1 00:00:03,420 --> 00:00:05,930 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean 2 00:00:05,960 --> 00:00:09,150 Sean Aylmer: Aylmer. The conflict in Ukraine has been felt right around 3 00:00:09,150 --> 00:00:11,930 Sean Aylmer: the world. While we know financial markets are affected by 4 00:00:11,930 --> 00:00:16,460 Sean Aylmer: geopolitical events, the actual impact varies between commodities, bonds, equities, 5 00:00:16,690 --> 00:00:19,720 Sean Aylmer: and even then, it's sector by sector. We've spoken on 6 00:00:19,720 --> 00:00:22,530 Sean Aylmer: a number of occasions now to Wilson Asset Management. And 7 00:00:22,530 --> 00:00:24,759 Sean Aylmer: today I wanted to get a feel for how equities are 8 00:00:24,760 --> 00:00:28,630 Sean Aylmer: being impacted by the conflict. John Ayoub is the portfolio 9 00:00:28,630 --> 00:00:31,950 Sean Aylmer: manager at WAM Leaders, that's Wilson Asset Management Leaders. And 10 00:00:31,950 --> 00:00:34,140 Sean Aylmer: joined me this morning, John, welcome to Fear and Greed. 11 00:00:34,140 --> 00:00:35,910 John Ayoub: Good morning, Sean. And thanks for having me. 12 00:00:36,260 --> 00:00:40,320 Sean Aylmer: So broadly speaking, how have equities fared over the past 13 00:00:40,320 --> 00:00:42,430 Sean Aylmer: couple of weeks since the conflict began? 14 00:00:42,920 --> 00:00:46,729 John Ayoub: Surprisingly well. There's a few things at play right now, 15 00:00:46,729 --> 00:00:50,659 John Ayoub: which probably characterise that we're in the eye of the storm. So things 16 00:00:50,659 --> 00:00:53,150 John Ayoub: aren't seeming as bad as what they potentially may be. 17 00:00:53,150 --> 00:00:56,010 John Ayoub: So we're still rolling off COVID from last year and 18 00:00:56,010 --> 00:00:59,560 John Ayoub: the last few years, I should say. And the rate complex, 19 00:00:59,560 --> 00:01:01,920 John Ayoub: where people are constantly talking about what the Fed's going 20 00:01:02,020 --> 00:01:04,420 John Ayoub: to do and what the RBAs going to do over the coming 12 months, 21 00:01:04,740 --> 00:01:07,870 John Ayoub: they're still dictating the direction of the markets. And Ukraine- 22 00:01:07,870 --> 00:01:11,700 John Ayoub: Russia conflict adds another layer of complexity. So as we 23 00:01:11,700 --> 00:01:15,120 John Ayoub: start to meander through trying to work out the recovery of 24 00:01:15,120 --> 00:01:18,030 John Ayoub: earnings for companies, and we came off a very strong 25 00:01:18,030 --> 00:01:21,610 John Ayoub: reporting season in Australia and America, where companies highlighted some 26 00:01:21,650 --> 00:01:25,740 John Ayoub: strong rebounding in earnings, very good cost discipline. We start 27 00:01:25,740 --> 00:01:28,949 John Ayoub: to look at the consumer and corporate, and nations, there's a 28 00:01:28,950 --> 00:01:32,569 John Ayoub: very strong and very stable positions. So with that backdrop, 29 00:01:33,010 --> 00:01:35,610 John Ayoub: we think the world can absorb some rate hikes, but, here's 30 00:01:36,350 --> 00:01:39,240 John Ayoub: the but, as we start to consider what Ukraine and Russia 31 00:01:39,240 --> 00:01:42,330 John Ayoub: put into the mix, we're going to see some serious inflation. 32 00:01:42,330 --> 00:01:45,310 John Ayoub: Some concerns have started to hit the market around what 33 00:01:45,310 --> 00:01:47,840 John Ayoub: that means for growth, what that means for the outlook 34 00:01:47,840 --> 00:01:51,680 John Ayoub: of economies. So with that context, people start to price 35 00:01:51,680 --> 00:01:54,880 John Ayoub: in less rate hikes over the next 12 to 18 months. And 36 00:01:54,880 --> 00:01:56,860 John Ayoub: with that, people get a little bit more excited around 37 00:01:56,860 --> 00:01:59,580 John Ayoub: the outlook for equities. But we still think that