WEBVTT - 2025: What Investors need to know 0:00:00.480 --> 0:00:03.960 We're into an era now where politics Trump's the economy 0:00:04.000 --> 0:00:06.960 and trade, so there is a lot of uncertainty and 0:00:07.000 --> 0:00:07.880 baked into that. 0:00:08.360 --> 0:00:11.600 Healthcare is a bit of a beaten up sector are globally, 0:00:12.160 --> 0:00:18.160 mostly because of OURFK Junior getting into power. 0:00:18.360 --> 0:00:20.280 I mean, the one thing we can be sure about 0:00:20.520 --> 0:00:23.560 with the Chinese economic statistics is that they're basically lying. 0:00:23.680 --> 0:00:25.479 An area that I think is quite attractive at the 0:00:25.520 --> 0:00:30.920 moment is the smaller capitalization companies. 0:00:33.920 --> 0:00:34.280 Cure. 0:00:34.520 --> 0:00:37.520 Welcome to Shed Lunch, brought to you by Cheesy's. I'm 0:00:37.560 --> 0:00:41.000 Helen Madison. Today we look at what investors need to 0:00:41.040 --> 0:00:44.879 be thinking about as we navigate twenty twenty five. The risks, 0:00:44.960 --> 0:00:46.400 the opportunities, and. 0:00:46.440 --> 0:00:47.920 Plenty of unknowns. 0:00:48.200 --> 0:00:51.960 I'm joined by Harbor Asset Management's Christa Lever and Business 0:00:52.000 --> 0:00:56.720 Desk founding editor Patrick Smalley. Before we get started, here's 0:00:56.760 --> 0:00:57.800 some important information. 0:00:58.080 --> 0:01:01.120 Investing involves the risk lose the money you start with. 0:01:01.440 --> 0:01:05.160 We recommend talking to a licensed financial advisor. We also 0:01:05.240 --> 0:01:09.200 recommend reading product disclosure documents before deciding to invest. Everything 0:01:09.200 --> 0:01:11.280 you're about to see and here is current at the 0:01:11.280 --> 0:01:11.880 time of recorded. 0:01:11.920 --> 0:01:13.360 Welcome Patrick and Chris. 0:01:13.959 --> 0:01:14.039 Hi. 0:01:14.240 --> 0:01:14.800 Nice to be here. 0:01:14.959 --> 0:01:15.400 Thanks all. 0:01:16.840 --> 0:01:20.520 Let's start with the US. I must say for listeners 0:01:20.520 --> 0:01:22.840 and viewers that we are doing this on the inauguration 0:01:23.120 --> 0:01:25.760 of Donald Trump. Just with that caveat that we do 0:01:25.880 --> 0:01:29.600 know things may have changed since then. Chris would start 0:01:29.600 --> 0:01:33.479 with the markets. The US markets have gone incredibly well 0:01:33.520 --> 0:01:36.880 over the last little while. Many investors are sort of 0:01:37.160 --> 0:01:40.320 questioning how far can the US go? 0:01:41.840 --> 0:01:42.720 Is it overvalued? 0:01:42.920 --> 0:01:47.480 And the tech Titans do seem to have a dominance, 0:01:47.560 --> 0:01:49.560 So are there alternatives? 0:01:50.600 --> 0:01:55.040 Yeah, So, just touching on the US market first, valuations 0:01:55.040 --> 0:01:59.120 are high, okay, so we're currently trading it about twenty 0:01:59.160 --> 0:02:03.080 five times backward looking earnings. That is a very high multiple. 0:02:04.160 --> 0:02:07.640 The issue is multiples don't tell us a lot about 0:02:07.680 --> 0:02:11.359 returns for say twenty twenty five or even twenty twenty six. 0:02:12.160 --> 0:02:16.520 The real information that they give us is longer term 0:02:16.560 --> 0:02:22.359 than that. So we know that current valuations typically have 0:02:22.480 --> 0:02:28.919 led to at these levels quite subpar returns over ten years. 0:02:30.200 --> 0:02:32.560 So then we go back and look at the overall 0:02:32.560 --> 0:02:38.760 market valuation and say what's driving it. While the Magnificent seven, 0:02:38.919 --> 0:02:43.720 or the tech Titans or the AI hyperscalers they get 0:02:43.800 --> 0:02:48.120 all the press, what slips really far below the radar 0:02:48.840 --> 0:02:53.280 is Actually the valuations of US companies are quite high 0:02:53.360 --> 0:02:57.360 across the board, So there's very few sectors in the 0:02:57.480 --> 0:03:04.320 US that are not trading at their top decile valuation wise. Currently, 0:03:04.800 --> 0:03:09.520 lots of people talk about in Nvidia, Amazon, Apple, they're 0:03:09.560 --> 