Latest / The Money Puzzle / What might the 2025 Federal Budget bring?

Transcript

What might the 2025 Federal Budget bring? · The Money Puzzle

0:09
Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
0:12
Speaker 1: James Kirby, the World editor at The Australian. Welcome aboard everybody.
0:16
Speaker 1: You do know that we have a budget coming up
0:20
Speaker 1: in March March twenty five. Most people don't realize. They
0:25
Speaker 1: expect the budget to be of course in May, but
0:28
Speaker 1: because it's an election year, we have a pre election
0:30
Speaker 1: budget penciled in from March twenty five and then we
0:34
Speaker 1: will have an election. Not only is there a budget
0:39
Speaker 1: coming up sooner than you might have expected, but of
0:41
Speaker 1: course we are going to have something of a giveaway budget.
0:44
Speaker 1: We're pretty certain about that because that's the nature of
0:47
Speaker 1: election era or election time budgets, especially when you have
0:50
Speaker 1: an incumbent administration. Also, interestingly, of course we'll have a
0:54
Speaker 1: new regime in our world. That is that Jim Charmers
0:57
Speaker 1: will remain treasure, but it's goodbye. Stephen Jones, who was
1:02
Speaker 1: Financial Services Minister and tried a lot of that rather
1:06
Speaker 1: difficult parliamentary initiatives, such as they're trying to bring in
1:09
Speaker 1: originally trying to bring in the super tax in its
1:11
Speaker 1: original form. He also had a lot of issues with
1:15
Speaker 1: the Big industry funds and Seeva's sort of running a
1:17
Speaker 1: mock last in twenty twenty four, So that is a
1:23
Speaker 1: very difficult job, to be honest, And then people say, oh,
1:26
Speaker 1: Stephen Jones, you know he was a terrible financial services minister.
1:29
Speaker 1: They say the same thing about Jane Hume. They said
1:31
Speaker 1: the same thing about everyone I can ever remember. In
1:34
Speaker 1: that job. It's a really hard job because the treasurer
1:37
Speaker 1: gets to basically get all the glamour, and the Financial
1:40
Speaker 1: Services minister, who was also in charge of super gets
1:44
Speaker 1: to basically front up to all the difficult press conferences
1:47
Speaker 1: and do a lot of really tough stuff behind the scenes.
1:49
Speaker 1: So in my experience, that particular post is something of
1:55
Speaker 1: a hospital pass politically, So keep that in mind in
1:59
Speaker 1: any event, Budget's coming, What could we expect this time round?
2:04
Speaker 1: And a few other things I want to talk to
2:05
Speaker 1: do too about today. The ideal person, of course, is
2:09
Speaker 1: my favorite budget guest and joins me every year for
2:14
Speaker 1: the budget specially it's Will Hamilton of Hamilton with Partners.
2:17
Speaker 2: How are you will very well? James? How are you?
2:20
Speaker 2: Thank you for having me?
2:21
Speaker 1: You all ready for March twenty five? You're ready to
2:24
Speaker 1: do a mark? We have never done a March budget,
2:26
Speaker 1: have we. We've had some funny ones in COVID. But yeah,
2:29
Speaker 1: in fact, that whole thing about the federal budget always
2:32
Speaker 1: being in first Tuesday in May has sort of been
2:35
Speaker 1: sort of knocked around a lot this last year or two.
2:39
Speaker 1: But what in your world? I don't really want to
2:44
Speaker 1: talk about this macro situation, you know, are we in
2:47
Speaker 1: what's the situation? Are we in the radar or whatever,
2:49
Speaker 1: et cetera. I'm thinking more in terms of measures. Is
2:53
Speaker 1: there for investors? Is there any aspect that they should
2:56
Speaker 1: keep an eye on? Do you think of this looming budget.
