WEBVTT - Quick Bite: Capital gains tax 💰how could it happen?

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<v Speaker 1>You're listening to a share these podcast.

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<v Speaker 2>Capital gains tax. For me, I've always felt like it's

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<v Speaker 2>more of a when, not an if. But again it's

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<v Speaker 2>topical and both political parties, business lea, they're speaking about it.

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<v Speaker 2>What's your view on capital gains tax?

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<v Speaker 1>Yeah, I expect it will be introduced at some stage

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<v Speaker 1>in New Zealand. It's a question of what will be

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<v Speaker 1>the context of the debate, and if the debate for

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<v Speaker 1>introducing it is revolving around envy and not wanting people

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<v Speaker 1>to make a capital gain from property and a belief that, oh,

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<v Speaker 1>if people don't invest in property, they're going to invest

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<v Speaker 1>in other productive activities. I don't know if it gets

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<v Speaker 1>across the line from my point of view. To get

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<v Speaker 1>it across the line, it has to be in the

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<v Speaker 1>context of the country needs to generate more tax revenue

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<v Speaker 1>in the future because of the aging population, the increased

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<v Speaker 1>demands on the health system, for instance, just to modernize

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<v Speaker 1>what's already sitting out there, we do need to raise

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<v Speaker 1>raw more revenue. New Zealand has already highly depended upon

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<v Speaker 1>income tax and GST rate is already fifteen percent. Put

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<v Speaker 1>it in that context and I can see myself probably

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<v Speaker 1>voting in favor of it coming in. But as long

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<v Speaker 1>as it is couched in terms of some people have

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<v Speaker 1>made money and we don't think they should have made

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<v Speaker 1>that much money, I would struggle then, I think too

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<v Speaker 1>to go and support it. It has to be part of

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<v Speaker 1>a broader fiscal debate. But it's going to come, but

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<v Speaker 1>I think it's impossible to predict what parliamentary term it's

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<v Speaker 1>going to appear.

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<v Speaker 2>I'll be if someone can nail that story of you know,

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<v Speaker 2>it'll help me more growth over time and stuff. I

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<v Speaker 2>think that would be amazing as well. So for our listeners,

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<v Speaker 2>what should they as investors be thinking or bearing in

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<v Speaker 2>mind over the next six to twelve months.

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<v Speaker 1>Yeah, expect a lot of uncertainty out there. We're at

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<v Speaker 1>a turning point in a number of cycles. And my

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<v Speaker 1>experience of having been in this business back in New

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<v Speaker 1>Zealand since nineteen eighty seven is that we're volatilely kind

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<v Speaker 1>of me. We get hit by shops all the time,

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<v Speaker 1>domestic ones and offshore, and when cycles turn, sometimes they

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<v Speaker 1>don't keep going in the direction that you expect. This

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<v Speaker 1>happened a year ago the housing market was picking up

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<v Speaker 1>quite strongly. Prices on average in New Zealand increased zero

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<v Speaker 1>point nine percent a month for a five month period

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<v Speaker 1>July through to November, and then they started falling away.

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<v Speaker 1>It was a false start. I don't think it's a

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<v Speaker 1>false start this time around in terms of the residential

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<v Speaker 1>property market picking up. But there are a number of

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<v Speaker 1>things out there that are going to occupy people's minds

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<v Speaker 1>and so obviously keep an eye on what's happening in

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<v Speaker 1>the Middle East and the potential for greater discord over

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<v Speaker 1>there that may cause an impact in the oil market.

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<v Speaker 1>It hasn't so far, but that is always a risk

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<v Speaker 1>that's sitting out there. We've got the American presidential election

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<v Speaker 1>in about a month's time coming along, and if mister

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<v Speaker 1>Trump gets back in, then we're looking at higher tariffs

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<v Speaker 1>for the thirteen percent of New Zealand exports that go

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<v Speaker 1>to the United States, and then other countries may be

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<v Speaker 1>looking at putting tariffs in place as well. So that's

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<v Speaker 1>a risk for New Zealand because we're vulnerable to these

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<v Speaker 1>things that we need access overseas. Keep an eye on

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<v Speaker 1>the Chinese economy. At its peak three years ago, thirty

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<v Speaker 1>three percent of our export receipts came from China, including

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<v Speaker 1>Hong Kong. Now we're down to twenty seven point three

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<v Speaker 1>percent and falling away. China's economic outlook is not particularly good,

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<v Speaker 1>and that means still low demand for forestry products and

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<v Speaker 1>it's going to be suppressing prices for the likes of

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<v Speaker 1>red meat, and i'd suggest also a bit on the

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<v Speaker 1>dairy product side as well, So keep an eye on

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<v Speaker 1>that one. And outside of that, it's simply the usual things.

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<v Speaker 1>At some stage we're going to give another decent earthquake,

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<v Speaker 1>a big earthquake. Unfortunately in New Zealand, I don't tend

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<v Speaker 1>to buy into there's another pandemic just around the corner,

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<v Speaker 1>one in every seventy years in terms of you know,

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<v Speaker 1>COVID et cetera. Maybe that's so that is more my

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<v Speaker 1>underlying assumption with that regard. But people need to remember

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<v Speaker 1>diversification in your portfolio and watch for over extrapolation of

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<v Speaker 1>cycles once they start, because I can assure you from

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<v Speaker 1>three and a half or so decades in this business

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<v Speaker 1>there isn't a tendency to over extrapolate the up and

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<v Speaker 1>the down. Things move in cycles, and watch out you

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<v Speaker 1>don't get overly optimistic or pessimistic. The other way around.

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<v Speaker 1>Investing involves the risk you might lose the money you

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<v Speaker 1>start with. We recommend talking to a licensed financial advisor.

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<v Speaker 1>We also recommend reading product disclosure documents before deciding to invest.

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<v Speaker 1>Everything you're about to see and hear is current at

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<v Speaker 1>the time of recording.