0:03:13.079 trading at about thirty times earnings. But if I look 0:03:13.120 --> 0:03:17.120 through the US market, there's companies like Walmart that are 0:03:17.160 --> 0:03:22.000 trading at over thirty times earnings, Constellation Energy, a nuclear 0:03:22.240 --> 0:03:27.680 energy company that's trading it over thirty times earnings. Financials 0:03:28.080 --> 0:03:32.680 banks they're trading at the highest valuation level that they 0:03:32.760 --> 0:03:37.240 had since the Global financial crisis, or obviously preceding the 0:03:37.280 --> 0:03:41.080 global financial crisis. So I think it's an oversimplified kind 0:03:41.080 --> 0:03:45.720 of narrative saying it's just the magnificent seven. So if 0:03:45.800 --> 0:03:48.120 you look at financials, you say, you know, why is 0:03:48.200 --> 0:03:54.119 that so expensive? It's because one of Trump's big policy 0:03:54.160 --> 0:04:00.680 platforms is deregulation, and that benefits highly regulated sectors outside 0:04:00.680 --> 0:04:05.400 of the US are a lot less pressing. An area 0:04:05.480 --> 0:04:07.720 that I think is quite attractive at the moment is 0:04:07.840 --> 0:04:15.800 the smaller capitalization companies. They're trading at a record low 0:04:16.120 --> 0:04:21.840 relative to larger cap companies, and the key thing that's 0:04:21.880 --> 0:04:26.680 really held these companies back has been that they tend 0:04:26.720 --> 0:04:30.520 to be more indebted with floating rate debt, so they've 0:04:30.680 --> 0:04:35.480 rarely felt the full brunt of those bond yields going up. 0:04:37.000 --> 0:04:41.000 Now we've probably seen the worst in my view, in 0:04:41.040 --> 0:04:46.600 the moves and bond yields, and that should benefit those companies. 0:04:47.160 --> 0:04:52.440 Those companies are also more cyclically exposed, so they need 0:04:52.480 --> 0:04:55.480 a strong economic cycle. And actually when we look at 0:04:55.480 --> 0:05:00.159 the US, their economic cycle looks really really strong. So 0:05:00.360 --> 0:05:03.919 that's for investors looking at a bit more for a 0:05:03.920 --> 0:05:07.720 bit more value outside the top end of the market, 0:05:08.080 --> 0:05:13.400 which is really quite expensive in historical terms. 0:05:14.080 --> 0:05:17.200 With Trump coming in, though, there are lots of unknowns 0:05:17.279 --> 0:05:22.440 and maybe the deregulations, you say, is what is fueling this, 0:05:22.920 --> 0:05:26.200 But Pat, what do you think in terms of where 0:05:26.440 --> 0:05:27.080 it might go? 0:05:27.839 --> 0:05:29.839 So one thing we know about Trump is that we 0:05:29.880 --> 0:05:32.560 don't know what Trump will do next. But the one 0:05:32.560 --> 0:05:35.000 thing we can be sure about is that anything that 0:05:35.000 --> 0:05:41.359 Trump does will be self interestedly pro American, so that 0:05:43.160 --> 0:05:46.480 whatever he does, you can bet on it being something 0:05:46.520 --> 0:05:53.240 which is basically nakedly self interested and therefore probably good 0:05:53.320 --> 0:05:57.120 for the American economy. Notwithstanding the fact that. I don't 0:05:57.200 --> 0:06:00.080 quite see how unless he gets a different person to 0:06:00.160 --> 0:06:04.680 run the US Federal Reserve, you can cut taxes, impose tariffs, 0:06:05.000 --> 0:06:06.440 and chuck out a whole lot of people who are 0:06:06.440 --> 0:06:09.000 currently working illegally in your workforce and not have an 0:06:09.040 --> 0:06:13.480 inflationary burst. Now, I don't think that even Donald Trump 0:06:13.560 --> 0:06:18.760 can stop inflation with that particular triumvirate. Perhaps the question 0:06:18.880 --> 0:06:22.239 is will the American economy, because it's so strong anyway, 0:06:22.720 --> 0:06:24.920 just kind of override that, and so you know that 0:06:25.040 --> 0:06:27.279 inflation becomes a bit of a break as opposed to 0:06:27.760 --> 0:06:31.599 a major problem for the growth trajectory for the United States. 