Let's take a moment to look back at the year that’s been and review a handful of the global headlining moments that have defined 2019.
As expected, Brexit dominated many new articles and talking points throughout 2019. The United Kingdom’s withdrawal from the European Union was due to conclude in March of this year, following a two-year-long process. However, as 2019 draws to a close the renewal date of January the 31st 2020 has now been established. The new year will no doubt again be dominated with much talk of this deal, with the United Kingdom and European parliament’s hopefully forming an agreeance.
In March 2019, the heart-breaking Christchurch mosque massacre sent New Zealand into a state of shock and disbelief at such an extreme act of violence. The terrorism threat level was raised to high for the first time in New Zealand history. On April 1st the Arms Amendment Act 2019 was introduced in the house of representatives and passed its first reading the following day. The final reading was passed on April 10th and it became law by the end of that week, less than one month following the attack.
The phenomenon that is Greta Thunberg took the world by storm, as she demanded individuals and nation leaders to enforce climate action. Many of the younger generation took to the streets around the world supporting Greta’s protests, using their voices to fight for global warming acknowledgment and climate change action.
In September of 2019, an impeachment inquiry against Donald Trump was initiated after allegations that Trump had abused the power of the presidency. This was based on the notion Trump had withheld information, as a means of pressuring Ukraine's newly elected president to announce investigations that would be publicly damaging to Trumps 2020 election political rival. On the 18th of December, President Donald Trump was impeached by the House of Representatives, making him the 3rd president in history to be so. This decision has created the need for a trial in which the senate will have the final vote on whether Trump will remain in office. We can expect the impeachment inquiry will carry on through to the New year with much discussion surrounding its outcome with the upcoming 2020 Election.
In terms of reviewing the New Zealand financial markets for 2019, we also saw several notable changes.
The Official Cash Rate began the year unchanged at 1.75. In May 2019 a point change of -0.25 basis points was announced, the first reduction in nearly two and a half years. This brought the Official Cash Rate to a record low of 1.5% due to longstanding price stability. This change had an immediate effect on the mortgage rates on offer by New Zealand Banks. In August of this year, another change was announced reducing the OCR by a further 0.50 basis points, bringing the OCR to yet another record low of 1.00%. The final announcement released in November established there would be no further change, and the first announcement for 2020 will take place on February 12th.
With the changes in the OCR, we also experienced interest rates continuing to decrease as the year progressed. Consumer price inflation remained below the 2% mid-point target. It was noted that interest rates would need to remain at low levels for prolonged periods in order to ensure inflation will reach the mid-point of the Monetary Policy Committee’s 1% to 3% target range.
This year KiwiSaver experienced a new law change with the addition of two new contribution rate options, 6% and 10%, as from April 1st. With this change the ‘contributions holiday’ was also renamed ‘savings suspension’ and the 5-year suspension was reduced to a yearly renewable opportunity, based on a reassessment of position. Later, from July 1st, those over the age of 65 who missed out on the opportunity to invest in KiwiSaver or had previously closed their accounts, were offered the opportunity to reinvest into the scheme.
The global economy has many people curious as to whether it is finally moving forward from its rocky period. The United States and New Zealand share markets both show signs of reaching record years. The New Zealand stock market is positioned to reach one of its strongest runs in 20 years with the S&P/NZX50 up 28.3 percent in the year to date while overseas markets such as the Dow Jones Index have also managed to hit new highs in the past few weeks. The return the New Zealand stock market has experienced throughout 2019 leaves investors hoping the good run will continue well into the new year and beyond.
New Zealand’s new dwelling consents also reached all-time highs, with the number of new dwelling consents issued rising by 7.2 per cent in September 2019 alone, following a 0.9 percent rise in August. In January 2019, a total of 2,496 new dwellings consents were issued, while September had over 3,347. As more consents are issued and more houses are built, the New Zealand Housing market is bound to face repercussions. The residential property market experienced a decline in new listings progressively throughout 2019, meaning a lower level of total stock on the market and less choice for buyers, ultimately assisting in maintaining higher asking prices. Due to the fluctuations in the market, it is hard to predict whether this trend will continue into the New Year or not.
2019 has been an incredibly challenging yet engaging year across many channels. As we approach the beginning of the new decade, we can expect to continue seeing trends such as climate action and political unrest develop in many ways. We will no doubt see the concluding answers to many current events that have been dominating our recent news articles. It is important to remain aware and up to date on such events, and we look forward to keeping you updated when we resume in the new year.