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Speaker 1: And there may be some hope coming from the Chinese economy.

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Speaker 1: Last week, authorities there announced the range of monetary and

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Speaker 1: fiscal stimulus policies to try and get the massive economy

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Speaker 1: moving again. So what do we see and what might

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Speaker 1: it mean for New Zealand harbor Asset Management. Shane Solly

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Speaker 1: has been looking into this for us this evening, Kilder

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Speaker 1: Shane Jack So just do you good things. Just talk

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Speaker 1: to us first of all, a bit about what the

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Speaker 1: Chinese have actually done.

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Speaker 2: Yeah, so the move started last Tuesday. We saw cuts

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Speaker 2: to official interest rates much like other central banks. They've

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Speaker 2: cut the cost of borrowing and they also eased mortgage availability.

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Speaker 2: This came out of the People's Bank of China. Remember

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Speaker 2: they've been battling a residential property market the last probably

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Speaker 2: decade that got out of control and we're coming through

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Speaker 2: the other side of it. So now they're trying to

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Speaker 2: ease up a bit. Interestingly, that was backed up later

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Speaker 2: and by the week by the Polopjuu, which is the

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Speaker 2: main policy making organization of the Chinese government. They came

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Speaker 2: out with a bunch of announcements also aiming at stabilizing housing,

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Speaker 2: supporting consumption and really it was a bit don't expected,

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Speaker 2: you know, really this new found sense of urgency, but

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Speaker 2: none of that. Then it was backed up by some

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Speaker 2: of the local government authorities announcing and easing up and

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Speaker 2: home ownership policies that really sort of let people go

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Speaker 2: and buy homes again. There's more to competentially, jack, and

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Speaker 2: there's a bit of speculation that there's some more fiscal stimulus,

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Speaker 2: particularly propping up some of the banks, giving them some

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Speaker 2: more capital. Certainly that's got people, we're excited. It's all.

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Speaker 2: The Chinese shoe market up almost sixteen percent last week

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Speaker 2: and even today it's up six point seven percent, So

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Speaker 2: I have a big day in the Chinese shaar market.

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Speaker 1: Yeah, no, that's huge. So what has been the broader

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Speaker 1: global reaction to it?

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Speaker 2: Yeah, so certainly markets are still a little bit cautious,

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Speaker 2: a lot of detail to come out, but we have

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Speaker 2: seen a bit of a pop and anything that's China related,

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Speaker 2: and certainly we've seen the resource stocks do quite well,

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Speaker 2: and closer to home, you know, it is supportive for

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Speaker 2: our commodity exports. So if we do see Chinese consumers

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Speaker 2: getting bit optimistic, it's helpful for a new zone produce.

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Speaker 2: Help from his own travel. One interesting one for the

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Speaker 2: dairy industry is there's been an nuts aentother monthly child

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Speaker 2: allowance for second children and it's quite chunky if you're

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Speaker 2: a Chinese family, up to potentially eight hundred remember per

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Speaker 2: month per child, So that is relative to average person

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Speaker 2: earning fifteen thousand and one a year. If you're in

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Speaker 2: a second tier city, that's big.

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Speaker 1: Yeah, yeah, that's huge. So what about New Zealand how

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Speaker 1: might these changes in the stimulus impact us?

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Speaker 2: Yeah, I think we certainly see it come through our

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Speaker 2: dairy sector. Should you better into this, but it's quite

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Speaker 2: a broad range of activities that will benefit. Depends a

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Speaker 2: little bit on where and how fast the policies come through,

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Speaker 2: but I think net need it's a wind for New Zealand,

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Speaker 2: definitely a win for Australia and by second derivative, work's

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Speaker 2: a wind for New Zealand. Australia obviously still one of

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Speaker 2: the big trading partners. So China's huge, Australia huge net

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Speaker 2: net positive.

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Speaker 1: Back home, Fontira has got a new strategy.

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Speaker 2: Yeah. Look they've undertaken quite in depth review. They've come

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Speaker 2: out and said, look we're really good at business to

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Speaker 2: business during nutrition and so as a result they're going

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Speaker 2: to focus back on this high performing ingredients food service

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Speaker 2: and looking to divest some of its global consumer businesses.

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Speaker 2: So what does it mean. It may create a better

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Speaker 2: path to value creation, so flowed Terra. They've come out

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Speaker 2: and announced some higher financial targets, higher reternal capital and

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Speaker 2: a different dividend policy, which is an increase in dividend.

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Speaker 2: So for farmers and for investors in the finn Terra

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Speaker 2: share funds might see better returns in the future.

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Speaker 1: It's not all positive in the dairy sector. There simmes

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Speaker 1: results throughout today and they're not great.

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Speaker 2: No, unfortunately, some are still going through some tough times.

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Speaker 2: They came out and announced their financial year twenty twenty

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Speaker 2: four results. Their earnings before interest, tax, appreciation and amortization

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Speaker 2: bit of a mouthfulm sorry, that was at forty five

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Speaker 2: mil down from seventy five million last year on lower

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Speaker 2: ingredients consumer gross profits. One of the things they had

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Speaker 2: done though, they added an increased one off payment to

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Speaker 2: South Island farmers who remain with Sinlay, the biggest shiet

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Speaker 2: of Sinlas, trying to retain them. People are a bit weary,

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Speaker 2: so they've decided to another twenty cents per kilogram of

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Speaker 2: milk solids to the mix to try and retain those farmers.

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Speaker 2: But unfortunately Sinlay didn't provide any financial year twenty five

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Speaker 2: guidance and didn't talk about volumes, didn't talk about anything,

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Speaker 2: so it was a pretty tough day for Cinlay.

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Speaker 1: Hey, thanks for your time, Jane really appreciate it. Shames

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Speaker 1: from Harbord Asset Management, thank you for your feedback as well.

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