0:06:31.960 --> 0:06:35.000 Where does it leave will trade though, and probably more 0:06:35.120 --> 0:06:39.280 likely Australasia, I mean the tariffs. There's been a lot 0:06:39.279 --> 0:06:41.360 of consternation here about what might happen. 0:06:41.600 --> 0:06:45.680 Well, Trump was a protectionist, Biden is even more protectionist. 0:06:45.760 --> 0:06:49.800 We've had more protectionist US federal settings now for the 0:06:49.839 --> 0:06:52.599 best part of a decade more of the same. I 0:06:52.640 --> 0:06:55.400 don't necessarily think makes a huge amount of difference to 0:06:55.440 --> 0:06:58.279 New Zealand's ability to sell exports into the United States. 0:06:58.640 --> 0:07:01.600 I'd be a bit surprised were to be heavily hit 0:07:01.640 --> 0:07:04.240 by a tariff's way. My impression anyway is that it's 0:07:04.240 --> 0:07:08.559 a manufacturing and goods play rather than a services play. 0:07:09.480 --> 0:07:12.240 So to that extent, you know, maybe it's a good 0:07:12.240 --> 0:07:14.240 thing we never got a free trade agreement with the 0:07:14.360 --> 0:07:19.480 United States because we do know though that that in 0:07:19.520 --> 0:07:24.160 the last Trump administration we had steel tariffs put on 0:07:24.240 --> 0:07:27.560 New Zealand produced steel, which is sort of insulting rather 0:07:27.600 --> 0:07:29.720 than economically debilitating. 0:07:29.760 --> 0:07:33.560 Though, Chris, do you have any thoughts on that just 0:07:33.600 --> 0:07:34.360 on tariffs. 0:07:34.480 --> 0:07:39.080 Yes, he's doing it to be pro American, but we've 0:07:39.080 --> 0:07:40.960 got to be careful here because when we look at 0:07:40.960 --> 0:07:43.960 some of the large companies in the US, the amount 0:07:44.000 --> 0:07:48.800 of revenue that they generate from offshore is really quite high. 0:07:49.040 --> 0:07:52.040 And we know one of the other things we know 0:07:52.200 --> 0:07:55.600 about Trump is that one of the biggest measures of 0:07:55.680 --> 0:07:59.840 popularity that he uses is the US stock market. So 0:08:00.120 --> 0:08:05.080 that gives me some comfort at least, you know, when 0:08:05.080 --> 0:08:08.679 I look at these and it's even the Magnificent seven, 0:08:08.760 --> 0:08:11.840 you know, the amount of income that they generate from 0:08:11.880 --> 0:08:16.720 offshore is really quite high. So yeah, since he does 0:08:16.760 --> 0:08:19.480 like the stock market, sees it as a good barometer, 0:08:20.120 --> 0:08:24.680 that might temper some of his enthusiasm when he's looking 0:08:24.720 --> 0:08:27.560 to hopefully not go all out reckless. 0:08:28.000 --> 0:08:30.920 Crypto is his big thing, though, isn't it. So that's 0:08:31.040 --> 0:08:33.839 one aspect of markets. 0:08:34.679 --> 0:08:40.160 Yes, and it's an aspect which it's an interesting aspect 0:08:40.240 --> 0:08:43.720 in the sense that you know, bitcoins at over one 0:08:43.760 --> 0:08:48.520 hundred thousand dollars and it's one of those esset classes 0:08:48.559 --> 0:08:51.959 where people like myself and traditional finance we sit there 0:08:51.960 --> 0:08:54.840 and scratch our heads and quite frankly, we've missed it. 0:08:54.960 --> 0:08:57.880 You know, if someone asked me five years ago, what 0:08:57.920 --> 0:09:00.760 did you think about crypto'd probably expouse the same views 0:09:00.800 --> 0:09:05.360 as the likes of Warren Buffett, who doesn't have a 0:09:05.400 --> 0:09:10.040 horribly favorable view of that particular asset class. But the 0:09:10.040 --> 0:09:12.400 really is, we've kind of all been wrong, right. It's 0:09:12.440 --> 0:09:15.920 gone on longer and been a lot more successful than 0:09:16.080 --> 0:09:20.160 anyone could have thought. And you know, that anti fe 0:09:20.320 --> 0:09:25.959 art or anti establishment sort of form of holding your 0:09:25.960 --> 0:09:29.440 wealth has found favor with a bunch of different people 0:09:29.440 --> 0:09:35.840 and even institutions in the US and here and here, 0:09:35.920 --> 0:09:40.360 and interestingly enough, you know, it seems that both Donald 0:09:40.360 --> 0:09:48.320 Trump and Millennia Trump have found a way themselves to generalize. 