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International shares

The MSCI World Index fell 1.8% in local terms over the month of July. Returns to unhedged New Zealand-based investors were up 1.4%, with the NZ dollar weakening further and falling just over 3% on a TWI basis for the second straight month.

Australian shares 

The Australian share market continued its losing streak, recording a 4.6% loss for July – its seventh negative month out of the last nine. The market moved in a 400 point (+/-8%) trading band during the month driven by volatility in the banks, with investors moving to reduce the long resource/short financials trade.

 
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New Zealand shares 

New Zealand shares were boosted by the first interest rate cut from the RBNZ in five years, and the NZSX50 finished up 4.4% in July. This was in stark contrast to international shares.

Australian Listed Property 

The S&P/ASX 200 Property Index (gross) finished a turbulent month down -5.0%, under performing the broader share market by 0.4%. It was another extremely volatile month, being down nearly -17% mid-month, then bouncing back into positive territory a week later before falling again just before month end. Global credit concerns continued to haunt the sector.

International Listed Property 

Global real estate stocks continue to be on a roller coaster, with unusual volatility tied to the daily news, but ended close to flat for the month of July. A number of factors created conflicting currents, including continued unrest in the financial services markets, increased inflation concerns worldwide, and fluctuations in the oil market that led to a more positive investment environment.

New Zealand Listed Property 

The New Zealand Property Index (gross) returned -4.4% in July, under performing the NZX50 Index (gross), which gained 4.4%. The sector was dragged lower by the weight of selling pressure due to negative news surrounding property developers and finance companies.

International fixed interest

Global bonds hedged into NZ dollars returned 1.68% for the month. The global credit crunch dominated proceedings in July, with another three bank failures in the US and a major rescue of two major enterprises, Freddie Mac and Fannie Mae. These events did nothing to instil confidence in the economic outlook, despite the much lower oil prices.

New Zealand fixed interest

The New Zealand Government bond market returned 1.14% for the month, outperforming cash, which returned 0.75% over the same period. Over July, the NZX Government Bond Index returned 1.14%, the NZX All-Swaps Index 1.80% and the NZX Corporate A-Grade Index 1.65%.

Currency

The NZD/USD tested the top-side of the range in early July before collapsing to a new low of US$0.7335 by the end of the month. This equated to a 3.8% decline, the largest monthly decline since August last year.