Latest / Best of Business / Stephanie Batchelor: Milford Asset Management expert on the sections of the market that have held up

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Stephanie Batchelor: Milford Asset Management expert on the sections of the market that have held up · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: With markets as volatile as they are and with the
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  Speaker 2: headlines so negative, you'd be forgiven for thinking that every
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  Speaker 2: company out there has gone down this year. Not the
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  Speaker 2: case at all. Stephanie Bachelor is from Milford Asset Management Hastaff.
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  Speaker 3: Hi here that how are you?
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  Speaker 2: I'm very well, thank you. Now tell me which parts
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  Speaker 2: of the share market have been doing well despite the selloff.
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  Speaker 3: Yes, So, if we look across the different sectors that
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  Speaker 3: make up the global share market, the best performing one
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  Speaker 3: has been consumer staples. So this sector is up about
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  Speaker 3: ten percent year to date versus the broader global share
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  Speaker 3: market being down about five percent, so it's about a
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  Speaker 3: fifteen percent outperformance. And in other sectors that have held
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  Speaker 3: up better areas like utilities and infrastructure as well.
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  Speaker 2: What is a consumer staples company? I mean, do I
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  Speaker 2: do I know any of these companies?
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  Speaker 3: Yeah? So consumer staples companies are sort of exactly what
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  Speaker 3: they're say are like, you know, they're companies that sell
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  Speaker 3: core goods that consumers need and you can't really live
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  Speaker 3: without food. Diverriadges household products like toilet paper, toothpaste, all
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  Speaker 3: companies that provide the essential service like supermarkets. So one
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  Speaker 3: example is a UK consumer health company called Calion. So
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  Speaker 3: you might not have heard of the company, but I'm
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  Speaker 3: pretty sure you'll know it's products. They sell brands like Panadol,
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  Speaker 3: Voltaire and Censordine Centrum as well as many Moore.
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  Speaker 2: Yeah totally. So why are they doing so well during
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  Speaker 2: the volatility?
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  Speaker 3: Yeah, So when there's a lot of uncertainty in markets,
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  Speaker 3: investors tend to shift towards consumer staples companies because they
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  Speaker 3: know that they're going to be more resilient during a downturn,
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  Speaker 3: because you know, they're categories that people can't not buy.
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  Speaker 3: And then within consumer staples there are subcategories. So one
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  Speaker 3: of these is consumer health, which HALion falls under, and
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  Speaker 3: these are even more resilient. So they come in just
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  Speaker 3: after pet food in terms of sort of macro resiliency.
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  Speaker 3: So you can think of them like the staple of staples.
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  Speaker 3: And you know it's because when we're sick or thinking
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  Speaker 3: about our health, we become quite loyal to certain brands.
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  Speaker 3: You know, we want to stick with what we know
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  Speaker 3: and trust rather than switching it up. Just to save
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  Speaker 3: a few dollars. And there's also less competition in the space.
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  Speaker 3: So in food and beverage, new competitors are popping up
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  Speaker 3: all the time, and snack foods or energy drinks, but
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  Speaker 3: in consumer health there are a lot of regulatory barriers
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  Speaker 3: to entry. So it sort of stopped that from happening.
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  Speaker 2: And then how are they going to be impacted by
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  Speaker 2: the tariffs?
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  Speaker 3: Yeah, so Haleyon is a little bit more protected from
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  Speaker 3: tariff relative to other companies. It's a UK company and
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  Speaker 3: it has about a third of its revenue generated in
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  Speaker 3: the US, but about eighty percent of those products are
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  Speaker 3: produced domestically, so they're not subject to tariffs, and then
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  Speaker 3: the remaining twenty percenter imported. And it also has a
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  Speaker 3: very high growth margin structure, so that limits the impact
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  Speaker 3: from a little bit as well. But there are you know,
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  Speaker 3: there are other consumer staples companies that aren't so lucky.
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  Speaker 3: So for example, Remi Quantro, which sells Cognac and other
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  Speaker 3: spirits from Europe into the US. That's also classed as
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  Speaker 3: a consumer staples company. But because it imports about ninety
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  Speaker 3: percent of its US products, it's a it's at risk
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  Speaker 3: of a big tariff hit, and even more so because
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  Speaker 3: Trump has threatened outsized tariffs of two hundred percent on
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  Speaker 3: European alcohol as a retaliation to their tariff on US whiskey.
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  Speaker 3: So as a result, Remy is actually down more than
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  Speaker 3: the global shre market this year. It's down fifteen percent,
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  Speaker 3: whereas hally On is up nine percent in US dollars.
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  Speaker 2: Yeah, it's really interesting stuff, Steff. Thanks for talking through
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  Speaker 2: and appreciated that. Stephanie Bachelor milfairset management.
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