0:09:48.440 --> 0:09:51.080 I actually think that's that's quite dangerous for both of them, 0:09:51.840 --> 0:09:53.840 because it reminds me so much of the n f 0:09:53.920 --> 0:09:57.400 T when you're sitting all sitting around in COVID and 0:09:57.440 --> 0:09:59.000 everyone was buying an f T S and saying it 0:09:59.040 --> 0:10:01.599 was going to be having this mouse thing in a 0:10:02.120 --> 0:10:04.360 digital form was going to be incredibly valuable. Where are 0:10:04.360 --> 0:10:06.439 they now? I don't think anybody talks about or trades 0:10:06.559 --> 0:10:09.360 NFTs and like Yu gi O cards or something like that. 0:10:09.440 --> 0:10:12.560 You know, So there's crypto and there's crypto. I mean, 0:10:12.559 --> 0:10:17.120 bitcoin is one thing, some meme, stock meme crypto that 0:10:17.120 --> 0:10:20.240 that has been made up around around particular individual. I mean. 0:10:20.800 --> 0:10:25.520 The reality of Trump is that he's, as they've described 0:10:25.520 --> 0:10:27.480 in the New York Times to day, he's actually starts 0:10:27.520 --> 0:10:29.640 as a lame duck in the sense that the longer 0:10:29.760 --> 0:10:33.719 his his term goes, the less significant his influence will 0:10:33.760 --> 0:10:36.760 be because he can't stand again. So he will be 0:10:36.920 --> 0:10:38.920 you know, he's going to flood the zone with all 0:10:39.040 --> 0:10:43.880 kinds of populist and economic things in the first nine months, 0:10:43.920 --> 0:10:47.240 twelve ninety twelve months because he has to get going fast, 0:10:47.280 --> 0:10:50.600 and because he also just wants to overwhelm such opposition 0:10:50.640 --> 0:10:52.680 as there is just have too many things going at once, 0:10:52.720 --> 0:10:55.920 sort of Roger Douglas style. Nobody knows what's coming next, 0:10:55.960 --> 0:10:58.960 and so you're in a constant stut of fusion and terror. 0:11:00.920 --> 0:11:03.800 But as time goes on, he becomes less and less influential. 0:11:03.880 --> 0:11:06.240 Somebody has to replace him. What happens to your crypto 0:11:07.000 --> 0:11:08.360 mean crypto at that point. 0:11:08.720 --> 0:11:13.560 AI has had a phenomenal amount of success in recent times, 0:11:13.640 --> 0:11:16.760 and we can't not talk about that when we're talking tech. 0:11:17.320 --> 0:11:21.040 Yeah, I mean, there's two things with megatrends. You know that. 0:11:21.120 --> 0:11:23.920 The first one is to decide whether they are a 0:11:24.000 --> 0:11:28.800 megatrin Right now, with AI, we're going through the capital 0:11:28.840 --> 0:11:32.560 expenditure cycle. There's very little revenue being made from it 0:11:32.960 --> 0:11:37.480 outside say co pilot with Microsoft and some search engines 0:11:38.080 --> 0:11:42.960 and companies. Over the next years are going to determine 0:11:43.160 --> 0:11:45.360 whether this is a good use of capital or not. 0:11:46.120 --> 0:11:49.640 Because you read the headlines and there's hundreds of billions 0:11:49.640 --> 0:11:53.160 of dollars going towards AI. At the end of the day, 0:11:53.160 --> 0:11:59.560 there needs to be monetization to justify that capital expenditure. Now, 0:12:00.679 --> 0:12:03.960 the other thing to bear in mind is we're so 0:12:04.280 --> 0:12:07.280 bad at picking mega trends in an early stage. And 0:12:07.320 --> 0:12:10.600 I always think of the example of at and t 0:12:11.480 --> 0:12:15.120 asking Mackenzie to go out there. This is in the 0:12:15.200 --> 0:12:18.000 lad eighties. They said, look, mobile phones are taking off. 0:12:18.320 --> 0:12:20.600 How many will there be in the year two thousand. 0:12:21.160 --> 0:12:23.760 Mackenzie came back and said, look, we think there'll be 0:12:24.679 --> 0:12:27.960 about nine hundred thousand mobile phones. In the year two 0:12:27.960 --> 0:12:32.520 thousand there was well over one hundred billion mobile phones. 