Source: Radio New Zealand
AFP / Getty Images / Michael M Santiago
KiwiSaver providers are hoping news of a ceasefire in the Iran conflict may give investment markets more support.
Sharemarkets lifted on the announcement that US President Donald Trump was willing to enter a ceasefire agreement with Iran if the Strait of Hormuz was opened.
Since the conflict in the Middle East began, Morningstar data shows, typical growth funds have dropped about 4.3 percent and recovered about half of that.
By comparison, when Trump announced tariffs last year, the peak to trough drawdown was 5 percent, but it bounced back within five weeks.
Morningstar spokesperson Greg Bunkall said all eyes would be on the markets now. He said the ceasefire should positively affect KiwiSaver returns.
Dean Anderson, founder of Kernel, said markets had overall held up well and were looking through the noise.
“However, as we have all been experiencing over the past couple of months – and years – is how little weight to put on a day-by-day message.
“The news, tweets, media stand-ups are continuing to convey a different message each time. For now, the world remains in limbo and the underlying pressures of rising oil prices are not going to ease overnight.
“For investors, as boring as it sounds, it remains the case to simply focus on the bigger long-term picture. There aren’t any ‘safe haven’ bets at the moment, we’ve seen all asset classes impacted, so the key is remaining diversified, continuing to contribute to KiwiSaver, and avoid attempting to time the market or pick a hot stock/sector in this environment.”
Greg Smith, investment specialist at Generate, said the market response to the ceasefire news was a relief rally rather than a full resolution.
“Markets are giving the ceasefire the benefit of the doubt – but it remains conditional. The key issue is whether the Strait of Hormuz fully reopens and supply disruptions are resolved. Until that’s clear, there’s likely to be an element of caution.
“This all follows a familiar pattern of escalation, deadlines, and last-minute de-escalation, so it’s understandable that markets remain somewhat sceptical. In the bigger picture, this looks more like a temporary circuit breaker than a lasting peace agreement, with volatility likely to remain elevated in what is still a fluid, headline-driven environment. The same risks could re-emerge quickly if negotiations stall or tensions flare again.”
He agreed the disruption to KiwiSaver had been relatively limited so far.
“Even with recent volatility, global markets are still only around 5 percent to 10 percent below their record highs, which highlights how measured the pullback has been. Diversification and the defensive characteristics of the NZ market have also helped cushion the impact from our perspective.
“From an investment perspective, we’ve remained disciplined and avoided reacting to short-term noise. Periods like this are often driven by headlines, but our focus stays on long-term fundamentals. We’ve leaned into the volatility to selectively add to high-conviction areas where we see strong structural growth – rather than stepping back. In particular, we’ve continued to build positions in areas like AI, where earnings momentum remains strong and adoption is still in its early stages.
“Overall, while markets may continue to respond positively in the near term, the situation remains fluid and headline-driven.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand