1 00:00:00,040 --> 00:00:02,519 Speaker 1: Let's talk about the n z X and I'm joined 2 00:00:02,520 --> 00:00:05,680 Speaker 1: by Sam Trathui and he's from Milford Asset Management. 3 00:00:05,720 --> 00:00:07,560 Speaker 2: Hell it's Sam Evening Andrew. 4 00:00:08,240 --> 00:00:10,200 Speaker 1: So the market, the INS and X has been a 5 00:00:10,240 --> 00:00:15,240 Speaker 1: material underperformer, particularly when you're compared to major off sure 6 00:00:15,360 --> 00:00:16,360 Speaker 1: share markets this year. 7 00:00:16,800 --> 00:00:21,440 Speaker 2: Why I think, Look, Firstly, it's still up ten percent 8 00:00:22,320 --> 00:00:24,079 Speaker 2: over the course of the year, which is not a 9 00:00:24,120 --> 00:00:27,280 Speaker 2: bad yees and it's definitely what I call respectable, but 10 00:00:27,400 --> 00:00:29,960 Speaker 2: agree like, it's not the twenty five thirty percent that 11 00:00:29,960 --> 00:00:32,440 Speaker 2: we are seeing in major offshore share markets, the likes 12 00:00:32,479 --> 00:00:34,400 Speaker 2: of the S and P five hundred, et cetera. So 13 00:00:35,159 --> 00:00:38,680 Speaker 2: why hasn't kept up Really three key reasons. So firstly, 14 00:00:38,920 --> 00:00:42,200 Speaker 2: interest rates. The first half of this year, the stance 15 00:00:42,280 --> 00:00:44,919 Speaker 2: taken by the rbn ZS was a really big head 16 00:00:44,960 --> 00:00:47,880 Speaker 2: win to the local market. It's pretty sensitive to tentist rates, 17 00:00:47,920 --> 00:00:50,680 Speaker 2: the dividing yields, et cetera. The attractives and attractiveness of 18 00:00:50,720 --> 00:00:54,040 Speaker 2: them as a big driver of performance. And it wasn't 19 00:00:54,080 --> 00:00:56,680 Speaker 2: untill that first cut that we saw from the RBNZ 20 00:00:56,880 --> 00:01:01,360 Speaker 2: in July that that pressure is. Secondly, corporate earnings have 21 00:01:01,480 --> 00:01:04,360 Speaker 2: been under pressure. That's what we all can see and 22 00:01:04,400 --> 00:01:07,120 Speaker 2: feel in the economy coming through and heading the market. 23 00:01:07,520 --> 00:01:09,720 Speaker 2: And then finally, if you look closely at the performance 24 00:01:09,720 --> 00:01:12,880 Speaker 2: of those major year markets offshore at the return, it's 25 00:01:12,920 --> 00:01:15,920 Speaker 2: really been driven by a handful of stocks. So take 26 00:01:15,959 --> 00:01:20,319 Speaker 2: the US for example, the Magnificent seven there led by 27 00:01:20,440 --> 00:01:24,440 Speaker 2: Navidio on the artificial official intelligence theme. That stock is 28 00:01:24,520 --> 00:01:27,039 Speaker 2: up one and eighty percent this year, so it's a 29 00:01:27,080 --> 00:01:29,640 Speaker 2: big part of the market. The inxt X does have 30 00:01:29,680 --> 00:01:31,959 Speaker 2: some winners Frish and Buckle Health get the largest stock 31 00:01:32,040 --> 00:01:34,800 Speaker 2: up sixty percent this year, but not to the same extent. 32 00:01:34,959 --> 00:01:36,840 Speaker 2: So three key differences there. 33 00:01:36,880 --> 00:01:39,319 Speaker 1: Andrew, Okay, so what about the year ahead. 34 00:01:40,360 --> 00:01:43,160 Speaker 2: I think, look, the headline really is that I'm probably 35 00:01:43,160 --> 00:01:46,480 Speaker 2: more optimistic about the outlook for the inxet X that 36 00:01:46,520 --> 00:01:48,800 Speaker 2: we than I have been some time, and that's really 37 00:01:49,480 --> 00:01:54,200 Speaker 2: since the pandemic. So where interistrates are heading, the official 38 00:01:54,200 --> 00:01:57,640 Speaker 2: cash rate towards three percents, and the prospect of improving 39 00:01:57,680 --> 00:02:02,240 Speaker 2: economic conditions in the year and then therefore improving corporate 40 00:02:02,280 --> 00:02:05,040 Speaker 2: earnings really are the big drivers there. If you look 41 00:02:05,120 --> 00:02:09,480 Speaker 2: back at history pre the pandemic, when we're last cutting 42 00:02:09,480 --> 00:02:12,760 Speaker 2: interest rates back and from say twenty fifteen to twenty twenty. 