came as a major shock to the business world. Interest rates had been at rockbottom levels since the Global Financial Crisis back in 2009, and in some countries they had even been negative. The scale and pace of rate hikes over the past two years – an increase of 5 per cent in 18 months – were the highest for decades. Looking ahead, investors are expecting interest rates to fall almost as rapidly as they rose, but that may prove wishful thinking. What goes up ... There are certainly good reasons to expect interest rates to come down. Most importantly, inflation, which peaked at double-digit levels, has now dropped back to well below 5 per cent in many countries. And the latest monthly price rises suggest it will soon be at the 2 per cent rate that most central banks target. So far, most countries have dodged a technical recession, defined as two successive quarters when the economy contracts, but growth has slowed sharply, and employment has stopped rising. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 5 1

F E AT U R E S

‘The last mile may prove to be the hardest.’ So, it is not surprising that central bankers are considering when to take their foot off the brake by bringing interest rates back to more normal levels. If things work out as the financial markets anticipate, interest rates will come down by 1.5 percentage points in the United States this year and by almost as much in the United Kingdom and eurozone. (The Reserve Bank of New Zealand is also likely to cut interest rates by around 1.5 percentage points this year.) Second thoughts However, since the beginning of this year some have begun to have second thoughts about this interest rate story. Their concern is that while inflation fell rapidly last year, it may not fall as fast from now on. The last mile may prove to be the hardest. One reason is that the reduction in inflation so far has been largely a result of previous price increases dropping out of the yearon-year measure. In Europe, energy prices shot up in 2022 after Russia’s invasion of Ukraine and that caused overall inflation to rise steeply. But those price hikes dropped out of the year-on-year inflation rate in 2023. Squeezing the last bit of inflation out of the system may turn out to be difficult. Even if there are no new shocks, such as a spike in oil prices or further shipping problems in the Middle East, central bankers worry about domestic price pressures. In particular, the labour market has remained remarkably tight despite the weakness of the economy. Many businesses cannot fill vacancies or have been forced to concede high wage demands. That in turn will push up the price of domestic services.

Even in Europe, which was hit by the double whammy of tighter monetary policy and a spike in energy prices, the economy has only stagnated rather than falling into an outright recession.

Labour market In the US – which is a bit of an exception – the strength of the labour market reflects overall economic activity holding well. Rather than tightening their belts as interest rates rose, people have carried on spending, confirming the adage that you should never bet against the US consumer.

It seems that interest rate hikes have not slowed spending as much as people expected. This may be because many households and businesses took advantage of the decade of low interest rates to lock in low borrowing costs with fixed-rate loans. US mortgages are often set for 30 years and those in France and Germany for more

AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 5 2

than 10. As a result, many households have not seen their mortgage rates go up despite central banks raising rates. The upshot is that there is a real possibility that central banks delay interest rate cuts until the middle of this year and then bring rates down a bit more slowly than investors anticipate. That could have knock-on effects on equity and property prices, keeping them lower than investors expect, and it could delay the recovery in economic activity.

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F E AT U R E S

Snapshot News, events and innovations from around the world that grabbed our attention and are likely to impact the global economy going forward. RUSSIA

The Ukraine war has been raging for two years, as have the international sanctions against Russia. But most recent results reveal that Russia’s economy has rebounded sharply from a slump in 2022. This apparent growth, founded on statefunded production of weapons, conceals what many economists are predicting – stagnation or recession.

AFRICA

A report by the Centre for Global Development predicts climate change will send 200 million Africans into severe hunger, slash revenue from crops by 30 per cent and cut average gross domestic product per capita by 7.1 per cent. The study reveals that economic issues in the developing world will significantly deepen after 2050, and erode any gains made in more recent times.

AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 5 4

INDIA

US investment bank Jefferies has reported that India is set to become the world’s third biggest economy by 2027. Based on India’s current economic trajectory, the report states that India’s economy could reach $5 trillion in the next four years, which would move it ahead of Japan and Germany. The country is currently the world’s fifth largest economy, with stocks returning over 10 per cent over a 20-year period, Business Insider reports.

AUSTRALIA

Once the world leader in rare earth element mining, Australian mining is finding itself in an increasingly precarious position as China floods the market. Extremely low-cost labour and processing, coupled with the Chinese government’s determination for global market dominance has seen Australia’s position eroded. Nickel, steel, iron ore and lithium prices have collapsed as the market is flooded with Chinese produced elements, needed for technology such as smartphones.

Correct at Feb 26, 2024.

SNAPSHOT

CHINA

FRANCE

ARGENTINA

GERMANY

BYD has overtaken Tesla as the world’s biggest selling electric vehicle manufacturer for the second year in a row. In the last quarter of 2023, the company’s battery-only cars also outsold Tesla – for the first time since production began. The company, according to Guardian reports, is looking to Europe for locations for factories, and plans to enter that market in the foreseeable future.

Government expenditure in France is being cut by 10 billion euros. Items under the knife include education and environmental initiatives amid wars in Ukraine and Gaza coupled with slowdowns in key economies such as Germany, and extremely high interest rates. This comes after high spending in the Covid pandemic to support the economy.

Argentina’s new president and well-known economic libertarian, Javier Milei, has dissolved half of the country’s ministries and devalued the peso by 50 per cent. His “shock therapy” is intended to curb inflation, which is currently sitting at over 250 per cent. This is an uncomfortable echo of the 1970s and early 80s, when a military dictatorship introduced a similar economic plan, leading to a debt crisis.

Bundesbank, the German central bank, has warned that a technical recession is possible in 2024. Germany is currently experiencing a round of strike action, particularly in the transport sector, and the bank said this reduced productivity could lead to a further decrease in GDP. The gross domestic product shrunk by 0.3 per cent year-on-year in the last quarter of 2023.

AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 5 5

C RYP TO

The Benefits of Bitcoin ETF Approval Janine Grainger, founder and CEO of Easy Crypto, provides a simple guide to what it means for the industry and how New Zealand investors can get a piece of the action. In 2023, global crypto ownership rose 34 per cent to 580 million and 15 years on from the mining of the first Bitcoin block, this digital currency is now ranked as the ninth most valuable asset in the world. January saw historic approval by the United States Securities and Exchange Commission (SEC) of a Bitcoin spot exchange traded fund (ETF) which has been widely tipped to drive even further uptake. Here’s a simple guide to what the approval means for the industry and how New Zealand investors can get a piece of the action. What are Bitcoin ETFs? ETFs are a financial product in America that allows people to buy Bitcoin through investing in a managed fund, similar to a KiwiSaver product. Approval of the ETF allows hundreds of millions of investors around the world who can buy American ETF products to access Bitcoin as easily as they can purchase any other managed fund and gives big investors (like pension funds) access to the Bitcoin market for the first time. How are they different? While Bitcoin ETFs have been around for a few years, most have worked by tracking the Bitcoin market, for example through Bitcoin futures used to buy and sell Bitcoin. This has allowed investors to speculate around price without actually owning the cryptocurrency. ETFs that use investors’ money to purchase Bitcoin have, up until recently, not been approved for trading on major stock exchanges because regulators have considered them too risky. This is the first time the US Securities and Exchange Commission has approved Bitcoin funds for listing and trading in the US.