0:12:32.679 --> 0:12:37.559 So even very smart people at Mackenzie struggled to figure 0:12:37.600 --> 0:12:41.240 that one out. That's the overall trend. But then there's 0:12:41.240 --> 0:12:44.120 making money from the trend, and that's a really tough 0:12:44.160 --> 0:12:47.959 thing too, because in the late eighties early nineties, you 0:12:48.000 --> 0:12:51.720 would have said Motorola or Nokia, that's going to be 0:12:51.760 --> 0:12:56.520 the pre eminent phone company. In the early two thousands, 0:12:56.559 --> 0:12:59.679 I remember my first work phone. It was a BlackBerry, 0:13:00.200 --> 0:13:03.560 was great, and they look like they were going to 0:13:03.559 --> 0:13:08.240 assert dominance. And then out came the iPhone. When the 0:13:08.280 --> 0:13:12.720 iPhone first came out, people were laughing at it. They said, 0:13:12.760 --> 0:13:15.480 oh God, such an expensive phone. It doesn't have a keyboard. 0:13:16.400 --> 0:13:21.680 Our thinking changes so much with these trends. So that's 0:13:21.760 --> 0:13:26.240 the cautionary note. With these new mega trends. 0:13:26.679 --> 0:13:28.640 I think you may disagree with me about this. Chris, 0:13:28.640 --> 0:13:30.720 I don't know, but I think there's also an opis 0:13:30.840 --> 0:13:37.520 question with AI. You know, artificial intelligence to produce an 0:13:37.559 --> 0:13:40.880 answer has to use energy to produce the answer. The 0:13:40.960 --> 0:13:44.160 deeper the question, the more energy it uses. And these 0:13:44.200 --> 0:13:48.000 things are starting to suck an enormous amount of electricity 0:13:48.040 --> 0:13:50.880 out of grids everywhere that they're being used. So I 0:13:51.440 --> 0:13:54.120 suspect that there will start to be a metric which 0:13:54.160 --> 0:13:58.120 will be what is the cost per answer for your question? 0:13:58.679 --> 0:14:00.520 And it will be the person with the life cost 0:14:00.559 --> 0:14:04.080 per answer in energy terms and therefore sense per question 0:14:04.679 --> 0:14:08.840 who will win. And if it becomes clear artificial intelligence 0:14:08.960 --> 0:14:11.760 just becomes more and more of an energy chew, it's 0:14:11.800 --> 0:14:13.440 going to be harder and harder to make the case, 0:14:13.520 --> 0:14:16.439 as you said, for where the use cases are where 0:14:16.440 --> 0:14:18.200 it's actually sufficiently valuable. 0:14:18.400 --> 0:14:22.080 That climate question is pretty intense. I mean, there's lots 0:14:22.080 --> 0:14:26.920 of consternation about what might happen. I suppose it's a 0:14:26.960 --> 0:14:28.480 bit of a wait and see. I mean, some of 0:14:28.520 --> 0:14:33.120 the bigger players are saying they're working towards mitigating that. 0:14:33.560 --> 0:14:35.600 I don't think we've seen a lot though. It just 0:14:35.600 --> 0:14:37.600 seems to run ahead of its own steam. 0:14:37.640 --> 0:14:39.720 If you like, well, I suspect we're in for a 0:14:40.160 --> 0:14:44.040 couple of years anyway where the whole focus on climate 0:14:44.120 --> 0:14:48.080 change sustainability, the idea that the brand value and so 0:14:48.120 --> 0:14:53.200 forth in climate change action is actually diminished because of 0:14:53.200 --> 0:14:54.880 what we're seeing in the United States, because of the 0:14:55.280 --> 0:14:58.080 push to the to the right of the political spectrum, 0:14:58.680 --> 0:15:03.160 you know, Black Crop, American banks, all these big players 0:15:03.360 --> 0:15:08.400 pulling back from a kind of a breast beating approach 0:15:08.480 --> 0:15:11.800 to their climate change obligations. I mean basically that the 0:15:11.880 --> 0:15:13.960 United States is at the moment, as the world's most 0:15:14.000 --> 0:15:17.600 powerful economy, is saying we've stopped caring, and a lot 0:15:17.640 --> 0:15:19.080 of people are going to take a lead from that 0:15:19.160 --> 0:15:22.080 because ultimately it's difficult to get about climate change. So 0:15:22.360 --> 0:15:25.200 I worry about that that the sustainability trend is going 0:15:25.240 --> 0:15:27.480 to be quite hard to sustain it, particularly as a 0:15:27.480 --> 0:15:30.800 branding proposition, and quite the way that it has over 0:15:30.840 --> 0:15:31.800 the last ten years. 