if 38 00:01:59,580 --> 00:02:02,650 John Ayoub: we consider the comments last week from Jerome Powell, he 39 00:02:02,650 --> 00:02:05,500 John Ayoub: still sees rate hikes in the US coming as early 40 00:02:05,500 --> 00:02:09,120 John Ayoub: as March, and significant rate hikes above 25 pips continuing 41 00:02:09,120 --> 00:02:11,730 John Ayoub: through the course of the year. This will put pressure 42 00:02:11,730 --> 00:02:14,380 John Ayoub: on equity markets. So you throw that in, along with 43 00:02:14,380 --> 00:02:16,970 John Ayoub: the pressure inflation is going to put on the outlook to growth. 44 00:02:17,419 --> 00:02:20,320 John Ayoub: We think there could be some turbulent times leading some 45 00:02:20,320 --> 00:02:22,740 John Ayoub: pressure on equity markets for the next six months in particular. 46 00:02:23,120 --> 00:02:25,500 Sean Aylmer: Okay. It's a really good a point because the US Fed Reserve 47 00:02:25,560 --> 00:02:28,639 Sean Aylmer: Chair, Jerome Powell, as you said, he wants to keep 48 00:02:28,870 --> 00:02:31,419 Sean Aylmer: raising interest rates. Now he's doing that because the economy 49 00:02:31,419 --> 00:02:34,669 Sean Aylmer: is recovering. Certainly in Australia, we've had some really strong 50 00:02:34,780 --> 00:02:38,540 Sean Aylmer: economic growth figures last week. The flip side though, of 51 00:02:38,540 --> 00:02:42,180 Sean Aylmer: course, as you mentioned, Ukraine, and even potentially a new 52 00:02:42,180 --> 00:02:46,050 Sean Aylmer: variant of coronavirus too, it must be difficult to know 53 00:02:46,050 --> 00:02:48,190 Sean Aylmer: exactly where to go as an investor. 54 00:02:48,720 --> 00:02:51,910 John Ayoub: Absolutely. We characterise it as a game of 3D chess, you're 55 00:02:51,910 --> 00:02:55,530 John Ayoub: trying to play chess on three different planes and trying to juggle COVID, rates, 56 00:02:55,600 --> 00:02:58,359 John Ayoub: and Ukraine- Russia. So what we try to do, you need 57 00:02:58,360 --> 00:03:01,340 John Ayoub: to adjust as new information comes, you can't really set 58 00:03:01,340 --> 00:03:03,940 John Ayoub: a course today and expect that to be held true 59 00:03:03,940 --> 00:03:06,839 John Ayoub: for next week, let alone next month or next quarter. 60 00:03:07,139 --> 00:03:10,570 John Ayoub: So as information evolves, our job as equity investors is 61 00:03:10,570 --> 00:03:12,810 John Ayoub: to process those and come out with new conclusions if 62 00:03:12,810 --> 00:03:16,250 John Ayoub: that's necessary. And we've had very good times in equity 63 00:03:16,250 --> 00:03:20,700 John Ayoub: markets where a lot of easy money's made on cheap 64 00:03:20,700 --> 00:03:23,190 John Ayoub: money effectively. And we think though, it's going to get 65 00:03:23,190 --> 00:03:24,489 John Ayoub: a little bit harder from here on in. So it's 66 00:03:24,490 --> 00:03:25,630 John Ayoub: going to be a lot more, you need to do 67 00:03:25,630 --> 00:03:28,410 John Ayoub: a lot more DD (Due Diligence) on companies to see how their ability 68 00:03:28,410 --> 00:03:31,359 John Ayoub: to sustain the inflation, how their ability to pass on 69 00:03:31,360 --> 00:03:34,269 John Ayoub: that inflation to customers, what their balance sheets look like. 70 00:03:34,270 --> 00:03:35,910 John Ayoub: If rates start to head up and their cost of 71 00:03:35,910 --> 00:03:37,780 John Ayoub: debt starts to sneak up. So there needs to be 72 00:03:37,780 --> 00:03:40,620 John Ayoub: a lot more discipline in the way that you spend your money effectively. 73 00:03:40,900 --> 00:03:45,270 Sean Aylmer: Yeah, yeah. So if we think about the energy sector, oil and gas, particularly, at 74 00:03:45,270 --> 00:03:49,370 Sean Aylmer: the moment, we still have gas flowing between Russia and 75 00:03:49,370 --> 00:03:52,810 Sean Aylmer: the continent. This whole disruption to energy seems to be 76 00:03:52,810 --> 00:03:55,860 Sean Aylmer: a really critical piece of it because of inflation, is that right? 