What’s all the fuss? In terms of implications, optimists have started to draw comparisons with how the first gold ETF impacted the price of gold. The impact was not immediate, albeit definite and sustained. Once demand is established, this could lead to sustained buying pressure as institutions and retirement funds begin to incorporate crypto into their portfolios. It’s also expected issuers, including big names like BlackRock and Grayscale, will aggressively drive funds into these offerings, resulting in an uptick in the marketing and media attention around Bitcoin. In future, seeing adverts for Bitcoin ETFs could become as common as seeing a call to invest in your future through a retirement fund. This institutional participation has already started to inject substantial liquidity into the market and has helped foster greater price discovery via increased trading on a regulated platform. Once demand is established, this could lead to sustained buying pressure as institutions and retirement funds begin to incorporate crypto into their portfolios. Increasing institutional investment in crypto also helps boost trust and confidence in the industry as people watch brands they know and trust use a specific asset. The ETF structure allows investors to gain exposure to Bitcoin without directly owning the underlying asset, offering a more regulated and familiar investment vehicle to consumers. Are they available in New Zealand? The short answer is “yes”, most if not all Bitcoin ETFs are available through several locally accessible investment apps in NZ,

including Sharesies, Hatch and Vault. So far, they have proven a popular choice with thousands of local investors having put roughly $1.6 million into new funds tied to the price of the asset, soon to be followed by a $7 million local fund. Sharesies and Hatch’s data in January showed BlackRock and Ark Invest’s Bitcoin funds were the most popular among investors. As with any investment, due diligence is important. Although ETFs offer those new to Bitcoin a more regulated and familiar investment instrument, there are costs associated with investing in US markets, including a one-off payment of around $5 to meet your US tax requirements. There could also be multiple institutions profiting from your purchase, meaning overall fees could be more than buying your Bitcoin directly from a crypto currency exchange that operates here in New Zealand. The biggest extra cost is often currency conversion fees: investing in US markets requires US dollars, and converting your NZ dollar to US dollar, and then back again, incurs FX fees at every stage, not to mention exchange-rate fluctuations. Although there are no cryptocurrencybased ETFs traded on the NZX, there are local financial products in the New Zealand market that track the price of Bitcoin and other cryptocurrencies. Over the past few weeks, millions have made the jump from “Should I invest in crypto?” to “Where can I invest with the lowest fees?” Regardless of how investors choose to invest in Bitcoin, it’s clear the future of finance is evolving, and Bitcoin ETFs represent a bridge between conventional investment practices and the dynamic realm of digital currencies. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 5 7

G R E E N I NVESTM E NT

Real Fighters Needed in the Green Corner

Two decades of scalable and renewable energy efforts have had little impact on fossil fuel reliance, but this is no time to hang up the gloves, writes Sam Stubbs.

Vaclav Smil, author of more than 40 books on energy and the environment, is one of Bill Gates’ favourite writers. The reason he’s so prolific and popular is because he’s focused on letting science drive the environmental policy debate, rather than platitudes and politics. And, despite all the rhetoric about carbonneutral goals, Smil quantifies an unfortunate fact. Two decades into scalable and renewable energy, with Germany now generating 40 per cent of its power from renewables and China making huge strides in solar, fossil fuels have gone from providing 87 per cent of the world’s primary energy supply, to 84 per cent today. That’s a very small drop in global fossil fuel reliance for a huge amount of effort. It’s a reduction of less than 5 per cent over the last two decades, with only a small percentage change deemed possible in the foreseeable future. So why are fossil fuels still so dominant? One major factor Smil highlights is that there are still four major commodities critical to human welfare: ammonia (fertiliser), steel, concrete and plastics, and all four are heavily dependent on fossil fuels for production. None have a viable path to renewable energy substitution, well at least for many decades yet. For example, fertiliser, and the additional fossil fuels that power the tractors and machinery on the farm, have decreased the amount of human labour required to produce a kilogram of wheat from 10 minutes back in 1800 to an efficient two seconds today. Yet little by way of additional battery power and automation could supplant what only fossil fuels can affordably provide: fertiliser and the energy required to harvest, store and transport the final product. Without fossil fuels, many would starve. Doom and gloom Over time, technologies like green hydrogen

and better battery storage will help. But we need them in vastly higher quantities than we currently have, and manufacturing these will need enormous amounts of new, renewable electricity, with additional technological breakthroughs that are, in all likelihood, quite some way away. I realise this all sounds doom and gloom, and it’s at the very least a monumental challenge. But it doesn’t mean we can’t fix global warming; it’s just that it will take longer than originally thought and involve much more investment than anticipated. But when the going gets tough, we should keep going. And, from right now, investors can certainly help. Here’s how. The first, and easiest way, is the development of policies to discourage investment in fossil fuel extraction and processing. This increases their cost of capital and encourages investment in renewables. Excluding fossil fuels has already been a good investment strategy for fund managers, too. While oil companies have performed well over the last year, over 10 years the sector has significantly underperformed. The S&P 500 index has delivered an average 13 per cent a year with BP, for example, returning less than 5 per cent. The next potential action is investing in listed companies that make a direct (positive) impact on energy generation and consumption. The most obvious examples are those building wind and solar farms, or with carbon-zero generation (for example hydroelectric power). Studies over decades show that wind and solar projects have a low relative chance of going over time, or over budget, and are now generating power at competitive market rates. They just make financial sense. Risk and return Another option is to invest in private companies making an environmental impact.

Given that many of them are busy developing new technologies, they are typically higher up the risk and return curve. However, many traditional industries could use a motivated shareholder focused on environmental impact, especially in seemingly boring yet impactful areas like waste minimisation, alternative packaging and distribution efficiencies. And perhaps the biggest step is addressing the fundamental problem: that we need a lot more base load electricity to substitute for fossil fuels in the making of ammonia, steel, concrete and plastics. We will need oodles of megawatts for green hydrogen alone, yet it’s unlikely solar and wind will provide this in anything like the quantities we will need. This raises an uncomfortable subject for New Zealanders; the apparent need for nuclear power in many countries that aren’t blessed with our natural renewable energies. It is no surprise that many long-term, savvy investors, including Bill Gates, are heavily involved in funding new, and inherently safer, nuclear start-up companies. They produce power 90 per cent of the time versus 45 per cent for the best wind turbines, and 25 per cent for the newest solar farms. And, specific to New Zealand, it is incumbent on investors, and especially large ones, to dragoon the powers that be into clarifying and maintaining an emissions standards scheme that the market can support. The current state of affairs would be a farce, if it wasn’t a tragedy. Given that capitalism is the worst form of economic organisation (except for all the others) unless we get the right incentives and disincentives in place, the tragedy of the commons will lead to a hot and bothered world. And in the meantime, let’s just plant lots (and lots) of native trees. That’s simple enough, right? AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 5 9

PIE Time

InvestNow senior portfolio manager, Jason Choy, explains the impact of the imminent 39 per cent tax rate on trust income – and why PIE managed funds can cushion the blow. A shockwave is due to roll over New Zealand trusts in just a few weeks, adding (on average) more than $22,000 to the annual tax bill of the estimated 44,250 trusts caught in its wake unless they take action now. Due to come into force on April 1, the wellsignalled jump in the trustee tax rate from 33 per cent to 39 per cent will largely impact the top quarter of New Zealand trusts with assessed income that pays almost all of the tax levied on the sector. Meanwhile, the top 5 per cent of trusts, roughly 9,000, account for close to 80 per cent of the trustee income tax impost across the industry. Trustee tax rates The former Labour government-initiated move brings the trustee tax rate in line with the top marginal rate but – unlike the stepped thresholds for individuals – applies across all income. And following an earlier Labour-led change that made beneficiary distributions less attractive for many trusts, the scale of top-end taxable “trustee income” soared from $11.4 billion in 2020 to $17.1 billion in the 2021 financial year, according to Inland Revenue. The statistics imply the 9,000 highest earning trusts generated an astonishing $13.4 billion of trustee income between them in 2021 – or almost $1.5 million each on average: for the top 25 per cent highest earning trusts the average trustee income computes to around $388,000. Based on the IRD data, the hike would see those income-producing trusts pay an average extra $22,000 in trustee tax in the next financial year, a figure which rises to $88,000 for the top 5 per cent of income-producing trusts. Investment action plan Despite the shocking headline numbers, trusts can easily limit the damage by shifting investment assets, where possible, into portfolio investment entity (PIE) funds. PIEs feature a top tax rate of 28 per cent, AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 6 0

which, crucially, is a final tax for all investors. Even at the current 33 per cent tax rate, PIE managed funds are compelling investment vehicles for trusts but at 39 per cent the decision should be a no-brainer. Assuming trusts can switch all their incomeproducing assets into like-for-like PIE managed funds, our analysis suggests the 44,250 trusts due to bear the brunt of the increase would pay an average $41,000 or so less in the coming tax year than if left facing the 39 per cent rate. Under the same assumptions, for the top 5 per cent highest earning trusts shifting to PIEs would lower their next annual tax bill by about $162,000 on average compared to sucking-up the full new higher rate. Of course, not all assets have a PIE equivalent – especially, illiquid ones like private businesses or property – but trustees need to work with their professional advisers such as lawyers, financial planners and accountants to identify the best tax-effective solutions for their investment assets. When it comes to trustee income, PIE managed funds can offer considerable tax savings compared to directly held cash, shares, bonds, term deposits et al, while maintaining the overall trust investment exposure. By our calculations, in real terms trusts that don’t adjust their asset structures could pay

up to 40 per cent more in tax in the 2024/25 financial year versus those that move to PIE managed funds. Change via InvestNow InvestNow is uniquely placed to facilitate more tax-efficient investment portfolios for trusts in the looming 39 per cent rate world. Established in 2017, the platform now administers over $1.5 billion for a variety of investors including a substantial number of trusts. We have set up specific trust onboarding and governance protocols allowing trustees to effectively manage their investments in a compliant manner and with sophisticated reporting tools. Our investment menu offers some 150plus PIE managed funds from 30 different investment managers covering local and global fixed income, equities and cash. For more information on how InvestNow services trust clients and to check out our wide range of PIE managed funds offered by dozens of reputable, licensed managers, please visit investnow.co.nz/family-trustaccounts/. Or call us today on 0800 499 466 to find out more about using PIE managed funds to ensure trustee income is only taxed at a maximum rate of 28 per cent, and how your trust could side-step a 40 per cent higher tax bill.

The upcoming change in tax rate for trusts may mean you’re paying up to 40% more tax than you need to. From April 1 2024, the trustee income tax rate will increase from 33% to 39%. By switching your family trust’s investments to PIE managed funds, your tax rate is capped at 28%. InvestNow has an extensive range of PIE managed funds covering fixed-income, equities and cash.

Transitioning is easy. InvestNow can help. Call us on 0800 499 466.

investnow.co.nz/family-trust-accounts

PROPERTY

Price Growth Could be Patchy Kelvin Davidson warns while mortgage rates stay high, expectations should stay low.

Property values have generally begun to rise across most parts of the country, with the main centres near the front of the pack. Key supports continue to include strong inward migration and a resilient labour market. But even though mortgage rates have shown some falls at longer fixed durations, those changes have been small – so the bottom line is mortgage rates are generally still high. This will tend to cap the pace of house price growth in 2024 and could cause the upturn to be patchy/underwhelming from month to month, and from region to region. The market in numbers Taking a quick look at the key market metrics, sales volumes have continued to rise in recent months, and our figures show that in December they were almost 30 per cent higher than the same month in 2022. Yet they are rising from a low base, so the December monthly figure was still actually about 25 per cent below normal. Indeed, the total of around 66,000 sales for the 2023 calendar year as a whole remained close to 40-year lows. The climb back towards a regular annual turnover of more than 90,000 property deals could take some time. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 6 2

Accordingly, although the normal passthrough from rising sales volumes to higher house prices (as the stock of listings on the market tightens a bit) has now started, it’s still a little inconsistent. In December, the CoreLogic House Price Index showed Auckland, Tauranga and Christchurch grew by more than 1 per cent, but Hamilton was flatter, and Gisborne and Napier actually declined. This is reflective of the still-low turnover environment. First-home buyers That said, first-home buyers continue to enjoy current market conditions, with the CoreLogic Buyer Classification figures showing they had a 27 per cent share of property purchases in December, continuing a strong run of activity (at least in relative terms). Among other things, they’re using KiwiSaver for at least part of their deposit, and also fully utilising the low-deposit lending allowances at the banks. On the flipside, with gross rental yields low (even though rents themselves have accelerated) and mortgage rates still high, it remains tricky to get the sums to work on a typical investment property purchase, with large top-ups from other income still required. As such, mortgaged multiple property owners’ share of activity is closer

to only about 20 per cent at present, below their normal levels of 25 per cent or above. Watching potential tax changes Of course, would-be (and existing) property investors are at least feeling a bit happier, given the change of government and the looming reinstatement of mortgage interest deductibility for existing properties over the next 12 to 18 months or so. Smaller tax bills will no doubt improve the sums for some investors and bring them back to the purchasing table. But for others that decision still hinges on if and when mortgage rates themselves start to decline more materially again. Looking ahead On that note, it’s important to acknowledge that inflation isn’t back in the bottle yet, so it might not be wise to count on any meaningful mortgage rate declines until at least the second half of 2024. On that front, as ever, all eyes will be on the Reserve Bank’s regular official cash rate decisions. Their plans for possible caps on debt-to-income ratios for mortgage lending this year will also need to be monitored closely. Overall, house prices should continue to rise, but 2024 could still be a bit underwhelming compared with previous upturns.

C ORELO GIC

Average Property Value

Northland

$736,341 1.9%

CoreLogic House Price Index Percentage change last three months

Bay Of Plenty

$865,033 -2.3%

Auckland

$1,293,228 2.0%

Gisborne

Waikato

$589,493 0.1%

$818,956 5.1% Taranaki

$636,940 0.7% Manawatu/Whanganui

Hawke’s Bay

$556,481 2.6%

Tasman

$744,651 0.8%

$777,363 1.4%

Wellington

$893,887 0.2% Nelson

$780,528 1.0%

Marlborough

$698,781 0.5%

West Coast

$376,090 5.9%

Canterbury

$724,472 1.7% Southland

$459,677 -1.3%

Otago

$875,741 3.5%

New Zealand Average

$924,489 2.1% AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 6 3

PROPERTY

AWARD-WINNING DESIGN PMG recently completed a carbon-reduced fitout at 152 Fanshawe Street in central Auckland. Designed in partnership with Spaceworks using their innovative carbon calculator, the project won the environmental category in the 2023 Construction Sector Accord Awards, with judges praising its replicability across the sector.

AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 6 4

152 Fanshawe Street, Auckland.

The Advantages of Sustainable Buildings The PMG team explains why sustainability is the key to maximising long-term growth for commercial property investors and tenants. The rising number of businesses signing up to net zero targets, an ongoing focus on minimising operating costs, as well as shifts in the way businesses and consumers work, live and shop, has led to a growing demand for sustainable spaces in the commercial property sector. PMG Funds, one of New Zealand’s most established unlisted property fund managers, has been a key player in the sector’s drive for sustainable change, prioritising longevity and sustainability in their relationship-based, collaborative approach to property management. Meeting expectations PMG’s Property and Facilities Management teams have worked closely with tenants and suppliers to understand and support their evolving needs, creating high-quality spaces that are fit-for-purpose for tenants while improving the overall value of the properties and ensuring sustainable returns for investors. “Sustainability is an increasing focus for occupiers when making property decisions and we acknowledge PMG’s unique opportunity to play a prominent role in leading the sector. We also value bringing our tenants and suppliers along for the journey to drive positive climate action and facilitate long-term change,” says Jamie Reid, GM Property at PMG. This partnership approach has resulted in various successful sustainability initiatives across PMG’s portfolio. Since embarking on their sustainability journey in 2019, some of these initiatives have included: •

Achieving and maintaining Toitū Net CarbonZero certification.

•

Publishing two Sustainability Reports

The upgraded end-of-trip facilities at 152 Fanshawe Street.

(2021, 2023), with a third to be published in 2024. •

Installing waste and recycling systems across 73 per cent of properties where PMG manages waste.

•

Recycling 500 tonnes of waste.

•

Regular measurement, reporting and management of waste streams, as well as educating tenants.

•

Installing bike charging stations and EV charging stations at Bethlehem Town Centre, Tauranga.

•

Installing EV chargers at 152 Fanshawe Street, Auckland.

•

Introducing after-hours air-conditioning management via an easy-to-use app.

•

Installing carbon-reduced concrete at 25 Link Drive, Christchurch.

•

Partnering with Sunergise to roll out solar installation across the portfolio.

•

Awarded the FMANZ Sustainability Impact Award 2023.

The value case The value case for sustainability extends beyond reducing emissions, to the business benefits that flow from sustainability initiatives. “We’ve not only reduced operating costs for our tenants but also increased the overall value of our properties, thereby maximising returns for our investors,” says Simi Mukerjee, Head of Sustainability at PMG. This statement echoes recent research, which shows that sustainable buildings have a higher return on investment over their lifetime. JLL’s 2022 Global Return on Sustainability reports that BREEAM (Building Research

Establishment Environmental Assessment Method) rated buildings recorded rent premiums between 4 and 11 per cent and enjoyed 100 per cent pre-leasing compared to 50 per cent for standard properties. According to the 2023 Enabling a netzero built environment report by Colliers, sustainable buildings are projected to repay a probable 20-year rental premium by a factor of approximately three through operating cost savings alone. For PMG, sustainability initiatives support their efforts to grow value for their investors over time by increasing asset values and tenant retention, while supporting their tenants to grow their business, attract and retain staff. An average occupancy rate of 99 per cent (as at January 1, 2024) across their portfolio is testament to this. “The value that green buildings provide has become increasingly crucial to our tenants and investors. The positive feedback we’ve received, as well as recent industry recognition, being awarded the FMANZ Sustainability Impact Award 2023, highlights the impact and increased return on investment of these sustainability initiatives,” says Reid. Learn more about PMG’s commitment to a low carbon future for the property sector and how sustainability can unlock sustainable returns for investors at www.pmgfunds.co.nz Disclaimer: The information in this editorial is of a general nature and was current on February 15, 2024. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013 and does not take your individual circumstances and financial situation into account. PMG does not provide financial advice. Please seek advice from a licensed financial advice provider before making any investment decisions. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 6 5

O P E S PA R T N E R S

The Flood Factor: How to Avoid Buying Flood-Prone Properties A rare one in 200-year storm caused widespread damage and flooding last summer. A year on, investors are very wary of flood threat. Andrew Nicol explains how property investors can navigate some risk. A property in a known floodplain is not an immediate cause for panic. Hear me out. Flood zones are prevalent throughout Auckland, Christchurch and other major areas. If you buy (or own) a property in a floodplain, you have a 1 per cent chance of flooding in a given year. For buy-and-hold investors, this risk increases to 14 per cent during 15 years of ownership. So, it’s not so much about not buying a property in a flood zone. It’s about knowing what risks you need to pay more attention to. Property age Newer builds (not necessarily new builds) are often going to fare better in a flood. Up-to-date council rules state properties must be raised above the ground if the area is prone to flooding. The Christchurch City District Plan specifies properties need to be high enough off the ground to withstand: a one in 200year rainfall event; and a 1m sea level rise. In suburbs like Bromley, Christchurch, that number is 1.5m higher off the ground, for newer properties. Existing properties, pre-dating these codes, are built lower to the ground. This can mean that two properties sitting side-by-side in a flood zone will have varying flood risks. Depending on the age of each property. New builds Floods happen because stormwater systems

get overwhelmed. If you build a whole heap of properties together, you often have a whole heap more rooves to collect water, and less grass to absorb it. New developments will often have a water tank installed underneath or near the unit. It works like a big bucket that collects all the rainwater running off the roof, driveways, and walkways. The tank then collects the water and drip feeds it into the storm water system at a rate it can cope with. If your land is sloped, then water can run off your land and it won’t pool. But if your land is flat, or is at the bottom of a hill, then the water might stay on your land. So, the stormwater system only gets fed water at a rate it can cope with. Car parks If your newer property is in a flood-risk area, you still have to worry about your car. If your car is parked on the street, and the street floods, your car may be a write-off. But you may not be off the car-parking hook entirely if your property comes with a garage. While newer properties will be raised above ground level, often the garage won’t. This is because a developer often isn’t going to lay the extra concrete just to raise your car off the ground. You can ask for it, of course. But it will be at an extra cost, and this may put some people off. Especially considering the price

of a garage can add significant cost to a new property. Land flooding The focus is usually on how to keep water out of the house. So, we forget to think about how badly the land will get flooded. Sometimes the flood risk is the susceptibility of the water to go onto the land. You can get a building inspector to look at your property’s plans before you go unconditional. They will be able to tell if the water is going to pool on your land, or runoff somewhere else. This can be an issue if you can drive through the flood water to get to your property ... or get out. Sure, it’s a small risk, but it’s something that you want to think about when you’re making a purchasing decision. The reality is, many homeowners and investors already own property in a flood zone. But for potential buyers, there is some control you can exercise around flood risk when buying properties. Especially, when they know what properties are more susceptible than others. Some properties are more at risk, than others. This is true, even for neighbouring properties. Investors who deal in new builds might be able to worry a bit less. This is something you want to think about when you’re making a purchasing decision. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 6 7

OYSTE R P R O P E RT Y G R O U P

It’s all in the Footprint and Long-Term Value Unlocking investment opportunities in commercial property using ESG frameworks to deliver sustainable returns. More than two-thirds of New Zealanders prefer for their money to be invested ethically and responsibly*. While many recognise that investing in commercial property investment can provide stable and long-term returns, not everyone realises its potential to contribute positively to the environment. This makes it an attractive option for investors looking for benefits beyond profit. Oyster Property Group is one of New Zealand’s leading unlisted commercial property fund managers. For more than 20 years, its funds have catered to a diverse range of investors, from everyday New Zealanders who can invest for as little as $10,000, through to wholesale investors and global capital partners. With a diverse commercial property portfolio valued at approximately $1.9 billion, Oyster is well positioned to contribute to positive environmental change through its assets and tenants. As a future-focused business, Environmental, Social and Governance (ESG) is a key pillar of Oyster’s strategy. Oyster has crafted a robust sustainability plan designed to create long-term value for its stakeholders through sustainable growth and by taking active steps to reduce and better manage both its own footprint and those of its tenants. Shaping more sustainable cities Commercial property owners can have a tangible impact on the sustainability landscape of New Zealand’s cities.