3:00
Speaker 2: I don't think there's any nasties that people need to
3:02
Speaker 2: be looking out for. The governments do not take away
3:06
Speaker 2: during an election. Budget so as simple as that, So
3:10
Speaker 2: increase taxes or introduce new taxes, or look at ways
3:16
Speaker 2: I'm restricting what people can do, so I don't think
3:20
Speaker 2: they'll be that, but be prepared just for's some window
3:23
Speaker 2: dressing on the expenditure side, so extension of things like
3:26
Speaker 2: the redbait on electricity and things like that. I really
3:30
Speaker 2: think it's going to be a bit of a yawn,
3:32
Speaker 2: But if anything, there will be a few goodies rather
3:35
Speaker 2: than nasties here.
3:38
Speaker 1: I never I take that attitude going into a budget, Will,
3:41
Speaker 1: And I'll tell you something without naming names. There are
3:44
Speaker 1: people who go into the budget and they have decided
3:46
Speaker 1: what they're going to do and what they're going to
3:48
Speaker 1: write and what they're going to say before they go in.
3:50
Speaker 1: I don't do that. I'm very old fashioned, and I
3:52
Speaker 1: don't look at the press releases either for what it's worth.
3:54
Speaker 1: I actually look at the budget measures and the budget
3:57
Speaker 1: papers and I go through them systematically, and it is labor.
4:01
Speaker 1: Let me tell you, it's hard work because these days, folks,
4:04
Speaker 1: it's on a PDF. It's like a two hundred and
4:06
Speaker 1: sixty page PDF, and you're locked in there for six
4:08
Speaker 1: hours reading this pdf. But if you do dig in,
4:11
Speaker 1: and if you are if you know how to read
4:13
Speaker 1: those budget papers, there's always interesting things in there question
4:17
Speaker 1: of finding them. One of the things I was thinking, Will, was,
4:20
Speaker 1: you know, they did one very smart. I think it
4:22
Speaker 1: was very smart how they cut personal taxes and then
4:27
Speaker 1: how they got a second ring of the belt by
4:30
Speaker 1: basically moving the by enhancing taxes in the middle brackets
4:36
Speaker 1: and reneging on promises for higher salary tax cuts. They
4:42
Speaker 1: did that in this in the recent times, and politically
4:48
Speaker 1: I might be wrong, but I have a feeling that
4:50
Speaker 1: might have been one of the smartest things that they
4:52
Speaker 1: have done in their entire time in this is the Abbot,
4:56
Speaker 1: This is the Abbot, the Albans administry and the Chalmers administration.
5:01
Speaker 1: It's interesting. I'm thinking of Chalmers and I'm thinking of
5:04
Speaker 1: a line he said in a profile recent He already
5:06
Speaker 1: said I'm the treasure that Albanizi needs. And I said
5:11
Speaker 1: to myself, that is a devilishly ambiguous line. What on
5:15
Speaker 1: earth does that really mean? What does that really mean?
5:18
Speaker 1: But we'll assume Chalmers is there, We'll assume he's in
5:21
Speaker 1: this our same state of mind. Do you think that
5:23
Speaker 1: in the way of giving out goodies as opposed to nasties,
5:27
Speaker 1: which we can sort of assume is a theme of
5:30
Speaker 1: this election, is there anything we might see on that?
5:32
Speaker 1: So I do think is there anything you're hearing in
5:34
Speaker 1: your world that people are braced.
5:37
Speaker 2: For not hearing now? And I think it's going to
5:40
Speaker 2: be a bit of a nothing, because we've also got
5:43
Speaker 2: to remember that there are macro implications if they go
5:46
Speaker 2: out handing out too much and you're going to bring
5:49
Speaker 2: inflation back under focus again and therefore interest rates and
5:52
Speaker 2: they're going to want to avoid that discussion. So there'll
5:54
Speaker 2: be something here, is something there. I think the big
5:56
Speaker 2: thing is post the election, and because I think it's
5:59
Speaker 2: odds on that we're going to have a minority government.
6:03
Speaker 2: I'm not saying which side because I think that's too
6:06
Speaker 2: difficult to predict, but.
6:08
Speaker 1: As a financial operator, which would you regard as more difficult,
6:12
Speaker 1: this administration or a minority government?
6:15
Speaker 2: Yeah, well, no one likes minority governments because yeah, there's
6:21
Speaker 2: been a difficult government with respectors of working in air industry.
6:24
Speaker 2: But I think that if they're going into negotiations, you
6:28
Speaker 2: just need to be very aware of what the other
6:30
Speaker 2: side could be looking for. If they're looking into a
6:35
Speaker 2: minor minority government, So.
6:37
Speaker 1: Are you assuming a labor minority government, a labor led
6:39
Speaker 1: minority government.
6:40
Speaker 2: Or if it's coalition, you know they'll be they'll be
6:45
Speaker 2: negotiating with a handful of teals.
6:46
Speaker 1: So that's right, a handful of teals. That's assuming there's
6:50
Speaker 1: any teals left. It would be very interesting to see.
6:54
Speaker 1: It would be very interesting to see, all right. And
6:56
Speaker 1: I don't mean to be facetious there. I really don't.
6:59
Speaker 1: But some of the you know, got in a very
7:01
Speaker 1: slim margin, and you know it would be difficult to
7:04
Speaker 1: get in again. I would think, all right, okay, now, also,
7:08
Speaker 1: will I want something I just wanted to bring before
7:10
Speaker 1: we go to the break. I wanted to ask you
7:12
Speaker 1: one quick thing, which is and this is a totally
7:16
Speaker 1: different subject, folks, it's about term deposits.
7:22
Speaker 2: We are.
7:24
Speaker 1: In the era now of where rates have peaked and
7:27
Speaker 1: their due to decline, and we all talk about how
7:31
Speaker 1: decline with repeated cuts we hope in the future. So
7:36
Speaker 1: we've all talked about that in terms of investment in
7:38
Speaker 1: how its stokes investment. What about term deposits. You were
7:41
Speaker 1: skeptical about sort of returns people were getting in any
7:44
Speaker 1: event up to now. But what do you suggest to
7:48
Speaker 1: people as term deposit rates inevitably start to get cut
7:53
Speaker 1: in the backs of doing it already?
7:55
Speaker 2: While as skeptical as we were saying, a lot of
7:57
Speaker 2: people at the end of twenty three lock in five
8:00
Speaker 2: percent two days, and they were going out as far
8:02
Speaker 2: as six months because you could, you know, people could
8:05
Speaker 2: could lock that in at that stage, and some people
8:10
Speaker 2: thought getting five percent was fantastic. Yeah, it's rest free.
8:13
Speaker 1: Well, it's government guaranteed risk free.
8:15
Speaker 2: I understand that, and you should always balance and looking
8:19
Speaker 2: at balancing risk and return and asset allocation and with
8:22
Speaker 2: which we do and we think that's very important. But
8:24
Speaker 2: by putting one hundred percent in two days at five percent,
8:27
Speaker 2: I thought that was a bit silly. And yeah, when
8:29
Speaker 2: you've seen the market rally since October twenty two, the
8:33
Speaker 2: US market and US dollar terms, and I understand the
8:35
Speaker 2: strand dollars gone down seventy percent versus you would have
8:38
Speaker 2: picked up approximately thirteen percent totally in returns in tds.
8:43
Speaker 2: That's why asset allocation, that's why looking beyond just one
8:47
Speaker 2: asset class, be at astrain equities as well. The fact
8:50
Speaker 2: is you do need to diversify, you need to take
8:53
Speaker 2: into account risk and I think that's very important.
8:58
Speaker 1: Okay, all right, all right, very good. All right, Well
9:00
Speaker 1: take short break, folks, and we'll be back in one moment. Hello,
9:12
Speaker 1: Welcome back to The Australian's Money Puzzle podcast. I'm James
9:15
Speaker 1: Kerry talking to Will Hamilton, regular on the show. Hey,
9:17
Speaker 1: well you mentioned I just want to clarify, but what
9:20
Speaker 1: you were talking about there before the break about the
9:24
Speaker 1: diversification and keeping things balanced, and you were skeptical about
9:31
Speaker 1: five percent that basically what you're saying is five percent
9:34
Speaker 1: is not as good as it sounds when you've got
9:35
Speaker 1: inflation of whatever two and a half, et cetera. And
9:38
Speaker 1: then you were saying about balance. Is there a risk
9:41
Speaker 1: I haven't put this to anyone on the show, but
9:43
Speaker 1: is there a risk that many of our listeners who
9:47
Speaker 1: did listen to us all through the year, who did diversify,
9:50
Speaker 1: who did actively diversify into US shares, particularly through ATFS
9:57
Speaker 1: or whatever, that they are now out of balance because
10:02
Speaker 1: they are equities and their shares and their American shares
10:06
Speaker 1: particularly have surged and they've blown out. So as a
10:09
Speaker 1: part of the pie, they've become not dangerously big, but
10:12
Speaker 1: bigger than they were supposed to be.
10:16
Speaker 2: Absolutely, so we are reviewing a strategic acid allocation at
10:19
Speaker 2: the moment.
10:20
Speaker 1: Now.
10:20
Speaker 2: We do that. We look annually at what the long
10:24
Speaker 2: term forecasts are. And you know the fact is that
10:28
Speaker 2: US shares, global shares, but in particular US shares have
10:31
Speaker 2: had a very very strong two and a big years.
10:35
Speaker 2: The US is at a record level of its waiting
10:38
Speaker 2: in the organ Stanley Capital Index AQUISO or country World
10:42
Speaker 2: Index ex Australia, So that's the other thing that you
10:45
Speaker 2: need to take into account. I do think that we
10:48
Speaker 2: have an administration in the United States that is going
10:51
Speaker 2: to be is definitely pro growth. But after two and
10:54
Speaker 2: a big years of stellar growth performance in the US market,
10:57
Speaker 2: don't expect to see another very strong year. I think
11:01
Speaker 2: we're going to get a good year, but it's going
11:03
Speaker 2: to be very bumpy. But the reason why you invest
11:06
Speaker 2: in equities is for growth, and too many people invest
11:10
Speaker 2: in the Australian market for dividends or income. And it's
11:14
Speaker 2: interesting that the fact is there's been a lot written
11:17
Speaker 2: about the decline in the size of the ASEC, as
11:22
Speaker 2: there also has been in the UK. Yeah, and you
11:25
Speaker 2: square Peg, for instance, when they came out with their
11:28
Speaker 2: their announcements to the results at the end of thirty
11:30
Speaker 2: first of December, said that.
11:31
Speaker 1: If we just square Peg a square bigs.
11:34
Speaker 2: Aventure capital company run by Pelbast but it's very widely
11:40
Speaker 2: supported out there in the market. And they were sort
11:43
Speaker 2: of talking about two of their investments in Fund one,
11:45
Speaker 2: not Fund zero, which has got canvas in it. Fund
11:48
Speaker 2: one rocked and air Wallocks of looking to monetize those
11:53
Speaker 2: and they're looking at their full potential potential listings and
11:55
Speaker 2: they're discussing Nasdaq. Like Atlasian didn't come on the AX,
12:00
Speaker 2: it went to Narsdeck. Australian companies and they're looking at
12:03
Speaker 2: they're looking at nas Deck as well. So people were
12:05
Speaker 2: these growth companies, they're overlooking the AX and they're looking
12:11
Speaker 2: at nars Deck.
12:13
Speaker 1: That's a shame, isn't it. And then that's probably how
12:14
Speaker 1: it's going to go. And you can see why that's
12:17
Speaker 1: a problem all around the world. By the way, it's
12:18
Speaker 1: a problem all around the World's problem in London, it's
12:21
Speaker 1: a problem in Dublin. It's a problem in some of
12:23
Speaker 1: the European exchanges. It's a problem in Hong Kong. This
12:26
Speaker 1: sort of everything, well, as you say, will if seventy
12:29
Speaker 1: percent of shares are in the US, it becomes self perpetuating.
12:33
Speaker 1: Why would you list in your regional market when you
12:35
Speaker 1: can go straight to the US. You mentioned too there.
12:38
Speaker 1: I don't want to go too deep into that, but
12:39
Speaker 1: one was Rocket. Now that's linked with the guy that
12:42
Speaker 1: ran jet Star one time, isn't it, Bruce? And now
12:46
Speaker 1: this is rocked RKT or OKT. What was the other company,
12:51
Speaker 1: air well X air Warlex. Yes so too, the sort
12:54
Speaker 1: of high growth unlisted companies the point being, folks, But
12:58
Speaker 1: is that the sort of hottest companies along with Canvas,
13:04
Speaker 1: sort of big name unlisted companies that are sort of
13:07
Speaker 1: great hopes of the local economy just now all talking
13:12
Speaker 1: about going directly to the US to list. So what
13:15
Speaker 1: does that mean for the ESX Because if they keep
13:17
Speaker 1: getting big takeovers like Insignia and Sydney Airport and New
13:21
Speaker 1: Crest and they don't get the new IPOs, then guess
13:24
Speaker 1: what it shrinks and shrinks into a very small exchange. Okay,
13:29
Speaker 1: one last thing, will does Everyone's had a crack at
13:30
Speaker 1: this private credit. Liam Short was on the show. He
13:33
Speaker 1: more or less said, don't touch it. Other people have
13:36
Speaker 1: more balanced because they say, oh look there's good and
13:38
Speaker 1: there's bad in there. I wonder I just saw something
13:43
Speaker 1: this morning. I wanted to tell you this. I want
13:46
Speaker 1: to have you heard of Hamilton Lane them being the
13:51
Speaker 1: other they're the other financial advisors, but people don't know
13:54
Speaker 1: them like they know you. Because Hamilton Nane is very
13:57
Speaker 1: big and it's listed on the Nasdaq, which is an
13:59
Speaker 1: interesting thing for a financial advice network to do. The
14:02
Speaker 1: only reason I mentioned them is because they put out
14:04
Speaker 1: a survey this morning. It says nearly one third of
14:07
Speaker 1: financial advisors plan to alley case one fifth or more
14:10
Speaker 1: of client portfolios to private markets in twenty twenty five.
14:14
Speaker 1: Now think about that. So we can't We've got to
14:18
Speaker 1: be very careful here about what we call private investing
14:21
Speaker 1: on listed investing, and we have to separate the good
14:24
Speaker 1: from the bad, and we have to separate private credit
14:26
Speaker 1: from private equity, et cetera. But if I may, will
14:29
Speaker 1: just on that single issue of private credits, which is
14:32
Speaker 1: what's been put in front of many investors by their advisors,
14:35
Speaker 1: and there's more of it to come. If these guys
14:37
Speaker 1: are talking about this sort of level, what do you
14:42
Speaker 1: say to people who have no experience of this area
14:45
Speaker 1: if they are, if their advisor or an advertisement or
14:48
Speaker 1: anyone else puts it in front of them, what's your recommendation?
14:53
Speaker 2: Know what you're doing. That's the first thing. Don't just
14:56
Speaker 2: take it because you broke is offering it. Remember, they
15:00
Speaker 2: get a stamping fee. I think that you need to
15:03
Speaker 2: ensure that even within indiversified credit or private credit. Week. Yes,
15:07
Speaker 2: we've looked at it. We've supported a firm ten eleven, twelve,
15:11
Speaker 2: ye or something like that. However, you know, we have
15:15
Speaker 2: decreased property. We decreased that in October twenty two. We
15:19
Speaker 2: decrease it again this month, whilst the liquidity is there,
15:24
Speaker 2: and I think that's a big thing. Look at the
15:26
Speaker 2: liquidity and it's amazing. We've seen a lot of new
15:30
Speaker 2: clients in the last month or so, and some of
15:32
Speaker 2: them are with existing providers and then they say, oh,
15:35
Speaker 2: but I'm in this fund and I'm locked up. And
15:38
Speaker 2: it was a good thing at the time. They're sort
15:41
Speaker 2: of not happy due to one or two other reasons.