77 00:03:56,600 --> 00:04:01,360 John Ayoub: There's two sides to this coin. And the first one is Russia. 78 00:04:01,480 --> 00:04:04,170 John Ayoub: It's about 11% of global oil and gas supply, and 79 00:04:04,170 --> 00:04:09,060 John Ayoub: it's around 40% of Europe's gas supply directly for energy consumption. 80 00:04:09,660 --> 00:04:13,210 John Ayoub: So energy security is at the forefront of everything that 81 00:04:13,360 --> 00:04:16,679 John Ayoub: nations are doing. And you've even seen President Biden come 82 00:04:16,680 --> 00:04:19,480 John Ayoub: out and he's unwilling to put sanctions on oil, yet. 83 00:04:19,950 --> 00:04:24,159 John Ayoub: A $115, $120 oil doesn't help anyone really other than 84 00:04:24,330 --> 00:04:27,880 John Ayoub: oil producing countries and oil producing companies. So what you'll 85 00:04:27,880 --> 00:04:30,670 John Ayoub: want to see is political pressure will try to get 86 00:04:30,930 --> 00:04:34,880 John Ayoub: those oil prices and gas prices in particular down, but that's 87 00:04:35,410 --> 00:04:38,830 John Ayoub: easier said than done. Energy security now is at the forefront 88 00:04:39,400 --> 00:04:44,050 John Ayoub: of everyone's mind. And if you consider what the Chinese policy 89 00:04:44,050 --> 00:04:47,750 John Ayoub: makers have come out this week, they're ambivalent to price. 90 00:04:47,970 --> 00:04:51,180 John Ayoub: They just want supply and very rarely do you see 91 00:04:51,580 --> 00:04:53,700 John Ayoub: a nation come out and say, "Hey, do whatever it 92 00:04:53,700 --> 00:04:55,680 John Ayoub: takes to get it. Don't worry about the price." And 93 00:04:55,680 --> 00:04:58,839 John Ayoub: that's what we're hearing. We're hearing those anecdotes. So what 94 00:04:58,839 --> 00:05:04,130 John Ayoub: potentially could stumble the price, an Iranian nuclear deal could 95 00:05:04,130 --> 00:05:06,460 John Ayoub: lead to more supply coming into the market. But what 96 00:05:06,470 --> 00:05:08,380 John Ayoub: we've seen over the last three to five years is 97 00:05:08,380 --> 00:05:12,460 John Ayoub: a material under investment in energy. The world's being fixated 98 00:05:12,460 --> 00:05:15,900 John Ayoub: and rightly so on shifting to green energy, and finding 99 00:05:15,900 --> 00:05:18,779 John Ayoub: alternative sources. But there is a mismatch in duration when 100 00:05:18,779 --> 00:05:22,520 John Ayoub: you start to consider these elements. And there is also 101 00:05:22,520 --> 00:05:25,000 John Ayoub: a mismatch in economy. So you've got developing mores versus 102 00:05:25,000 --> 00:05:28,159 John Ayoub: developed worlds, that can afford the investment in green energy 103 00:05:28,160 --> 00:05:30,870 John Ayoub: versus developing nations, which is a long way away before 104 00:05:30,870 --> 00:05:34,289 John Ayoub: they can shift from the consumption of coal and gas 105 00:05:34,290 --> 00:05:38,650 John Ayoub: and oil towards greener alternatives. So it's a really interesting 106 00:05:38,650 --> 00:05:41,239 John Ayoub: place we are because I can't see oil, gas prices 107 00:05:41,240 --> 00:05:45,350 John Ayoub: coming back in very significant way anytime soon. Now, albeit 108 00:05:45,350 --> 00:05:47,529 John Ayoub: a resolution in Russia could help that, but what it does, 109 00:05:47,529 --> 00:05:51,800 John Ayoub: it highlights and underscores the need for countries to shore 110 00:05:51,800 --> 00:05:55,160 John Ayoub: up that supply to ensure there's adequate resources, to get 111 00:05:55,160 --> 00:05:58,530 John Ayoub: them through this period of transition, however long that transition 112 