For full detailed commentary, charts, and data available click on the link: 2026.Q1 Economic Commentary
While the last several years have seen many international share markets delivering strong double-digit investment returns, the first three months of 2026 saw most markets taking a small step backwards.
Market declines can happen at any time, but the primary headwind this quarter was linked to the escalating conflict in the Middle East. US and Israeli missile strikes on Iran disrupted the flow of oil through the Strait of Hormuz and created uncertainty for the global economy. Throughout March, investor sentiment oscillated between fears of a prolonged military conflict and hopes for de-escalation.
Geopolitical risks elevated but not unprecedented
We discuss the Geopolitical Risk Index (GPR Index) which aggregates the occurrence of words and phrases related to geopolitical tensions that are published in leading international newspapers. Since the mid 1980s, the GPR Index has recorded five distinct spikes. Without a crystal ball to tell us how the immediate future plays out, past events reveal that even when geopolitical risks are abnormally large, we can, on average, expect investment markets to continue to deliver very good long-term returns.
Feature Article: The case for a strategic allocation to New Zealand shares
New Zealand shares have experienced both strong and challenging periods over the past decade and a half. Despite recent underperformance, the case for maintaining a meaningful allocation to New Zealand shares remains intact for local investors.
We discuss the main reasons for this; tax efficiency, currency alignment, regulatory and geopolitical events.
Recent local share market underperformance does not change the role local shares can play in a well-constructed portfolio. For investors whose lives and spending are centred in New Zealand, they continue to offer tax-efficient, currency-aligned exposure to businesses they know.