With an extensive property portfolio comprising commercial office buildings, industrial and logistics assets and large format retail stores, Oyster boasts a large suite of premium assets. These are leased by tenants of leading national and international organisations – both public and private – many who value best practices in ESG, aligning with Oyster’s shared commitment to these principles. Oyster’s general manager of property, Fabio Pagano, says with more organisations looking to minimise the impact of their operations on the planet, they are seeking space from landlords who actively assist tenants in achieving sustainability goals. “Ensuring our assets contribute to a more sustainable New Zealand and a healthier planet is not only environmentally responsible, but it unlocks value for both our tenants and our investors, both now and in the future.” An investor-centric, long-term commitment Oyster’s ESG plan outlines clear, achievable goals that demonstrate its long-term commitment to sustainability. Key areas of focus include: •

Improving water and electricity consumption monitoring across its portfolio. Installing smart meters across Oyster’s portfolio to track electricity and water, enabling tenants to work towards their own sustainability goals, while supporting the values of environmentally conscious investors.

‘Oyster took a truly collaborative approach in working hand-inhand with us to deliver a premises that will serve as the home base for our team and our network partners for the next 25 years.’ – Carl Mills, KiwiRail AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 6 9

PROPERTY

‘We understand the influence we can have by prioritising ESG to shape more resilient cities for New Zealand.’ •

Sustainable electricity supply. Oyster has partnered with Ecotricity, New Zealand’s first and only Toitū climate positive certified electricity provider, to supply 100 per cent renewable electricity to most of its tenants. Ecotricity is currently reviewing Oyster’s portfolio to shortlist options for solar panel retrofitting.

•

Property performance verification. Nineteen of Oyster’s office properties have achieved a 4-star or higher NABERSNZ rating, which is the industry benchmark for energy efficiency and performance of office buildings.

•

Combating climate change. Oyster Management Limited became a Toitū Envirocare “carbonreduce” certified organisation in August 2023, allowing it to establish a baseline to measure, manage and reduce carbon emissions.

Oyster has established targets to reduce its corporate fuel and electricity related emissions by 25 per cent and per person travel emissions by 19 per cent by 2030. “As both a landlord and fund manager, our sustainability strategy is a key element in managing risks and creating long-term value for our tenants and investors,” says Pagano. “We understand the influence we can have by prioritising ESG to shape more resilient cities for New Zealand, making our business not only economically robust but also socially and environmentally responsible.” Landlord of choice New Zealand’s largest companies are now required to make climate-related disclosures across their operations - a standard that appears likely to become best practice for all businesses in the future. Many organisations across the public and private sector also mandate sustainability credentials as part of leasing and procurement policies. Oyster’s commitment to ESG provides investors with the assurance that Oyster is on the journey to make a tangible, longlasting impact, and is also well-positioned as the landlord of choice for tenants. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 7 0

Pagano says Oyster is seeing increasing demand from tenants who want to partner with a landlord who is invested in sustainable outcomes.

management of the growing rail network in Auckland and safeguarding future operations.

“Alongside ensuring our assets have strong sustainability credentials, we collaborate with our tenants to support them with their own sustainability goals.

The building’s indoor environment quality is designed to drive operational performance and reduce greenhouse gas emissions, further supporting KiwiRail’s progress towards sustainability.

“For example, we are installing smart meters across our portfolio to not only improve monitoring of electricity and water consumption, but also provide opportunity to drive down costs for our tenants and lift value for our investors.”

“When scoping our new building, we knew we needed an outstanding facility to meet our team’s needs long into the future, a critical component of which is fulfilling our organisation’s sustainability requirements,” says Carl Mills – Project Director at KiwiRail.

A great example of this in action is Oyster’s collaboration with its tenant KiwiRail in designing a bespoke space in Central Park in Auckland, perfectly tailored to meet its specific needs.

“This new facility will be crucial in delivering rail services to support Auckland’s growth and provide lower-emissions transport options for commuters.”

The result is a purpose-built stand-alone Rail Management Office Building at Auckland’s Central Park that has been developed targeting a 5 Green Star certification. Built with metering and monitoring systems to manage energy consumption and particular materials selected to reduce air pollutants, the premises provides space for KiwiRail and its rail partners to work together under one roof, supporting the

“Partnering with landlords like Oyster, who work closely with us and understand our sustainability requirements, delivers tremendous value to our organisation.” *Source: According to a recent Financial Markets Authority survey.

Scan the QR code or visit oysterproperty.co.nz/ sustainability to read our latest sustainability report.

SUNCORP VERO

Fighting the Good Fight Against Fraud Insurance fraud is a persistent and costly problem affecting not only insurance companies and the insurance industry, but anyone who holds a policy. Insurance fraud can range from making a claim when no loss has occurred to providing incorrect information, exaggerating a claim, or not providing or withholding relevant information. Paul Collins, who heads up the Fraud Intelligence Team at Vero Insurance New Zealand, says in recent years there is evidence of an increase in fraudulent claims that can be settled for cash, but no firm evidence of increased insurance fraud overall. “In recent times we have seen, for example, lost jewellery, with fraudsters often trying to take advantage of specific events. The severe weather events in early 2023 are an example of this, where people would noticeably inflate insurance claims or claim for accidents that didn’t happen.” Consequences of fraud There are serious consequences for a customer who defrauds or attempts to defraud an insurer. Insurers will often rely on a breach of a policy condition which requires policyholders to provide complete and correct information in relation to a claim. “Insurance contracts are also contracts of good faith, which means that there needs to be honest disclosure of information both before the policy is taken out and at claim time.” Generally, a claim which is supported by incomplete or incorrect information or one which is fraudulent will be declined, and the policy will likely be cancelled. The insurer may also cancel any other insurance policies the customer has. A customer who has had a policy cancelled will need to disclose this when they apply for other insurances. If they don’t disclose this to their next insurer, that insurer may decline any future claim (even if it’s accurate) and avoid that policy based on the customer’s non-disclosure. And it may be difficult to get cover in future. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 7 2

In some cases, insurance fraud or supplying incorrect information can also have flow-on consequences for people trying to obtain a mortgage or a personal loan for important assets. Banks usually require customers to have insurance as conditions of their mortgage or loans. The face of fraud One recent example is related to a customer who had made a claim for a collision with another vehicle. The customer stated they had braked suddenly to avoid an animal on the road and were hit from behind by another car. Vero identified inconsistencies between the damage to the customer’s car and the accident as it was described. A specialist crash investigator was engaged, and among their findings was that the damage to both vehicles was consistent with being driven into fixed objects (eg a concrete post) rather than hitting another car. They concluded the accident had been staged. The claim was declined for failure to provide honest and accurate information. The other driver’s insurance company investigated their claim, which was also declined. Another example follows a customer who made a claim for a TV which was damaged while moving it into another room. Following an investigation, it was uncovered that the customer had made a similar claim for a TV with another insurance company just two weeks prior. When contacted by Vero, the customer denied having made a claim or even having a policy with the other insurance company. It was then established that they had provided the same image of a damaged TV to both insurance companies. Vero determined that the customer had attempted to claim twice for the same damaged TV. The claim was declined for false statements and the customer’s policy cancelled.

