Retail Savings & Investments in New Zealand: Coronavirus (COVID-19) Sector Impact

Retail Savings & Investments in New Zealand: Coronavirus (COVID-19) Sector Impact

Summary

The Coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious Coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel Coronavirus a pandemic on March 11, 2020.

Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with key markets across the globe losing 20-50% of their value for the year to date. Many economists and institutions have cut their forecasts, with consensus global GDP growth currently at 2.6% for 2020 and many experts predicting the potential onset of recessionary environments.

A similar trend is expected in New Zealand, as economic growth in the country is predicted to have dipped in the first quarter of 2020 and will decelerate further if the disease is not controlled at the earliest possible opportunity. The decline will have an adverse impact on all sectors, including retail investments.

This report focuses on the impact of the Coronavirus outbreak on the New Zealands economy and the country’s retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts GlobalData’s pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.

Scope

- New Zealand retail savings and investments are forecast to contract by 3.7% over the course of 2020, as the economy has come to a standstill thanks to the impacts of COVID-19. Retail equity and mutual fund holdings are expected to take the brunt of the economy’s slowdown, with respective declines of 17.6% and 8.4% anticipated.
- Retail deposits and bond holdings, on the other hand, are set to fare better than initially expected courtesy of a flight to safety away from risk assets. However, more pronounced declines in risk assets holdings are expected to result in a total retail holdings forecast for 2020 that is 7.2 percentage points (pp) lower than initially predicted before the onset of COVID-19.
- The effects on the different segments that make up the high-net-worth (HNW) market will be disproportionate. The financial services and investments sector, which is the largest contributor to New Zealand HNW wealth, has already taken a significant hit, as indicated by the 24% decrease of the S&P/NZX All Financials since the beginning of the year.
- The healthcare sector - the third largest contributor to HNW wealth - is being less severely impacted, with the S&P/NZX All Health Care having gained 4.2 since the beginning of 2020.

Reasons to Buy

- Make strategic decisions using top-level revised forecast data on the New Zealands retail savings and investments industry.
- Understand the key market trends, challenges, and opportunities in the New Zealands retail savings and investments industry.
- Receive a comprehensive insight into the retail liquid asset holdings in New Zealand, including deposits, mutual funds, equities, and bonds.