There is so much going on right now that we are going to take a slightly different format, a quick round the world at what has been going on over the past 6- 8 weeks.

*Source: Factset: Kōura returns are pre-tax and post-fees. Returns over 12 months are annualised. Local market returns use the relevant markets indices; NZ Equities uses NZX50 index; US Equities uses S&P500 index; Rest of World uses MSCI EAFE Index; Emerging Markets uses MSCI Emerging Markets Index, Fixed Interest uses Bloomberg Aggregate NZ Composite Bond Index. Bitcoin return is the USD change in price of Bitcoin. The return for an Aggressive Portfolio represents the equivalent of 95% growth and 5% income assets investing in core Kōura Funds. The return for a Growth Portfolio represents the equivalent of 80% growth and 20% income assets by investing in core Kōura Funds. Returns are calculated by Kōura. Past performance is not a reliable indicator of future performance. Returns are not guaranteed, and investment values may fluctuate over time. 

2025 was an amazing year to be an investor 

Before we get on to the present tense, let’s just take a second to remember how great 2025 was.  We are unlikely to get a year this good any time soon.  Everything did well, US stocks, European stocks, Bonds, Bitcoin, Gold it all won and gave some very healthy returns.   

You might think gold was the winner for the year with a 60% return, but you can’t go past the 75% return for the Korean stock market.  For a change, the US was the worst performing large equity market with it’s 18% underperforming the Eurostoxx 21%, Japan’s 29% and China’s 32%.

Emerging markets were consistently strong in 2025 as the impact of Trump’s policies were nowhere near as bad as previously feared.  TACO Trump has left Emerging Markets with strong technology companies and massive growth rates that investors are learning to fall back in love with. 

Unfortunately, NZ was the only market that failed to fire with a 3% return. One day NZ might fire up again, though in my view it will require some brave politicians and structural reform before we are looking at NZ as a good investment market again. 

AI looks to have claimed its first set of victims

In January Anthropic (the smallest of the AI players) released a set of industry wide plugins.  Amongst other things the tools can: 

Share prices of companies that may be impacted tanked.  It is becoming increasingly clear that the traditional software vendors are going to be at risk from the LLM’s moving up stream and stealing their thunder.  At the very least, the costs of staying ahead (both build and ongoing running costs) meaning that historical margins are unlikely to be achievable in the medium term.   

A basket of small cap technology stocks sank 20% in the days surrounding the release showing how scared investors are becoming of AI. 

The US market is about a whole lot more than tech

The real economy is finally starting to catchup to big tech.  Over the past three months, the large technology companies have finally fallen below 40% of the US stock market and the equal weighted S&P500 has outperformed the size weighted S&P500 by almost 3%. 

Investors are less enamoured by tech, but are also getting increasingly confident in the US picture.  Banks, utilities, retailers everyone is doing well with continued strong growth, massive tax cuts and lower interest rates. 

US interest rates are unlikely to go much lower 

Despite all of the retoric from Taco Trump, it seems that interest rates aren’t really going to fall any further.  The economy is strong, inflation is above the target band and most surprisingly Donald Trump nominated an inflation hawk (someone that is petrified about inflation) as the potential chair of the Federal Reserve.   

Asia is currently the place to go for technology 

Asian markets did extremely well in 2025 and that shows no signs of dissipating.  Investors like the fact they can buy technology and AI related stocks at a 30% discount to their American peers and can also buy a significant amount of the infrastructure.  Taiwan, Korea, and China have all been driven by growing and strengthening technology industries over the past 5 few years.

Europe may finally be turning a corner 

2025 was predicted by many as the year that Europe would finally deliver on its potential. While I disagree that it has materially changed, it did deliver better market performance than the US.

Interest rates are finally coming up (we have seen 4 rate rises by the ECB) which benefits the banks (up to 20% of European markets are financial related), we have seen Germany shift from austerity hawk to big spender and defence spending is likely to drive a whole world of innovation and growth across the continent. 

All the ingredients are there, though the Europeans now need to take this opportunity to make lasting structural changes and free up their economies rather than falling back into the old trap. I think 2026 is likely to be another good year for Europe, but I am not so confident about 2027! 

Things are changing here in NZ 

Some say that we are in an economic recovery, others say we are not.  We are at that stage of the cycle where you believe what you want, and most people are desperately hoping things start to get better. 

The economic data is still mixed, in my view still more hopeful than real and we have a few strong hurdles to overcome.   

With inflation coming in above the 3% target interest rates are likely to continue rising (wholesale rates are already up 0.5% over the past few months). Rising interest rates will make it near impossible for the long awaited housing recovery to arrive which will continue to subdue economic activity. 

The stronger NZD over the past few weeks has not only hurt KiwiSaver investors, buti s going to make it harder for our commodity exporters (the only good thing going for us at the moment).  

I remain pretty negative on New Zealand until we can affect structural change and address some of our long term productivity issues. 

Has the gold rush finally ended? 

Gold climbed all the way up over US$5,000 per ounce before quickly falling by 11% in a single day.   

3 years ago we were celebrating the move above US$2,000 so the jump up to $5,000 is not small.  The price jump has been caused by central banks and investors around the world have been hording gold as an alternative to the USD.  If you are an investor you are looking for a safe haven in a world of high inflation and volatile geo politics.

If you are the central bank of someone on the rwrong side of the US you are probably nervous that the US Government might seize your USD treasuries (as they did with Russia) so you are looking to hold something else. 

The early February fall was caused by:

• Technical changes - (tightening margin requirements on the Chicago
• Mercantile Exchange where gold derivatives are traded);  
• Reduced buying out of China- Gold is not so easy to store, so central banks need to stop buying and build more vaults; and 
• The nomination of inflation hawk Kevin Warsh to the role of US Federal Reserve President 

Gold (a little like Bitcoin) is a small asset without deep liquidity, that means that any sudden shifts in buyers or sellers can mean a rapid shift in the price.  If you are going to invest in gold remember you are betting as much on global volatility as anything else. 

Is Bitcoin dead? 

Bitcoin has fallen almost 50% from its October peak almost touching US$60,000 in early February. The reasons for the are rather opaque, though it is a combination of: 

The ETF’s were meant to reduce volatility, by making it easier to invest we had hoped that institutions would step in and start buying the dips. However that has not been the case with significant net outflows out of the ETF’s. 

On average Bitcoin has fallen over 70% in previous winters which might indicate we have a bit further to go. Though you can’t bet on anything with Donald Trump in the White House. The crypto industry will be looking for a return on the $200m they gave him for his re-election. 

What’s next? 

We continue to live invery interestingtimes. Markets have had an amazing run though the backdropremainsstrong. Economic growth continues to bestrongand AI is expected to boost margins for companies. Earnings are expected to grow by another 10 – 15% in 2026, which should drive stock markets higher. 

It’s a similar prediction to last year – another strong year for markets, though there will be some very wild swings on the way through.

Dislciamers: 

*Bitcoin is highly volatile and not suitable for all investors. Before investing part of your KiwiSaver balance in the Koura Bitcoin fund, ensure you fully understand the risks associated with cryptocurrencies: https://shorturl.at/U6Mkp, and/or consider seeking financial advice. 

*The views and opinions expressed in this article are those of Rupert Carlyon. This content is for informational purposes and should not be considered financial advice. Before making any financial decisions, consider consulting a financial adviser. 

*Kōura Wealth Limited is the issuer and manager of the Kōura KiwiSaver Scheme. A copy of the Product Disclosure Statement is available at kourawealth.co.nz/documents