Detering techniques Insurance companies employ strategies and technologies that help identify and initiate prevention measures against insurance fraud. It is a complex and ongoing battle that involves cooperation between insurance companies, law enforcement agencies and advanced analytics. During the lifecycle of a claim, Suncorp New Zealand utilises a mix of automated fraud detection tools and fraud awareness training to aid frontline staff. Where suspicions are raised, a claim is referred to specialists who will verify the circumstances of the claim. Collins says team members at Suncorp New Zealand who are involved with policy and claim lifecycle events are invaluable assets for identifying potential fraud, and they undergo fraud awareness training. “One of the primary methods we use to combat fraud is data analytics and predictive modelling, which can help the team identify suspicious claims. We also have in-house fraud and intelligence tools that help our fraud team to identify patterns of fraud and the team are supported by investigations specialists and law enforcement, when necessary.” The insurance industry also collaborates on a national scale under the Insurance Council of New Zealand, where tools and processes exist to provide industry-wide alerts on fraud issues and trends.

Disclaimer: The information in this article has been compiled from various sources and is intended to be factual information only. Full details of policy terms and conditions are available from Vero Insurance New Zealand Limited or your financial adviser. For advice on product suitability, please contact your financial adviser. While we take reasonable steps to ensure that the information contained in this article is accurate and up to date, it is subject to change without notice. Vero Insurance New Zealand and its related companies does/do not accept any responsibility or liability in connection with your use of or reliance on this article.

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I NVE ST I N YO U R S E L F

Fashion Update

2. 1.

The colours and styles of autumn 2024. 8.

1. MOSCOT Dahven Sunglasses – $570, 2. R.M.Williams Mulyungarie Fleece – $159, 3. R.M.Williams Berwick Chino – $219, 4. R.M.Williams Sorrento Zip Tote – $349, 5. R.M.Williams Comfort Craftsman – $749, 6. Levi’s Men’s Relaxed Fit Western Shirt – $139.90, 7. MOSCOT Sheister Sunglasses – $630, 8. Levi’s Iconic Western Shirt – $139.90 AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 7 4

FA S H I O N

3. 2.

1. twenty-seven names Soul Mate Blazer – $690, 2. Kathryn Wilson Mary Lou Loafer – $429, 3. R.M.Williams Verandah Raglan Top – $189, 4. twenty-seven names Starry Night Jacket – $740, 5. Kowtow Sailor Jeans – $289, 6. Kathryn Wilson Joey Boot – $389, 7. R.M.Williams Miller Shirt Dress – $299, 8. AHLEM Bonparte Sunglasses – $990, 9. Kowtow Agnes Dress – $359 AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 7 5

I NVE ST I N YO U R S E L F

When Opulence & Performance is Simply Electrifying Liz Dobson gets behind the wheel of a Mercedes-Benz EQE SUV and enjoys a world of cutting-edge technology and meticulous craftsmanship.

With EU regulations getting tighter each year for car manufacturers, the three German premium brands – BMW, Audi and MercedesBenz – took different roads to electrify their vehicle range. BMW officially entered the electric vehicle market with the launch of the BMW i3 in 2013. The i3 was an all-electric city car designed with sustainability in mind, featuring a distinctive carbon fibre-reinforced plastic body and a focus on urban mobility. Alongside the i3, BMW also introduced the i8 the same year, a plug-in hybrid sports car that combined an electric motor with a petrol engine for enhanced performance. These initial entries laid the foundation for the company’s subsequent efforts to expand its electric vehicle line-up. BMW New Zealand’s full electric line-up now includes nine vehicles, covering SUVs and sedans.

additional models like the Audi e-tron Sportback and the Audi Q4 e-tron. The company has expressed its commitment to further electrification and plans to introduce more electric and plug-in hybrid models in the coming years.

is the Mercedes-AMG EQE 53 4MATIC SUV.

Electric commitment Mercedes-Benz officially entered the electric vehicle market with the launch of the B-Class Electric in 2014. They significantly expanded the commitment to electric mobility with the introduction of the EQC, an all-electric SUV, which was unveiled in 2018 and began production in 2019.

The Mercedes-AMG EQE SUV blends the opulence and performance synonymous with the Mercedes-Benz brand with the sustainability and innovation of electric powertrains.

The EQC marked Mercedes-Benz’s entry into the fully electric SUV segment and represented a more substantial effort in the company’s push towards electrification.

Audi’s entry into the electric car market came in 2018 with the launch of the e-tron, the brand’s first fully electric SUV. The Audi e-tron SUV combined luxury and performance characteristics with electric propulsion technology.

Since the launch of the EQC, Mercedes-Benz has continued to develop its electric vehicle line-up, introducing additional models under its EQ brand, such as the EQA and EQB. The company has expressed its commitment to further electrification and aims to offer a comprehensive range of electric vehicles across various segments in the future.

Since the introduction of the e-tron, Audi has expanded its electric vehicle line-up, introducing

Mercedes-Benz has seven electric options, including a van. The latest to join the line-up

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To break down the model description, “AMG” is the performance division of the brand with vehicles’ power and appearance enhanced, while “4Matic” simply means fourwheel-drive.

Striking design As the latest addition to the EQ lineup, the EQE SUV brings forth a harmonious fusion of cutting-edge design, exhilarating performance, and eco-conscious engineering. The EQE SUV has a striking design, which seamlessly marries sleek aesthetics with aerodynamic efficiency. From its dynamic LED headlights to its sculpted body lines and assertive stance, it exudes elegance and modernity. Behind the wheel, the EQE SUV delivers a performance that is nothing short of exhilarating. Powered by dual electric motors, it boasts instant torque and seamless acceleration, propelling it from 0 to 100km/h in an impressive 3.7 seconds.

MOTORING

‘The Mercedes represents a leap forward in the world of electric vehicles.’

The advanced all-wheel-drive system provides exceptional traction and handling, allowing for confident manoeuvrability in various driving conditions. Additionally, the adaptive air suspension ensures a smooth and refined ride, enhancing the driving experience. With the driving modes, in Comfort it’s exactly as the name implies. It’s soft enough to cruise for long distances without fatigue. In Sport and Sport+ modes, the suspension stiffens, and the rear-wheel steering system sharpens up, giving the EQE agility that is otherwise hidden and locked away. I drove it in many road conditions; on the motorway where it excelled at overtaking, and around town where I was grateful for such features as a 360-degree camera and parking sensors when navigating tight spaces such as supermarket car parks. Made for speed I also took it on country back roads where the size (4863mm length) and weight (2580kg) plus 22-inch wheels impacted tight turns. This means it’s not the sharpest AMG at manoeuvring. But this SUV hasn’t been created for twisting roads ... it’s made for speed. And

that shows in situations such as accelerating on the motorway and overtaking. It’s fast and is sure to impress your passengers, as it did mine. When it comes to electric cars, brands go for range or torque and with the EQE 4Matic, it’s the latter. The range for the electric performance SUV is just 432 kilometres and it’s a “thirsty” vehicle due to the weight and focus on power. I had to charge it twice to 100 kilometres during my seven-day test period. Factors that affected the range were using air conditioning, and I like my temperature to be at the lowest setting and blasting on me during Auckland summers. But to help reduce the impact of using air-con, you can turn on the ventilated front seats to cool you down. While people talk about range anxiety with electric vehicles, there is also charge anxiety, when you have to rely on public networks if you are going on road trips or can’t have a charging wall box at your home or apartment complex. To combat this, you can join companies such as ChargeNet, with an increasing network of charging stations around NZ, or

download apps such as PlugShare that help you find your charging stations. What I liked about the AMG version of the EQE was the meticulously crafted interior that exudes luxury and sophistication, providing a serene environment. It’s also a good-looking SUV, with a sleek and modern design that commands attention on the road. It has futuristic features, such as the LED headlights and large information screens, but it remains part of the Mercedes design DNA. What sets the Mercedes-AMG EQE SUV apart from its competitors is its unparalleled combination of luxury, performance and sustainability. While many electric SUVs focus solely on eco-friendliness, the EQE SUV goes above and beyond by offering a level of refinement and performance typically associated with traditional internal combustion vehicles. Its cutting-edge technology and meticulous craftsmanship set it apart as a true standout in the electric vehicle market. Liz Dobson is the former motoring editor of the New Zealand Herald’s Driven publication and website. In 2020, she established AutoMuse.co.nz and in 2022 was made a judge for Women’s Worldwide Car of the Year. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 7 7

I NVE ST I N YO U R S E L F

A Year of Nostalgia & Futurism Mary-anne Tobin, of Design Addiction, outlines the ultimate luxe interior offerings for 2024. Kelly Wearstler fashionably reintroduced the iconic bolster with her cover appearance in Harper’s Bazaar late last year. It started re-appearing in Europe 2019, and we are just starting to see it mainstream in New Zealand. Bolster has had its moments in design, through the late 1920s in furniture and cushions. Some of these classic designs are now reappearing in the form of sculptural furniture and aesthetic swivel chairs. Bolster and boucle will work in unison, we will see more unique furniture pieces in this space, as boucle is such a soft and versatile fabric. Already we are seeing increased textures in boucle, and slightly softer mushroom brown hues. There is a growing popularity of bolster featured daybeds. The Axel daybed in Oat Boucle from Globe west by Soren Liv is a modern, timeless classic. Sadly, all good things must come to an end, and we will bid adieu to boucle by 2025. Tailored comfort We have seen a shift in the fashion world; we are leaving behind the skinny jeans in favour of a more rested fit, as I call it, tailored comfort. Supermodel Bella Hadid likes to wear relaxed grey denim jeans, and a double-headed belt in differing metals – to me this translates to brushed brass or nickel paired with chrome in our homes. Personally, this is something I am looking to introduce, chrome decor with brass detailing. If you can pull it off, it makes an impression. If we compare fashion with the interior design world once again, we can see our living areas changing. There has been a shift towards a more balanced home since Covid, with working from home options. Just as you feel more comfortable in relaxed clothes, the same applies with your furniture. Accent chairs and sofas such as the Togo by Michel Ducaroy, have a more comfortable, AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 7 8

or relaxed, sculptural style. My only rule is to keep it tailored this year, with additional detailing – such as bolsters with piping, and fitted upholstery. What will we see more of? We will certainly see more creativity in wall art and decor. A current favourite is The Visuals Gallery, based in Sydney. Owner Clementine Stoney Maconachie has nailed the wabi sabi imperfect crunched brass, and she has recently released new colours. I am enjoying the darker tones of blackened and aged brass. Mirror-polished stainless steel will be more prominent on walls. Reflective substrates, uniquely shaped mirrors, and custom mirror creations will elevate our spaces. Geometric (more triangles) and layered patterns will be used to lift our interiors, while adding texture and curves. Natural and organic artisan pieces will continue to be popular. Glass blocks will also make a reappearance. Black glamour will make a return as decor pieces, and more grandeur via old Hollywood handles and knobs. Hollywood patterns such as peacock feather motifs are being introduced for some playful design adventures.

Above: Monochrome and easy to combine, Melodie by Casamance is made in Belgium. Below: 2024 Pantone colour of the year, with a heavenly soft peach tone. Above right: An indulgent detailing by Powersurge. Bottom right: A nostalgic upholstery woven in lustrous velvet, Beverly Hills by Catherine Martin by Mokum, resembles a peacock feather.

PANTONE ®

13-1023 Peach Fuzz

BY D E S I G N

‘Pantone released its colour of the year in 2024 as Peach Fuzz.’

Medieval times. It may appear more in our commercial spaces – the Tamahere Country Club in Tamahere has a beautiful chain mail feature above the custom geometric designed mirror wall, sourced from Kaynemaile in Wellington. Devil in the detail There will be more focus on the finer details, such as brass cutlery inserts, door trims, floor and handrail detailing. Black and dark oaks are complemented by bronze and antique brass accents and differing levels of whiskey tones and subtle sheens. As the year progresses tan hues will go into more depths of coffee beans and chocolate. These dark features can be balanced with lightness such as textured walls with soft tones of warm whites.

Photographer: Simon Devitt

Colour of the year Pantone's colour of the year in 2024 is Peach Fuzz. In a recent home decoration, we used a Canvas by Mokum fabric in nude that has a slight tint of Peach Fuzz within the print. It offers a sense of femininity, freedom, and softness. More custom pieces will be prevalent, with New Zealand already showing some intuitive design with bespoke brass installations.

Intuitive design Just as our personal and consumer expectations increase, so will that of design. I feel we will transition into a world of heightened sensory design. Living will become a 5D experience, with heightened visuals, sound and touch. Interior designers will need to be more intuitive, creating a story that appeals to all our senses. I have mentioned in other articles that biophilic design is also commonly spoken of in 2024 – the principle of designing with nature for an indoor-outdoor connection – think plants, cicadas, tuis, waterfalls and fresh air. Our New Zealand suppliers will require some Kiwi ingenuity to adapt into this new realm. Just as our children’s teddy bears can now beat like a heart and smell like chocolate, as designers we must explore options in our homes to step into the next design era rather than repeat history. As we inhale into our spaces, we will be welcomed by the new sensory design era movement of 2024. Imagine coming home to a world within your home (multifunctioning design adapting to all our senses and movement). I believe this will begin soon.