43 00:02:13,280 --> 00:02:15,760 Speaker 2: Back then we had the rockstar economy, but we also 44 00:02:15,840 --> 00:02:18,160 Speaker 2: had a rockstar share market, and that's when we saw 45 00:02:18,200 --> 00:02:21,400 Speaker 2: some pretty persistent, steady flow into the market looking for 46 00:02:21,480 --> 00:02:24,920 Speaker 2: better returns. Most of that was term deposits. So it 47 00:02:24,960 --> 00:02:27,840 Speaker 2: will be interesting to see as ten rates system deposit 48 00:02:27,960 --> 00:02:31,160 Speaker 2: rates come down, will that drive the share market higher 49 00:02:31,240 --> 00:02:32,200 Speaker 2: like it has in the past. 50 00:02:32,720 --> 00:02:35,799 Speaker 1: Well, we always said, you know, survive until twenty five, 51 00:02:35,840 --> 00:02:37,799 Speaker 1: but these days are saying, well, twenty five is still 52 00:02:37,840 --> 00:02:39,480 Speaker 1: going to be a grind. Let's get to twenty six. 53 00:02:39,480 --> 00:02:40,280 Speaker 1: Would you agree with that? 54 00:02:41,520 --> 00:02:43,840 Speaker 2: I think, well, the test is and what we're not 55 00:02:43,880 --> 00:02:47,799 Speaker 2: seeing yet is if the interest rate cuts that are 56 00:02:47,800 --> 00:02:50,440 Speaker 2: coming through from the Reserve Bank when they do, actually 57 00:02:50,480 --> 00:02:54,040 Speaker 2: start to start to influence the local economy. And that's 58 00:02:54,040 --> 00:02:56,560 Speaker 2: what we really need to see, and I think people 59 00:02:56,600 --> 00:02:59,680 Speaker 2: are hopeful of it at the stage. But twenty six 60 00:02:59,720 --> 00:03:02,600 Speaker 2: to point certainly looks a lot easier and a lot 61 00:03:02,800 --> 00:03:04,360 Speaker 2: better set up than twenty five. 62 00:03:04,520 --> 00:03:06,400 Speaker 1: And does the nz X does do you Zealand need 63 00:03:06,400 --> 00:03:08,480 Speaker 1: a hero stock like in the video? And before we 64 00:03:08,520 --> 00:03:10,680 Speaker 1: go too much about in video, so the SMP says 65 00:03:10,680 --> 00:03:13,120 Speaker 1: that AAI might be being a little bit over hyped 66 00:03:13,280 --> 00:03:15,880 Speaker 1: in America, but still there's a hero stock there. Do 67 00:03:15,960 --> 00:03:18,800 Speaker 1: we really need one of those to make our markets perform? 68 00:03:19,600 --> 00:03:22,160 Speaker 2: I think it. Look it certainly was the biggest story, 69 00:03:22,160 --> 00:03:24,560 Speaker 2: the biggest thematic of twenty twenty four, and I expect 70 00:03:24,639 --> 00:03:28,239 Speaker 2: that to evolve in the video to the aartmatic in Nvidia, 71 00:03:28,320 --> 00:03:31,960 Speaker 2: to evolve into the next test stage over the yearhead 72 00:03:32,000 --> 00:03:34,800 Speaker 2: So maybe it's into software companies that benefit from that 73 00:03:34,920 --> 00:03:39,440 Speaker 2: AI tech to new point around how long it can last. 74 00:03:39,480 --> 00:03:42,839 Speaker 2: But locally we have had these stocks before. At Milk 75 00:03:42,880 --> 00:03:47,000 Speaker 2: for instance, dominated the market a while ago, and you know, 76 00:03:47,040 --> 00:03:49,120 Speaker 2: sure it does help performance, but I think the biggest 77 00:03:49,200 --> 00:03:53,800 Speaker 2: drivers that interest rate setup and where the economic conditions 78 00:03:53,800 --> 00:03:56,760 Speaker 2: he had, So certainly if they do improve, it is 79 00:03:56,800 --> 00:03:59,960 Speaker 2: a very good prospect for your head. 80 00:04:00,080 --> 00:04:03,200 Speaker 1: Thank you so much, Merry Christmas. Sam tra theory from 81 00:04:03,280 --> 00:04:04,960 Speaker 1: Milford's Essets Management. 82 00:04:05,720 --> 00:04:08,880 Speaker 2: For more from Hither Duplessy Allen Drive, listen live to 83 00:04:09,000 --> 00:04:12,040 Speaker 2: news talks. It'd be from four pm weekdays, or follow 84 00:04:12,080 --> 00:04:13,840 Speaker 2: the podcast on iHeartRadio.