00:05:58,640 --> 00:06:01,170 John Ayoub: will take. Now, the flip side of that coin is 113 00:06:01,430 --> 00:06:05,580 John Ayoub: these prices do make you consider how quickly we can 114 00:06:05,580 --> 00:06:08,870 John Ayoub: shift to green energy sources, and where that investment comes 115 00:06:08,870 --> 00:06:11,930 John Ayoub: from, because it's where the energy prices are today. And you look 116 00:06:11,930 --> 00:06:14,730 John Ayoub: at where Australia is, and we're building snowy hydro, and other things 117 00:06:14,730 --> 00:06:18,140 John Ayoub: to help combat the need for coal. Previously, the tipping 118 00:06:18,140 --> 00:06:21,300 John Ayoub: point and the cost of replacement didn't make any sense. 119 00:06:21,300 --> 00:06:23,979 John Ayoub: But as coal starts to spike up, oil starts to 120 00:06:23,980 --> 00:06:27,540 John Ayoub: spike up, gas starts to spike up, those replacement equations 121 00:06:27,540 --> 00:06:30,670 John Ayoub: become a little bit more balanced, and you could see 122 00:06:31,010 --> 00:06:34,540 John Ayoub: corporate world and private investors willing to fund it as 123 00:06:34,540 --> 00:06:37,500 John Ayoub: opposed to relying on governments. And that's where the biggest 124 00:06:37,500 --> 00:06:40,450 John Ayoub: debate has been. Who's going to fund this transition? And 125 00:06:40,450 --> 00:06:42,640 John Ayoub: if you can make an economic return, ultimately that's what 126 00:06:42,640 --> 00:06:45,540 John Ayoub: everything comes back down to, you could see that shift 127 00:06:45,610 --> 00:06:48,780 John Ayoub: from oil and gas towards those greener energy sources. And 128 00:06:49,029 --> 00:06:51,440 John Ayoub: that could be one of the positives, and I hate 129 00:06:51,440 --> 00:06:54,730 John Ayoub: to trivialise what we're going through. This could be one of the positives that comes out. 130 00:06:55,130 --> 00:06:57,270 Sean Aylmer: Okay. Stay with me, John, we'll be back in a 131 00:06:57,270 --> 00:06:57,560 Sean Aylmer: minute. 132 00:07:02,070 --> 00:07:05,000 Sean Aylmer: My guest this morning is WAM Leaders Portfolio Manager, John 133 00:07:05,400 --> 00:07:08,390 Sean Aylmer: Ayoub. So if we get away from the energy sectors, 134 00:07:08,730 --> 00:07:12,050 Sean Aylmer: things like technology stocks. I'm a bit confused by what's happened 135 00:07:12,220 --> 00:07:16,470 Sean Aylmer: with them recently in as much as they're relatively safe 136 00:07:16,470 --> 00:07:19,960 Sean Aylmer: assets to some extent, but they've certainly been sold off, 137 00:07:20,140 --> 00:07:21,050 Sean Aylmer: healthcare is the same. 138 00:07:21,490 --> 00:07:24,880 John Ayoub: Yeah, look, you're right in some respects, but valuation is 139 00:07:24,880 --> 00:07:32,050 John Ayoub: ultimately what drives everything. The rate dynamic drove them up, 140 00:07:32,250 --> 00:07:35,470 John Ayoub: and will drive them back down. There are tech stocks 141 00:07:35,470 --> 00:07:38,320 John Ayoub: and tech sectors, which, if you think of Google and 142 00:07:38,320 --> 00:07:42,260 John Ayoub: the like, they're core to everything we do now. However, 143 00:07:42,260 --> 00:07:45,980 John Ayoub: there's other stocks, which are more sensitive to consumers, they're 144 00:07:45,980 --> 00:07:50,280 John Ayoub: more sensitive to GDP. And there's definitely more sensitive to 145 00:07:50,280 --> 00:07:54,270 John Ayoub: the rate environment, where if we start to rate it, increased 146 00:07:54,270 --> 00:07:58,260 John Ayoub: rates to what on markets are predicting, the valuations will 147 00:07:58,260 --> 00:08:01,840 John Ayoub: pair back significant. So we saw at the onset of 148 00:08:01,840 --> 00:08:05,400 John Ayoub: the conflicts in Russia and Ukraine, forward pricing of rate 149 00:08:05,400 --> 00:08:08,360 John Ayoub: markets pull back, and expectations around six or seven rate hikes in 150 00:08:08,750 --> 00:08:11,160 John Ayoub: the US pull back to four or five. That actually 151 00:08:11,160 --> 00:08:12,940 John Ayoub: gave a little bit of a kick to the tech sector. 