0:15:32.240 --> 0:15:33.920 Even here in New Zealand. I mean they're looking at 0:15:34.000 --> 0:15:40.280 changing the climate reporting. That could have consequences there too. Yeah. 0:15:40.960 --> 0:15:43.840 Just thinking too about other trade partners besides the US. 0:15:43.880 --> 0:15:46.200 I think they're our second biggest trade partner, but China 0:15:46.240 --> 0:15:48.720 obviously is the big powerhouse, and there's obviously been a 0:15:48.760 --> 0:15:51.880 lot said about the slow down there, but it'd be 0:15:51.960 --> 0:15:54.280 quite good to get an idea of where that is 0:15:54.320 --> 0:15:56.680 actually at. To get anything out of the Chinese government 0:15:56.720 --> 0:15:59.160 is quite tricky. I've seen a number of reports about 0:15:59.160 --> 0:16:01.520 economists and like being muzzled when it comes to gross 0:16:01.520 --> 0:16:04.480 domestic product, which is, you know, a typical measure of 0:16:04.520 --> 0:16:07.480 an economy good or bad. Where do you see that going, 0:16:07.520 --> 0:16:10.360 particularly for New Zealand but also for Australia too. 0:16:10.880 --> 0:16:12.880 The one thing we can be sure about with the 0:16:13.000 --> 0:16:17.280 Chinese economic statistics is that they're basically lying. You know 0:16:17.320 --> 0:16:21.680 that the Communist Party wants us to believe that they're 0:16:21.680 --> 0:16:24.280 growing at about five percent. They'll be lucky if they're doing 0:16:24.320 --> 0:16:28.040 two two and a half. So the Chinese domestic economy 0:16:28.120 --> 0:16:31.840 is weak. If there are tariffs imposed at the sixty 0:16:31.840 --> 0:16:34.400 percent level, will be that much weaker. But at the 0:16:34.400 --> 0:16:38.440 same time, I can't see circumstances under which the Chinese 0:16:38.480 --> 0:16:41.480 Communist Party government doesn't hold hands in such a way 0:16:41.480 --> 0:16:45.680 that it continues to keep basic consumer demand in the 0:16:45.760 --> 0:16:49.240 Chinese economy ticking over and to the extent that New 0:16:49.360 --> 0:16:52.800 Zealand anyway perhaps less so Australia where they're into hard 0:16:52.840 --> 0:16:55.400 minerals and so forth. But New Zealand we're selling protein, 0:16:56.640 --> 0:17:02.920 and we're selling commodity protein mainly. Unless that unless the 0:17:03.000 --> 0:17:06.800 Chinese decide that I want to stay healthy, or that 0:17:07.119 --> 0:17:10.320 they are earning so little that they can't afford protein anymore, 0:17:10.359 --> 0:17:13.320 I think we're probably okay. And I suspect that if 0:17:13.480 --> 0:17:17.439 the flow of Chinese goods to the United States is 0:17:17.480 --> 0:17:19.880 cut off to some degree, we'll probably see cheaper stuff here. 0:17:21.720 --> 0:17:23.200 Chris, have you any thoughts on that. 0:17:24.040 --> 0:17:28.679 Structurally, China's still in such a hard spot. I think 0:17:29.200 --> 0:17:32.480 we're so used to out of China waiting for these 0:17:32.520 --> 0:17:39.399 big Berzuka stimulus announcements, and essentially since COVID, they've just 0:17:39.560 --> 0:17:43.159 disappointed and disappointed and disappointed. And that's because there's some 0:17:43.200 --> 0:17:48.640 really big structural issues there. The mechanism of which they 0:17:49.359 --> 0:17:55.560 provided stimulus to their people was through property, but unfortunately 0:17:55.720 --> 0:17:57.879 that can only go on for so long, and it 0:17:58.440 --> 0:18:02.560 went on to a point at China where they inflated 0:18:02.680 --> 0:18:06.080 quite a large bubble and they don't have the population 0:18:06.320 --> 0:18:11.680 growth anymore to paper over the cracks. So I think 0:18:11.760 --> 0:18:16.800 it's not a one year, two year kind of cycle 0:18:16.840 --> 0:18:19.439 that you have to think about. In China now, I 0:18:19.440 --> 0:18:22.359 think it's the next decade. I think they're really struggling 0:18:22.440 --> 0:18:27.760 to starve off deflation. It's starting to look a little 0:18:27.840 --> 0:18:32.280 bit like Japan did in the late eighties, and they're 0:18:32.920 --> 