Latest / Best of Business / Sam Trethewey: Milford Asset Management Portfolio Manager on the NZX potentially improving in 2025

Transcript

Sam Trethewey: Milford Asset Management Portfolio Manager on the NZX potentially improving in 2025 · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk zed B.
• 0:12
  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Let's talk about the n z X and I'm joined
• 0:19
  Speaker 2: by Sam Trathui and he's from Milford Esset Management.
• 0:22
  Speaker 3: Hell, it's Sam Evening Andrew.
• 0:24
  Speaker 2: So the market, the ins andex has been a material underperformer,
• 0:29
  Speaker 2: particularly when you're compared to major offre share markets this year.
• 0:33
  Speaker 3: Why I think, Look, firstly, it's still up ten percent
• 0:38
  Speaker 3: over the course of the year, which is not a
• 0:40
  Speaker 3: bad yes, and it's definitely what I call respectable but
• 0:44
  Speaker 3: agree like, it's not the twenty five thirty percent that
• 0:46
  Speaker 3: we are seeing in major offshore share markets that likes
• 0:49
  Speaker 3: of the S and P five hundred, et cetera. So
• 0:51
  Speaker 3: why hasn't it kept up? Really three key reasons. So, firstly,
• 0:55
  Speaker 3: interest rates the first half of this year, the stance
• 0:58
  Speaker 3: taken by the RBNZS was a really big had win
• 1:01
  Speaker 3: to the local market. It's pretty sensitive dentist rates, the
• 1:04
  Speaker 3: dividing yields, et cetera. The attractives and attractiveness of them
• 1:08
  Speaker 3: as a big driver of performance. And it wasn't until
• 1:11
  Speaker 3: that first cut that we saw from the RBNZ in
• 1:13
  Speaker 3: July that that pressure eased. Secondly, corporateatings have been under pressure.
• 1:19
  Speaker 3: That's what we all can see and feel in the
• 1:21
  Speaker 3: economy coming through and heading the market. And then finally,
• 1:24
  Speaker 3: if you look closely at the performance of those major
• 1:27
  Speaker 3: year markets offshore at the return, it's really been driven
• 1:30
  Speaker 3: by a handful of stocks. So take the US for example,
• 1:34
  Speaker 3: the Magnificent seven there led by Navidio on the artificial
• 1:38
  Speaker 3: official intelligence theme. That stock is up one and eighty
• 1:42
  Speaker 3: percent this year, so it's a big part of the market.
• 1:45
  Speaker 3: The INXTX does have some winners fishing Buckle Health get
• 1:48
  Speaker 3: the largest stock up sixty percent this year, but not
• 1:50
  Speaker 3: to the same extent. So three key differences there.
• 1:53
  Speaker 2: Andrew, Okay, so what about the year ahead?
• 1:57
  Speaker 3: I think, look, the headline really is that I'm probably
• 1:59
  Speaker 3: more optimistic about the outlook for the inxet X that
• 2:03
  Speaker 3: we than I have been in some time, and that's
• 2:05
  Speaker 3: really since the pandemic. So we're just heading the official
• 2:10
  Speaker 3: cash rate towards three percent, and the prospect of improving
• 2:14
  Speaker 3: economic conditions in the year ahead and then therefore improving
• 2:18
  Speaker 3: corporate earnings really are the big drivers there. If you
• 2:21
  Speaker 3: look back at history pre the pandemic, when we're last
• 2:25
  Speaker 3: cutting interest rates back and from say twenty fifteen to
• 2:28
  Speaker 3: twenty twenty. Back then we had the rockstar economy, but
• 2:32
  Speaker 3: we also had a rockstar share market, and that's when
• 2:34
  Speaker 3: we saw some pretty persistent, steady flow into the market
• 2:37
  Speaker 3: looking for better returns. Most of that was term deposits.
• 2:40
  Speaker 3: So it will be interesting to see as ten rates
• 2:43
  Speaker 3: system deposit rates come down, will that drive the share
• 2:47
  Speaker 3: market higher like it has in the past.
• 2:49
  Speaker 2: Well, we always said, you know, survive until twenty five,
• 2:52
  Speaker 2: but these days are saying, well, twenty five is still
• 2:54
  Speaker 2: going to be a grind, let's get to twenty six.
• 2:56
  Speaker 2: Would you agree with that?
• 2:58
  Speaker 3: I think, well, the test is and what we're not
• 3:00
  Speaker 3: seeing yet is if the interest rate cuts that are
• 3:04
  Speaker 3: coming through from the Reserve Bank when they do, actually
• 3:07
  Speaker 3: start to start to influence the local economy. And that's
• 3:10
  Speaker 3: what we really need to see, and I think people
• 3:13
  Speaker 3: are hopeful of it at the stage. But twenty six,
• 3:16
  Speaker 3: to your point, certainly looks a lot easier and a
• 3:19
  Speaker 3: lot better set up than twenty five.
• 3:21
  Speaker 2: And does the nz X does do you Zealand need
• 3:23
  Speaker 2: a hero stock? Like in the video and before we
• 3:25
  Speaker 2: go too much about in video. I see the SMP
• 3:27
  Speaker 2: says that AAI might be being a little bit over
• 3:29
  Speaker 2: hyped in America, but still there's a hero stock there.
• 3:32
  Speaker 2: Do we really need one of those to make our
• 3:34
  Speaker 2: markets perform?
• 3:36
  Speaker 3: I think, Look, it certainly was the biggest story, the
• 3:38
  Speaker 3: biggest thematic of twenty twenty four, and I expect that
• 3:41
  Speaker 3: to evolve in the video to the aotmatic in the video,
• 3:44
  Speaker 3: to evolve into the next test stage over the year.
• 3:48
  Speaker 3: Head so maybe it's into software companies that benefit from
• 3:51
  Speaker 3: that AI tech to new point around how long it
• 3:55
  Speaker 3: can last. But locally we have had these stocks before
• 3:58
  Speaker 3: at Milk for instance, dominated the market a while ago,
• 4:03
  Speaker 3: and you know, sure it does help performance, but I
• 4:05
  Speaker 3: think the biggest drivers that interest rate setup and the
• 4:09
  Speaker 3: economic conditions here. So certainly if they do improve, it
• 4:13
  Speaker 3: is a very good prospect to your.
• 4:14
  Speaker 2: Head, Sam, Thank you so much. Merry Christmas, Same trathority
• 4:19
  Speaker 2: from Milford's Assets Management.
• 4:22
  Speaker 1: For more from News Talk st B, listen live on
• 4:25
  Speaker 1: air or online, and keep our shows with you wherever
• 4:28
  Speaker 1: you go with our podcasts on iHeartRadio