New Zealand Equity Strategy: A Mid Year Health Check

Research evidence excerpt

New Zealand Equity Strategy: A Mid Year Health Check

Global Research

22 July 2026ab

New Zealand Equity Strategy Equity Strategy

New ZealandA Mid Year Health Check

Vignesh Nair

Analyst

The NZX50 index has underperformed vs our expectations... vignesh.nair@ubs.com

+64-9-913 4884

The NZX50 has been broadly flat YTD, with robust index level contributions from IFT and

to a lesser degree FPH, levelled by broad-based underperformance across the rest of the Marcus Curley

Analystmarket. Dissecting this performance and stripping out the +1% dividend returns, we

marcus.curley@ubs.com

find that the market P/E has expanded +6% whilst forward EPS forecasts have +64-9-913 4750

compressed -7%. Entering the second half of the calendar year, we are wary of a slightly

more challenged earnings outlook, with headwinds from election uncertainty and Thomas Maclean

Associate Analyst

tighter monetary policy; making our year-end target index return of +12% increasingly

thomas.maclean@ubs.com

challenging. Nevertheless, looking at historical RBNZ hiking cycles, we find that in the +64-9-913 2000

last four cycles, the wider NZX50 has performed reasonably, with average index returns

of +3% six months into a hiking cycle; and +8% a year in.

…we prefer equities across three styles…

With current equity markets driven by regimes and themes over fundamentals, we have

split the NZX50 across three relevant groupings (figs 12-14): 1) defensives vs cyclicals,

given ongoing macro pressure in NZ; 2) hard assets vs intangibles, given AI-led disruptive

threats; and 3) exporters vs importers, given a weak NZD. We believe stocks within these

themes are likely durable through cycle, and while multiples within these buckets have