We will start to see more corduroy – think back to your childhood corduroy jeans. A custom upholstered piece with Lee Jofa modern fabric Intargia by Kelly Wearstler would be nice in 2024, or the Casamance in Melodie (above left), with its champagne and onyx bold and vibrant geometric pattern. Viva La Marble! The marble trend isn’t leaving anytime soon; wall sconces with marble features, Calacatta Viola marble side tables, and kitchen islands with custom waterfall designs, will bring added depth, texture, and uniqueness to our homes. The beauty of marble and stone is that each piece holds its own original veining and colouring, which brings a sense of individuality as distinct statement pieces. Checkerboard floors will also be prominent, with marble contrasts. Another trending wall or ceiling feature is chain mail – small links of metal joined together. Mail armour brings a sense of masculinity and military; once a form of body armour for knights during AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 7 9

I NVE ST I N YO U R S E L F

Make Convenience the Key to Healthier Living Resident health and wellness contributor Joelene Ranby offers tips on ways we can all make our health resolutions stick. Did you start the new year like many of us do with the greatest intentions to create new health resolutions that would last the year this time? January has come and gone, and before we know it we can feel like we are suddenly relishing the last weeks of daylight savings and welcoming in the second quarter of the year with a blink of an eye. Like many things in life, focusing on small yet achievable steps to help form new habits can be the significant difference between our health resolutions resulting in real changes rather than familiar feelings of guilt or disappointment when we set goals which feel too out of reach. Who better to ask than Joelene Ranby, our resident health and wellness contributor and the founder of Resolution Retreats, New Zealand’s best wellness retreat, for her tips on ways we can make our health resolutions stick. We were delighted to discover the key is in convenience. Hydration vital “A great place to start is focusing on making healthier more convenient for you and being unhealthier less convenient for you. Some of these may seem simple, but you will be surprised how many of us have an empty drink bottle at our desk, in our car or in our handbag!” Here are some of my habit tricks for navigating the convenience conundrum: •

Effortless meal mastery: Invest as little as 30 minutes weekly to prep meals or meal elements; having nutritious options at your fingertips makes healthy choices easier and a no-brainer. Even doing a bit of chopping and organising as you unpack the groceries is a great first step. Meal mastery helps reduce food waste and saves you money.

•

Snack smart: Keep a curated stash of favourite fruits, nuts, boiled eggs and yoghurt within reach, making it easy to opt for these over less healthy snacks. For most of us, it’s not that we don’t enjoy healthier snacks; they just tend to be less convenient unless they’re prepped and ready to go. Focusing on

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R E S O L U T I O N R E T R E AT S

‘Prepare your body and sleep environment in advance; don’t wait until you’re tired.’

protein will also ensure you feel fuller for longer and reduce those afternoon sugar crashes/cravings. •

Digital detox, a wellbeing escape: Trade screen time for activities you love, enhancing your happiness, well-being and relaxation. Whether it’s personal time, creativity, or indulging in a hobby, prioritise activities that contribute positively to your health and happiness. Not investing in our happiness can leave us frustrated and resentful and looking for a pick-me-up in unhealthier but more convenient quick fixes.

•

Mindful eating, your daily pause: Transform mealtime into a personal care ritual. Chew and savour each bite, preventing overeating and promoting better digestion. Extending your meals beyond 20 minutes enhances satisfaction and allows your body to extract more nutrients from your food. Try to avoid distractions like electronics at mealtimes.

•

Hydration habit, your stylish statement: Carry a chic, reusable water bottle, it not only reflects your taste but ensures hydration is always at your fingertips. The easier the bottle is for you to take a swig, the better. Try a bottle with a quick-sip option. And most importantly, make sure it’s topped up; you can’t drink out of an empty water bottle.

•

Catch the first sleep train: Prepare your body and sleep environment in advance; don’t wait until you’re tired. Start getting ready for bed at least an hour before your intended sleep time. This can include limiting your use of electronics, showering earlier, brushing your teeth, etc, so that when you start to feel sleepy you can head straight off to bed. Many of us wait until we are feeling too tired before starting the getting ready for bed ritual, after which we may have missed the sleep train altogether. Out of sight, out of mind: Put away items that distract you or pull you into unhealthy habits. For example, having a jar of cookies on your benchtop will be a constant reminder they are there for the taking.

Putting them away doesn’t necessarily mean you won’t have the cookies, but without the constant visual reminder you’re less likely to indulge as often. •

Meal planning: One of the most effective ways to improve your nutrition is by thinking about meals and snacks in advance and what is required to make those happen. Meal delivery options such as My Food Bag’s Fresh Start subscription not only assist in taking the guesswork out of what you’re having for dinner, but also offer lunch and snack options. Their clever nutritionists do a lot of the work for you in picking balanced and delicious recipes and sending them your way (they have even featured some of our retreat recipes!) If you’ve got a particularly busy few weeks coming up, take a look at their express options for meals ready in less than 15 minutes.

Far left: All meals and snacks on retreat are nutritionist designed. Joelene’s recipe book Retreat Yourself also available to purchase to help make healthy food more convenient for you Far right: Joelene Ranby, founder and wellness manager at Resolution Retreats enjoying yoga on their purpose built yoga deck overlooking Lake Karapiro Middle: Retreat guests enjoying a game of tennis at the purpose built health resort

By focusing on making healthier habits more convenient, you’ll find that healthier choices slip into your day more effortlessly. These new habits begin to stack up, replacing those “unhealthier” habits that once felt more convenient. AUTU M N 2 0 2 4 | I N F O R M E D I NVESTO R 8 1

Earn a fixed return of 11-12%p.a. with interest paid monthly secured by first mortgage Minimum investment of $100,000 Wholesale investors only

Finbase provides private investors, family offices and high net worth individuals who meet relevant wholesale investor criteria an investment backed by First Mortgage Security. Investor security: Funds are utilised to provide First ranking mortgages to commercial borrowers for the purposes of short term property projects, maximum 12 month term of any loan.

No costs or fees deducted Returns are pre-tax

Maximum lending of 60% of property value.

Recently funded investments:

Taupiri, Waikato

Massey, Auckland

Kelston, Auckland and Waitakaruru

First mortgage security

Security description: Farm and winery on circa 4ha

Security description: 130m² residential home

Security description: Property 1: Large residential

of land, with a 110m² residential dwelling onsite

on 260m² freehold land - the home is a duplex,

home on freehold circa 470m² of land. Property

CV: $1,015,000

attached to another property

2: Relocated home on circa 9,970m² land

Loan advance: $576,800

CV: $660,000

Combined CV: $1,270,000

Loan to value ratio (LVR): 57%

Loan advance: $25,000

Loan advance: $663,000 (registered over both

Term: 12 months

Loan to value ratio (LVR): 4%

securities)

Interest rate: 11%p.a. paid monthly in arrears

Term: 10 months

Loan to value ratio (LVR): 52%

Purpose of funds: Funds used to refinance

Interest rate: 11%p.a. paid monthly

Term: 12 months

the current lender plus an equity release for

Purpose of funds: Small equity release for borrower

Interest rate: 11%p.a. paid monthly in arrears

business purposes

to do some minor renovations to the property

Purpose of funds: Funds are being used to settle

Exit strategy: Sale of the security property to

Exit strategy: Repayment from borrowers own

the purchase of property one

repay the debt

earned income

Exit strategy: Complete the CCC for property one and resell property for profit

Finbase is proud to have never

We will cover your legal and accounting fees of up to

missed an investor interest

$2,500 to discuss this investment opportunity with your

payment nor suffered a single

professional advisors, with no obligation for you to invest after doing so.*

loss of investor capital.

For investment opportunities contact our portfolio managers:

Pernell Callaghan

Hayden Thompson

021 143 4291 pernell@finbase.nz

021 253 7816 hayden@finbase.nz

For more information visit our website at www.finbase.nz Finbase is registered as a Financial Services Provider under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 of New Zealand. Its registered number is FSP1003560. *Terms and conditions apply. For marketing purposes the images are of suburb locations, not the specific property.