152 00:08:13,350 --> 00:08:16,300 John Ayoub: But with the comments that we saw from the Fed 153 00:08:16,300 --> 00:08:19,540 John Ayoub: last week, they highlight that no, no rates are still going 154 00:08:19,540 --> 00:08:22,520 John Ayoub: to march forward. And now we have to question valuations. 155 00:08:23,070 --> 00:08:26,540 John Ayoub: When it comes to healthcare, it's a similar vein, but 156 00:08:27,030 --> 00:08:30,410 John Ayoub: it's a defensive, it's a pure defensive. So within healthcare 157 00:08:30,410 --> 00:08:31,860 John Ayoub: and my comments earlier about you got to be really 158 00:08:31,860 --> 00:08:34,860 John Ayoub: selective on stocks. There are number of stocks that are 159 00:08:34,860 --> 00:08:37,839 John Ayoub: going to come off COVID headwinds, they're going to come off. 160 00:08:38,240 --> 00:08:40,020 John Ayoub: They're going to be certainly see a significant investment from 161 00:08:40,020 --> 00:08:42,700 John Ayoub: gun governments as Ramsay Health Care in Australia is one 162 00:08:42,700 --> 00:08:45,320 John Ayoub: in particular where, it's come through a very difficult time, 163 00:08:45,630 --> 00:08:49,500 John Ayoub: but if we can forecast 18 months forward, it's well positioned. 164 00:08:50,000 --> 00:08:54,230 John Ayoub: So you need to really be selective in stocks within sectors. 165 00:08:54,230 --> 00:08:57,140 John Ayoub: So previously people would just buy a basket, and they'd 166 00:08:57,140 --> 00:09:00,150 John Ayoub: all go up for one reason or another. I think 167 00:09:00,150 --> 00:09:03,470 John Ayoub: nowadays you need to be more considerate about the individual stock, as 168 00:09:03,470 --> 00:09:05,689 John Ayoub: opposed to buying individual sectors. 169 00:09:06,010 --> 00:09:07,830 Sean Aylmer: John, since I've got you, I'm now going to ask you 170 00:09:07,830 --> 00:09:10,069 Sean Aylmer: what stocks do you like if that's the case? 171 00:09:10,610 --> 00:09:13,280 John Ayoub: The Leaders Portfolio, and we hosted a webinar last week, 172 00:09:13,390 --> 00:09:16,220 John Ayoub: because we outline a lot about preferences from a sector perspective. 173 00:09:16,500 --> 00:09:18,709 John Ayoub: So you can find that on the Wilson Asset Management website, the 174 00:09:18,720 --> 00:09:22,130 John Ayoub: little plug there. We're fairly defensive, we're sticking to quality. 175 00:09:22,130 --> 00:09:24,559 John Ayoub: And I think what we characterize our portfolio right now 176 00:09:24,559 --> 00:09:28,240 John Ayoub: as quality, the companies that have the ability to combat 177 00:09:28,240 --> 00:09:32,320 John Ayoub: inflation or pass those onto consumers. Firstly, we are very 178 00:09:32,320 --> 00:09:37,859 John Ayoub: long commodities, BHP, Rio, South32, AWC, got a lot of Santos. 179 00:09:37,860 --> 00:09:41,260 John Ayoub: So our sector still is heavily geared towards that. And I'll come 180 00:09:41,260 --> 00:09:45,330 John Ayoub: to reasons why on that later. But other sectors like staples, 181 00:09:45,390 --> 00:09:48,750 John Ayoub: so Woolworth and Coles, they've come through a fairly difficult 182 00:09:48,750 --> 00:09:51,220 John Ayoub: time from a cost perspective and Coles, in particular, has shown 183 00:09:51,400 --> 00:09:55,220 John Ayoub: their ability to offset those costs rather quickly. So Coles, Woolworth, 184 00:09:55,890 --> 00:09:59,020 John Ayoub: high quality businesses like Treasury Wine and Endeavour. There's a 185 00:09:59,020 --> 00:10:01,429 John Ayoub: bit of a theme here. And then if you look