The Spinoff: Eight Extraordinary Money Moments in This Year-Long Heart Attack

Originally Posted by The Spinoff

Recapping the ups and downs of a turbulent 12 months.

It is officially the last week of the year, and yet March 2020 feels like yesterday. Much of our lives have been affected in strange and unexpected ways since the global pandemic was declared, and our markets and economies have been no exception. So what have been some of the most defining moments? And how are things now as we enter a new year?

The year opens with markets at their highest point
By the end of 2019, the NZX 50 index was posting its best year, nearly a third from where it was nearly 12 months earlier. In January, the good times continued with the stock market closing at record highs, while that momentum was expected to fuel growth in the coming year. But when February rolled around, concerns about the imminent threat of a new coronavirus began to swirl.

Covid-19 goes global
On February 24, the New Zealand stock market had its worst day in four months. Recessions in the US, Asia, and Europe soon followed as Covid-19, which had now spread everywhere outside of China, began to look more and more like a global pandemic. The situation quickly worsened in the coming weeks when two major oil producers, Saudi Arabia and Russia, went head-to-head over the price of oil.

Oil prices plummet
As travel bans came into effect and flights began to be canceled, demand for oil dropped rapidly. In an effort to try to keep the price of oil high, Saudi Arabia asked other countries to join them in cutting production. Russia, however, notably refused, prompting Saudi Arabia to launch a mass production drive to flood the market with so much oil that the price would completely collapse and put other producers out of business. In mid-March, oil prices hit their lowest level in 17 years.

Financial markets take a historic turn for the worse
However, for the last days of March, the fall in oil prices would be the least of the world’s worries. Globally, the number of deaths and the infection rate from Covid-19 skyrocketed, while daily cases in New Zealand quickly rose to double figures. In an effort to try to stop community broadcasting, the government announced on March 23 that New Zealand would enter a strict nationwide lockdown in 48 hours. On the same day, the NZX 50 Index would fall, with the biggest single-session drop since the 1987 market crash. Similar declines were taking place in equity markets around the world, with all signs pointing to a staggering world recession.

Post-crash recovery
As layoffs, pay cuts and business closures threatened to plunge New Zealand into an economic downturn in the following weeks, the government announced a $ 50 billion “once in a generation” bailout fund to address “The most challenging economic conditions facing any government since the Great Depression.” The wage subsidy scheme was expanded, free trade training was launched, and benefits were increased to support some of our most vulnerable. Similar policies were announced abroad as governments and central banks sought to stimulate the economy and protect jobs and businesses.

During the following months, many of the world’s leading financial indices experienced a slow and steady recovery to (near) normality. New Zealand avoided the worst of the economic fallout aided in large part by a successful public health response: As of early June, the country had zero known active cases of Covid-19 for the first time since its arrival earlier in the year.

A flood of first-time investors
While amateur investing has grown tremendously in recent years thanks to user-friendly online platforms like US-based Hatch, Sharesies, and Robinhood, the lockdown saw this phenomenon increase dramatically. Many beginners simply found themselves with the time and willpower to finally try their hand at investing in the stock market, while those with a little more experience saw the Covid-induced recession on the lockdown as the best opportunity to do so. with bargain stocks.

At Hatch, for example, more than 20,000 New Zealanders signed up to the platform during the shutdown, while the company’s one-year review found that the number of investors had grown by an average of 17 percent per month. But the most striking figure? This year, more than 380 million dollars were invested through the platform, 726% more than in 2019.

The price of houses, gold and cryptocurrencies rises
But it’s not just about stock market investments – all kinds of assets saw their prices skyrocket this year. House prices are the obvious ones, especially in New Zealand with border closures and rock-bottom interest rates fueling insatiable demand for real estate across the country. But with a severe shortage of homes for all, rising prices have not necessarily been a good thing, as first-time home buyers are increasingly lost as the gap between those with and without wealth continues to widen.

Another asset that performed well this year was gold, which hit record highs in August as many sought a “safe” investment in these uncertain times. That said, a number of observers have touted the supposedly volatile Bitcoin as the best performing asset of 2020 and some even describe it as “digital gold.”

Finally, a vaccine
Despite being a mostly terrible year for the world economy, 2020 is ending on a positive note: countries have started rolling out Covid-19 vaccines, Joe Biden’s election to the US presidency is a good one. news for the trade, and Christmas is giving many the hardest hit. retailers a much needed boost. While the virus continues to wreak havoc in many countries, including the UK, where a new, more infectious strain of Covid is expected to have emerged, New Zealand is ending the year in very good shape with our economy officially out of recession and a summer of freedom almost incomparable on the cards. Despite the odds, we finished 2020 well.