0:18:37.320 economic case study of just how tough it can be 0:18:38.119 --> 0:18:42.240 to get your economy going after you've had quite a 0:18:42.280 --> 0:18:48.640 substantial asset price bubble. There's we can kind of fear 0:18:48.720 --> 0:18:52.280 in New Zealand, there's probably some parallels with property. As 0:18:52.280 --> 0:18:54.600 I talk, I think, oh goodness me, my house price 0:18:54.640 --> 0:18:59.399 hasn't done actually hasn't done anything. It's gone backwards over 0:18:59.440 --> 0:19:02.240 the past three years, and like most keys, I look 0:19:02.240 --> 0:19:05.679 at it and go, well, I feel less wealthy. People 0:19:05.720 --> 0:19:08.440 definitely aren't going to the insurance broker like they did 0:19:08.480 --> 0:19:11.480 in the twenty twenty twenty twenty one and going hey, 0:19:11.520 --> 0:19:13.600 I'd love to put a sparple, a new car, boat, 0:19:14.680 --> 0:19:18.080 insert fancy shiny thing here on my mortgage. So you know, 0:19:18.440 --> 0:19:22.359 us as key as we understand the positive stimulus that 0:19:22.400 --> 0:19:25.640 a rising property market can give us. And that's where 0:19:25.640 --> 0:19:31.520 they're really struggling in China, and some of the multiples 0:19:31.560 --> 0:19:37.960 of house price to income rental yield in some of 0:19:38.000 --> 0:19:43.480 the Tierwan cities looking just as acute as Japan in 0:19:43.520 --> 0:19:45.480 the late eighties. So I don't think it's an easy 0:19:45.480 --> 0:19:49.000 fix in China. I really like it when I hear 0:19:49.040 --> 0:19:53.520 governments talking about diversifying our trade partners and looking at 0:19:53.560 --> 0:19:57.520 what we can what we can do to decrease our 0:19:57.560 --> 0:19:59.720 alliance there, because I think it's going to be pretty 0:19:59.760 --> 0:20:02.680 tough going in China for quite a while. I completely 0:20:02.720 --> 0:20:06.320 respect what you've said Patrick about I'd much rather be 0:20:06.760 --> 0:20:13.159 exporting what we do to China than what Australia is exporting, 0:20:13.200 --> 0:20:19.560 which is far more aliant on the construction cycle. Maybe 0:20:19.600 --> 0:20:21.840 it's the thing we can't expect is for Chinese tourism 0:20:21.920 --> 0:20:27.240 to recover. Domestic budgets and Chinese households are stretch. They're 0:20:27.240 --> 0:20:29.639 not going to be going let's go to New Zealand 0:20:29.680 --> 0:20:31.000 for a couple of weeks. 0:20:31.280 --> 0:20:36.440 So again, alternative markets, that's what we need to focus on, Chris, 0:20:36.440 --> 0:20:37.440 what about Australia. 0:20:37.560 --> 0:20:38.480 I mean, with. 0:20:40.280 --> 0:20:42.600 Lots of investors think in the US is the best thing. 0:20:42.680 --> 0:20:45.240 There's not a lot happening in the z X for 0:20:45.280 --> 0:20:50.399 a lot of people on shares is anyway, ACEX has 0:20:50.440 --> 0:20:52.560 always been known for its miners, but is that changing 0:20:52.640 --> 0:20:55.240 and is there value in some of the other types 0:20:55.280 --> 0:20:56.760 of sectors and stocks. 0:20:57.200 --> 0:21:01.280 Do you think yes, I'd break apart Ralia into three parts. 0:21:02.359 --> 0:21:04.800 So they've got these two really big sectors. So you've 0:21:04.840 --> 0:21:09.200 got you've got banks, and the yield curve is steepened 0:21:10.359 --> 0:21:15.480 over the past six months. That's great for banks. It's 0:21:15.520 --> 0:21:17.600 great for their business model of that they tend to 0:21:17.680 --> 0:21:22.240 lend long, borrow short. A steep yield curve is exactly 0:21:22.280 --> 0:21:25.080 what they want. That hasn't been lost on the market. 