at 186 00:10:01,660 --> 00:10:07,439 John Ayoub: the industrial world, things like Brambles, Wesfarmers, in healthcare, Ramsay 187 00:10:07,440 --> 00:10:11,480 John Ayoub: Health Care, CSL, a lot of these stocks are the 188 00:10:11,480 --> 00:10:14,420 John Ayoub: backbone of our portfolio now. And we think they should be 189 00:10:14,590 --> 00:10:16,750 John Ayoub: able to deal with a lot of the local headwinds 190 00:10:16,750 --> 00:10:19,530 John Ayoub: that we're facing over the next six months. But in 191 00:10:19,530 --> 00:10:23,770 John Ayoub: saying that, in regard to the tech sector, there's opportunities arising. 192 00:10:24,010 --> 00:10:26,150 John Ayoub: And what you want to typically do is try to 193 00:10:26,150 --> 00:10:29,580 John Ayoub: find the best stock in each sector that previously you 194 00:10:29,580 --> 00:10:33,300 John Ayoub: may know that an opportunity to buy because evaluation, dislocation, 195 00:10:33,300 --> 00:10:37,059 John Ayoub: and volatility provides opportunity. And so we have certainly got our eye on a 196 00:10:37,059 --> 00:10:40,410 John Ayoub: lot of names, I'll call out realestate.com as one, where 197 00:10:40,410 --> 00:10:43,460 John Ayoub: we think it's an incredible franchise. Even Seek. These are 198 00:10:43,460 --> 00:10:46,750 John Ayoub: really good businesses where valuation was a little bit stretched 199 00:10:47,300 --> 00:10:49,100 John Ayoub: over the last two to three years. But that doesn't 200 00:10:49,100 --> 00:10:51,770 John Ayoub: say that these businesses aren't market leaders, they absolutely are. 201 00:10:51,800 --> 00:10:54,590 John Ayoub: So their names that we put on the radar, we 202 00:10:54,590 --> 00:10:57,089 John Ayoub: put little positions in and if we're right in our 203 00:10:57,090 --> 00:11:00,220 John Ayoub: are thinking that valuations come under more pressure, these are 204 00:11:00,220 --> 00:11:02,330 John Ayoub: names that we'd look to increase our stake in. 205 00:11:02,809 --> 00:11:06,699 Sean Aylmer: Okay. You mentioned Santos there. Just one final question. How 206 00:11:06,700 --> 00:11:10,179 Sean Aylmer: do you judge oil and gas? I fully appreciate what's 207 00:11:10,179 --> 00:11:12,830 Sean Aylmer: happening in the Ukraine and to oil and gas prices. 208 00:11:13,200 --> 00:11:18,170 Sean Aylmer: So certainly it's a trading play. Is the long-term outlook 209 00:11:18,170 --> 00:11:21,040 Sean Aylmer: for these oil and gas guys though, particularly if they're 210 00:11:21,040 --> 00:11:24,680 Sean Aylmer: not transitioning, and would serve as another example, because it's taking on all BHP 211 00:11:24,750 --> 00:11:27,839 Sean Aylmer: oil assets, what is the long-term play for these guys? 212 00:11:28,320 --> 00:11:32,910 John Ayoub: Santos is taking steps to shift more and more to green energy 213 00:11:33,260 --> 00:11:37,590 John Ayoub: and carbon capture. And so they're doing their part. I 214 00:11:37,590 --> 00:11:40,200 John Ayoub: think if we take a step back and consider the 215 00:11:40,200 --> 00:11:42,210 John Ayoub: dynamic and how long it will take for this energy 216 00:11:42,210 --> 00:11:45,220 John Ayoub: transition to take place, countries like Norway have been able 217 00:11:45,220 --> 00:11:48,070 John Ayoub: to do it quickly, Australia potentially could do it quickly. 218 00:11:48,530 --> 00:11:52,270 John Ayoub: The US, who knows how long it takes? But if 219 00:11:52,270 --> 00:11:56,780 John Ayoub: we consider China, if we consider India, if we consider Korea, 220 00:11:57,040 --> 00:11:59,900 John Ayoub: very large markets, it's going to take a long time 221 00:11:59,900 --> 00:12:02,630 John Ayoub: to see. And if you think about the continent of Africa, 222 00:12:03,230 --> 00:12:04,950 John Ayoub: it's going to take a long, long, long time for 223 00:12:04,950 --> 00:12:08,300 John Ayoub: these countries to transition. And if you look at the 224 00:12:08,300 --> 00:12:11,360 John Ayoub: CapEx budgets of all the major oil majors in the world, 225 00:12:11,940 --> 00:12:15,179 John Ayoub: they've been shrinking at a rapid rate. So there is 226 00:12:15,179 --> 00:12:17,870 John Ayoub: a place for oil for the next 20 to 30 years. 