November was a noisy month. We saw headlines dominated by "doom and gloom," ranging from US government shutdowns and AI bubble fears to a meltdown in crypto markets. Yet, despite the noise, markets proved incredibly resilient. Global markets actually finished slightly up for the month, and even the tech-heavy Nasdaq only dipped 1.4% (remaining up 9% for the quarter).

While markets have had a fantastic run over the last 12 months, with global markets up 16%, investors are understandably nervous and looking for cracks in the system.

Market Performance at a Glance

*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.

Investors are on Edge

Investors are currently caught in a tug-of-war between two very different views of the world.

• The Bear Case: Some see sky-high valuations, a cloudy economic outlook, and concerns about AI profitability as signs we are heading for a "dotcom style" blowup.
• b Others look at falling interest rates and record-high earnings growth and predict a market boom for 2026.

This divide has created a "whipsaw" of emotions. In November, we saw markets drop 5% in a single week only to reverse those losses the very next week8. While institutional investors remain cautious (often holding cash), retail investors continue to drive positive momentum.

The AI Shake-up: Google Takes the Lead

The AI narrative shifted significantly this month. While Nvidia announced strong results, the spotlight was quickly stolen by Google.

On November 6, Google announced "Ironwood," a new chip designed specifically to train AI models that appears to be faster and more energy-efficient than Nvidia’s chips11. They also previewed their new Gemini model, which is showing signs of outperforming current market leaders.

Google seems to be quietly taking the lead in the AI ecosystem. Investors have noticed: Google stock is up nearly 40% over the past three months, compared to just 6% for Nvidia and the broader S&P 500.

Economic Outlook: Cloudy Global, Sunny Local?

Global Uncertainty

The global picture remains murky. We are seeing stubborn inflation, trade barriers, and rising unemployment in the US. The OECD has downgraded global growth estimates for 2026 to 2.9% due to these trade barriers.

Inflation remains above the 3% target in many countries, central banks are in a difficult spot under pressure to cut interest rates despite the elevated inflation. This is starting to look more and more like 1975.

New Zealand Turning a Corner

Closer to home, things are looking brighter. The Reserve Bank cut interest rates by another 0.25% in November and Acting Governor Hawkesby delivered a surprisingly upbeat message regarding the economy.

• Green Shoots: The RBNZ is seeing signs of recovery and has confidence in 202619.
• Business Confidence: Recent surveys’s show confidence hit an 11-year high of 67 in November.
• Anecdotal Evidence: Many industries are reporting improvements after a dire winter.

However, inflation remains a watch-out. While 51% of companies expect to raise prices, 74% expect their suppliers to charge them more -a discrepancy that suggests some difficult business decisions lie ahead.

Bitcoin: A Buying Opportunity?

Bitcoin, often viewed as a "sentiment asset," (priced on feelings rather than fundamentals) paid the price for investor nervousness, falling 35% from its record high of $125,000 to sit near $80,000.

Because Bitcoin has low liquidity and high leverage, small shifts in sentiment can cause massive price swings24. If you are a long-term believer in crypto, this dip could be a buying entry point compared to just a few weeks ago. However, be mindful that in a true "crypto winter," prices can fall up to 75%, so volatility is guaranteed.

Looking Ahead

The last 12 months have been exceptional, but we expect volatility to be the key theme for the year ahead. The fundamental backdrop—AI innovation, lower interest rates, and a resilient economy—hasn't changed.

Our job as investors is to look through the short-term jitters and focus on the horizon. When we look 24 months out, the outlook has never looked stronger.

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