0:21:25.720 --> 0:21:30.200 Australian banks at the moment are more expensive than they've 0:21:30.240 --> 0:21:35.760 ever been relative to history miners. Again, it's that it's 0:21:35.800 --> 0:21:38.919 that China link. We're a little bit apprehensive there on 0:21:38.960 --> 0:21:41.680 the reliance. And then there's kind of everything else that's 0:21:42.040 --> 0:21:44.560 a third bucket. It's quite a few healthcare names we 0:21:44.800 --> 0:21:48.800 like in Australia. Healthcare is a bit of a beaten 0:21:48.920 --> 0:21:58.680 up sector globally, mostly because of RFK Junior getting into 0:21:58.720 --> 0:22:02.560 power and in the US in that key healthcare role 0:22:02.680 --> 0:22:05.919 that's kind of sent shockwaves through the healthcare sector. The 0:22:05.960 --> 0:22:08.400 other one is the impact of the g LP one 0:22:08.640 --> 0:22:17.280 weight loss drugs that was tipped to impact a lot 0:22:17.320 --> 0:22:23.040 of healthcare companies. So any company involved in the likes 0:22:23.040 --> 0:22:27.919 of kidney dialysis for example, completely sold off because GLP 0:22:28.080 --> 0:22:31.600 one was seen to be quite a promising healthcare development 0:22:31.720 --> 0:22:35.119 in that particular area. But yeah, there's a number of 0:22:35.160 --> 0:22:38.359 companies we like in Australia in that healthcare space that 0:22:38.400 --> 0:22:41.840 have been I suppose caught up by that negative global 0:22:42.600 --> 0:22:43.680 health care narrative. 0:22:44.920 --> 0:22:46.960 So you're saying they're cheap at the moment, Yeah. 0:22:46.760 --> 0:22:50.600 They are cheap relative to history, but we're kind of 0:22:50.600 --> 0:22:52.600 our style is to not kind of you go up 0:22:52.640 --> 0:22:56.680 to purely cheap companies. The growth has to be there too. 0:22:56.920 --> 0:23:00.359 Thinking about our own market then, z X, it's no 0:23:00.800 --> 0:23:03.920 secret that it has been having a tough time. We 0:23:03.960 --> 0:23:06.760 did an index just recently, the Chezies Index, which is 0:23:06.800 --> 0:23:09.879 a quarterly sort of litmus test of what investors are 0:23:09.920 --> 0:23:13.080 thinking where they're putting their money in terms of confidence. 0:23:12.680 --> 0:23:15.960 And nine out of ten of. 0:23:15.760 --> 0:23:18.400 The stocks that people were investing in they are no 0:23:18.440 --> 0:23:22.160 longer because it is inz X and the US and 0:23:22.320 --> 0:23:26.159 to a lesser extent, Australia is taking their money. Just 0:23:26.240 --> 0:23:29.199 wondering what you think about where things could head for 0:23:29.240 --> 0:23:31.600 the inset X. There's been a lot of people talking about, 0:23:32.280 --> 0:23:34.480 you know, we need to put fire under it, we 0:23:34.520 --> 0:23:36.400 need to do something else or alternatives. 0:23:36.640 --> 0:23:40.200 What's your perspective, So this is not just an INSIDEX problem. 0:23:40.640 --> 0:23:44.760 Lots of exchanges around the world, publicly traded equities generally 0:23:45.600 --> 0:23:47.200 have been out of favor of me in so much 0:23:47.240 --> 0:23:52.720 private equity activity. Now inst x is a very small market. 0:23:52.760 --> 0:23:56.560 I mean, I've been reporting the enertisecs since nineteen ninety three, 0:23:56.640 --> 0:24:01.400 so I've now carbondated myself and the daily turnover it's 0:24:01.440 --> 0:24:05.320 not that much more today than it was then from 0:24:05.320 --> 0:24:08.760 my recollection anyway, my personal view is that we've it's 0:24:08.800 --> 0:24:11.240 got to get closer to the AASEX. You know, if 0:24:11.240 --> 0:24:13.520 it's got to be called the NZX, fine, but we 0:24:13.640 --> 0:24:16.240 need to be part of a much bigger, more liquid market. 0:24:17.080 --> 0:24:19.119 And you can see New Zealand companies voting with their 0:24:19.119 --> 0:24:21.000 feet on that. We've got a number of the more 0:24:21.000 --> 0:24:24.320 interesting New Zealand companies. I think of Aroa Biosurgery for example, 0:24:25.080 --> 0:24:28.919 good example of a company which should have a lot 0:24:28.960 --> 0:24:31.960 of growth potential in the health sector, based in Auckland, 0:24:32.720 --> 0:24:37.719 listed in Australia and those companies which make it into 0:24:37.760 --> 0:24:41.240 the big indicies for passive fund and indexes and so 0:24:41.280 --> 0:24:44.280 for passive fund managers and so forth, are almost all 0:24:44.840 --> 0:24:46.760 dual listed on the AX. So I think we've just 0:24:46.800 --> 0:24:48.920