Now Jeremy Hutton, Milford Asset Management is with us.
Good evening Heather.
Now NZX has had a bit of a tough month.
Obviously, so have other markets around the globe.
How has it been holding up?
Yeah, it has been extremely choppy in volatile month
and financial markets.
And everyone's sort of trying to guess
the next new flow coming out around the world.
But NZX is down 6% so far in March.
They would add today it had a really good bounce back
on some of that leaked ceasefire report.
So it has been actually down a lot more than that 6%.
But you have been slightly more insulated
than our peer markets and in the Australian market
down over 7% European and Asian markets
down between 8 and 10.
So they've been hit relatively harder.
And the US markets, of course,
have been a little bit more insulated
It does make sense, you know, the US,
they've got the energy independent.
So they are a little bit more insulated in.
And I suppose we don't have any really direct,
massive direct exposure to the Middle East.
But, you know, there are a few second order effects
to come through that worth touching on for NZ.
Yeah, those second order effects,
they, I mean, they have the potential
to hold our fragile economic recovery, don't they?
And it hasn't come at a great time
for our economic recovery.
I mean, we've obviously been trying to get off the canvas
after a tough few years.
And, you know, there has been a bit of a downturn in sentiment.
I mean, obviously driven by this oil price spike,
it is another tax or another cost-impost
on museum consumers and businesses.
And obviously, the next effect
is that short-term inflation.
And are we going to get increased prices?
Will it lower growth?
And could it lower earnings for companies?
So potentially a bit of a nasty
stack stationary environment that markets,
or financial markets, really don't like
and, in fact, no one really likes it at all.
How are you seeing the situation
through the different sectors on the ends of next month?
Yeah, firstly, you know, the hardest hit sectors
being tourism and travel adjacent businesses.
So companies like Ennis Allen,
tourism holdings in Cerco,
I mean, they're all understandable given
just some of the travel disruption we're seeing
And all of those shares are off a considerable
over 20% this month.
And then companies that use a lot of fuel as well.
So Korea, business, freightways,
and their main freight too,
they're both down over double digits.
So those companies really at the pointy end
of the fuel crisis at the moment.
And look, do you think that the higher short term interest rates
from the oil inflation are affecting us as well?
Yeah, and this is some of the second order effects
that potentially can come through
with those higher short term rates and oil inflation.
I mean, we're seeing some of the cyclical stocks
in our economy, which we're anticipating
a bit of a rebound this year getting hit.
Building materials companies like Volkan Steel
and Fletcher Building, investors are thinking,
you know, maybe the construction market
might slow down a little bit.
Retirement sector, such as Ryman and Somerset,
I mean, higher interest rates
are never good for the housing market.
And then Kathmandu, I mean, they're announced today
that they're going to perform a capital raise this week.
So, you know, I would expect a bit more weakness also
in the retail sector,
particularly if consumers are just spending a lot less money.
Where have been the places to hide your reckon
in the New Zealand market?
Yeah, channel infrastructure to no one's surprise
given the media attention around them.
They're our fuel import terminal.
The financial markets are giving them a bit of a benefit.
I mean, they're thinking that potentially a bit more
resilience and fuel storage will be coming in at that site
And then Fonterra and Turner's Automotive,
I mean, they both upgraded their earnings forecast this week.
So, the markets put them in the green for the month.
So, you know, the market is still rewarding
those companies that are putting some good earnings results through.
You good stuff, Jeremy?
Always good to talk to you, Jeremy Hutton,
Milford Asset Management.
