Devon Funds Morning Note - 28 November 2025

Friday 28th November 2025

Antipodean Ups & Downs

Global

Markets are closed in the US as Thanksgiving is celebrated across the country, and will reopen for a half-day session the following day where volumes are expected to be subdued as many will head off for a four-day weekend.

In the news, President Putin said President Trump’s peace proposal for Ukraine could serve as a framework for future negotiations, signalling Moscow sees political value in the plan even though no agreed or final version exists yet. He stressed that Russia ultimately wants a formal agreement with Ukraine but argued that, given the current legal and constitutional positions on both sides – particularly over territory and security guarantees – it is “impossible” to sign such a deal now, so the war will likely continue while talks drag on around an evolving draft. At the same time, broader markets remain calm about the geopolitical headlines, with oil prices little changed this week and Brent crude trading just above US$63 a barrel as traders balance ceasefire speculation against ongoing supply and demand fundamentals.

In the UK, the FTSE 100 was broadly flat as markets continued to digest Chancellor Rachel Reeves’ tax-heavy Autumn Budget, the 10 year UK gilt yield edged 3bps higher to 4.46%, unwinding about half of the prior day’s post Budget rally and reflecting a more balanced view on the UK’s growth and fiscal outlook.

New Zealand

The Kiwi market slipped in its latest session, with the NZX 50 closing down 1.0%, giving back some of this week’s post-RBNZ gains as investors locked in profits. Ryman posted mixed 1H26 results, while Tower Limited released strong FY25 results.

Ryman Healthcare (+2.1%) results showed a transparent balance sheet but lacked a convincing top-line and resale recovery story. On the positive side, new sales cash receipts were solid, and divestment and capital recycling are tracking well. Management has lifted its gross cost‑out target, meaning net debt now looks set to finish FY26 lower than previously expected; however, resale volumes remain sluggish, which is critical for unlocking cash and validating the value proposition of Ryman’s newer pricing model. Hence, the absence of momentum here limits confidence in a clean earnings inflection. There is also lingering uncertainty about where the steady‑state cost base will settle once the turnaround is complete and what a sustainable return to growth in earnings and dividends will look like beyond the current reset phase, leaving some investors cautious despite the operational improvements.

Tower Limited (+1.3%) delivered a record FY25 result, with net profit after tax rising to NZ$107.2m from NZ$83.5m, driven by benign weather, a sharply lower business as usual claims ratio, and 4% customer growth. Gross written premium edged up 2% to NZ$600m as strong volume growth in lower risk home policies offset softer motor premiums, while the management expense ratio held steady at 31.4% as scale benefits were recycled into technology and growth initiatives.

In macro news, Stats NZ’s latest figures show seasonally adjusted retail sales volumes rose 1.9% in the September quarter, marking one of the strongest quarterly outcomes in recent years as households loosened spending. The biggest contributions came from electrical and electronic goods retailers and motor vehicle and parts outlets, where demand rebounded on the back of promotional activity and improving supply, offsetting more subdued conditions in categories like apparel and some discretionary services. Taken together, the data points to a modest but broadening recovery in consumer activity, suggesting that lower interest rates and a stabilising labour market are starting to flow through to spending.

Australia

Australian equities briefly slipped into the red before closing up to finish the day in the green with the ASX 200 gaining 0.1%. Tech supported the index after a strong performance in the US, while elsewhere, the Australian bond market priced in a 50% chance of a rate hike next year. The Banking sector shrugged off policies to limit lending to high debt-to-income borrowers, and insurers took a hit as QBE (-3.7%) and Suncorp (-1.9%) underperformed in their market updates.

QBE Insurance Group reaffirmed its FY25 guidance, but this remains contingent on catastrophe losses in the second half of FY24 staying within its budgeted allowance. The company still expects the earned premium rate to increase modestly over the next 18 months, ahead of claims inflation, supporting profitability. Still, headline rate momentum is slowing faster than previously anticipated as the pricing cycle matures. As a result, further improvements in the combined operating ratio are less likely to come from price rises and more likely to depend on active portfolio optimisation (exiting underperforming business, refining risk mix) and disciplined cost control.

Suncorp Group released a natural hazards update detailing that three major events this year generated A$750m of gross claims, with the latest severe storm hitting Queensland pushing the group up to its maximum reinsurance retention for a single event and leaving a net cost of A$350m on Suncorp’s books. As a result, total net natural hazard costs for FY26 to 25 November are now estimated at A$1.15–1.275bn, which at the midpoint is roughly A$330m above the A$885m allowance set for 1H26. In effect, this means Suncorp has already used a large portion of its natural hazard budget much earlier in the financial year than planned, raising the risk that any additional large events could put further pressure on earnings unless covered by remaining aggregate or catastrophe reinsurance.

On a final note, the Australian Competition and Consumer Commission is reportedly leaning toward blocking National Australia Bank’s attempt to buy most of HSBC’s Australian retail business, due to concerns it could further concentrate deposits in the major-bank oligopoly. NAB’s offer structured primarily around acquiring HSBC’s sizeable Australian deposit book, rather than its loan portfolio, which would significantly boost NAB’s funding base without taking on equivalent credit risk raising red flags for the ACCC, which has been focused on competition in household deposits and is wary of deals that bulk up a major bank’s low cost funding without adding meaningful new lending capacity or customer choice.

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