227 00:12:18,510 --> 00:12:21,170 John Ayoub: The thing to also remember now is if what Russian 228 00:12:21,170 --> 00:12:25,250 John Ayoub: conflict has highlighted is energy supply and security of supply, 229 00:12:25,760 --> 00:12:29,410 John Ayoub: and who you partner with, because geopolitics, we got a little 230 00:12:29,410 --> 00:12:32,380 John Ayoub: bit lazy, so to speak, where you had a project 231 00:12:32,380 --> 00:12:35,300 John Ayoub: in Mozambique, we have a project here or project wherever 232 00:12:35,300 --> 00:12:37,900 John Ayoub: it might be, and you just expect them to come 233 00:12:37,900 --> 00:12:41,820 John Ayoub: to market. So if you consider Santos and Woodside in 234 00:12:41,820 --> 00:12:44,559 John Ayoub: that context, Australia's a really good place to be. You 235 00:12:45,640 --> 00:12:48,559 John Ayoub: know that politically, we're stable. We know that you can 236 00:12:48,559 --> 00:12:53,220 John Ayoub: get your supply. So I expect contracted gas from Australia 237 00:12:53,220 --> 00:12:57,210 John Ayoub: to fetch a premium, to what spot markets, when they normalise, 238 00:12:57,540 --> 00:12:59,510 John Ayoub: to what they should be able to do because we're a safe haven. 239 00:12:59,870 --> 00:13:02,770 John Ayoub: And that's not limited oil and gas, you can expand 240 00:13:02,770 --> 00:13:04,559 John Ayoub: that to a number of other commodities. You can expand 241 00:13:04,559 --> 00:13:07,370 John Ayoub: it to aluminium. You can expand it to nickel and 242 00:13:07,370 --> 00:13:10,969 John Ayoub: all the battery materials. Russia is a big supplier of nickel. 243 00:13:10,970 --> 00:13:14,250 John Ayoub: I think it's 20% of battery grade and 7% of refined nickel. 244 00:13:14,390 --> 00:13:18,580 John Ayoub: So there's no reason why Australia can't do particularly well 245 00:13:18,580 --> 00:13:21,390 John Ayoub: out of this, because we are a safe haven. We have 246 00:13:21,390 --> 00:13:25,020 John Ayoub: the resources. I think we should do particularly well. So 247 00:13:25,020 --> 00:13:26,470 John Ayoub: if you look at Tesla, where they're going to want 248 00:13:26,470 --> 00:13:30,280 John Ayoub: to contract, they're contracting with a lot of Australian suppliers. So, 249 00:13:31,190 --> 00:13:33,309 John Ayoub: it's an interesting dynamic and how it plays out. We're 250 00:13:33,309 --> 00:13:36,240 John Ayoub: probably going to be wrong. But timing is the big question. 251 00:13:37,330 --> 00:13:39,270 John Ayoub: And I think it's probably going to take a lot longer for the world to transition 252 00:13:39,270 --> 00:13:42,840 John Ayoub: to green energy, particularly from a developing nation standpoint, versus that 253 00:13:42,840 --> 00:13:43,760 John Ayoub: of developed nations. 254 00:13:44,070 --> 00:13:45,810 Sean Aylmer: John, thank you for talking to Fear and Greed. 255 00:13:46,090 --> 00:13:46,230 John Ayoub: No problem. 256 00:13:46,820 --> 00:13:50,170 Sean Aylmer: That was John Ayoub, WAM, Wilson Asset Management, WAM Leaders 257 00:13:50,170 --> 00:13:52,990 Sean Aylmer: Portfolio Manager. This is a Fear and Greed Daily Interview. 258 00:13:52,990 --> 00:13:55,040 Sean Aylmer: Join me every morning for the full Fear and Greed 259 00:13:55,040 --> 00:13:57,620 Sean Aylmer: podcast with all the business news you need to know, 260 00:13:57,770 --> 00:13:59,300 Sean Aylmer: I'm Sean Aylmer, enjoy your day.