15:43
Speaker 2: They're looking to move and now they've got buyers remorse
15:46
Speaker 2: because of the illiquidity of some of these funds. So
15:50
Speaker 2: make sure you understand one hundred percent what you're investing
15:54
Speaker 2: in and and the dispersion in the quality. You know,
15:57
Speaker 2: even in the property sector between a tier one manager
16:00
Speaker 2: and there's some really good ones, but there's also some
16:03
Speaker 2: that yeah, I've just decided, well, property is running, Property
16:06
Speaker 2: debts running, so I'm going into that will avoid them
16:08
Speaker 2: like the plague or mezzanine debt. You know that there's
16:11
Speaker 2: a story of one manager having to walk into a
16:13
Speaker 2: project and the mesa has been written off and so
16:16
Speaker 2: that's one hundred cents in the dollars. So suddenly you've
16:19
Speaker 2: invested in the second tier debt and you've lost one
16:23
Speaker 2: hundred percent of what you invested in.
16:25
Speaker 1: So I think, folks, it's hard to go too deep here.
16:29
Speaker 1: But a private credit it's fine for someone like Will
16:32
Speaker 1: who went in ten years ago, who knows that area,
16:36
Speaker 1: who knows who's who, and you know, who knows who
16:38
Speaker 1: are the good ones and who are the bad ones.
16:39
Speaker 1: And unfortunately there's not sort of one shop shop on
16:41
Speaker 1: the internet where you can just have a look up
16:42
Speaker 1: and say, well, who's good in private credit and who's bad?
16:44
Speaker 1: What you can do? What you can do, I think
16:47
Speaker 1: very usefully is keep an eye on financial media like ourselves,
16:50
Speaker 1: the Australian or any other publications which are covering the area,
16:53
Speaker 1: because there are incidents every other week of private credit
16:59
Speaker 1: managers having to go in and take over projects of
17:03
Speaker 1: there's no way that they want to take over these projects.
17:06
Speaker 1: That was not what their business is. Is just quickly
17:09
Speaker 1: realized that. Did that rattle you? What's going on? These
17:12
Speaker 1: stories we're seeing of private credit managers having to basically
17:15
Speaker 1: take over property properties and try and sell them. Which
17:19
Speaker 1: is that. I'm sure that's that is. They will tell
17:21
Speaker 1: you it's all normal. I wouldn't like to hear that
17:24
Speaker 1: if I had a fund.
17:26
Speaker 2: Yeah, well, first of all, if one of the things
17:28
Speaker 2: we do is we want to know about the recovery process.
17:31
Speaker 2: So when we're when we're looking at a manager, so
17:33
Speaker 2: how have they reacted? Have have they gone? What's the track record?
17:36
Speaker 2: And never believe if a fund manager says to you
17:40
Speaker 2: have never had a default, run.
17:42
Speaker 1: Right, ask that's a very simple question. Then pick up
17:45
Speaker 1: the phone. Just ask him one thing. Have you had faults?
17:48
Speaker 1: What were they? How did how did how did? How
17:50
Speaker 1: did you deal with them? If they've never had one?
17:52
Speaker 1: At such a good point, will I'll just close on that.
17:55
Speaker 1: I remember a very similar thing. I was on the
17:59
Speaker 1: board of a super fund once upon a time relating
18:03
Speaker 1: to a large newspaper group. I was like the very
18:07
Speaker 1: young I was just I was reporter. I want on it.
18:10
Speaker 1: I went down it for experience and I was like
18:11
Speaker 1: the worker rapp or whatever, and was that hedge funds
18:15
Speaker 1: were just coming in, Yes, I think it was hedge funds,
18:17
Speaker 1: and they were all the rage. So this is going
18:19
Speaker 1: back twenty years ago and someone came in and they
18:22
Speaker 1: were launing theres Someone who was used to fund, was
18:24
Speaker 1: friends with, who had done other business with them, came
18:27
Speaker 1: in and they were launching a head fund and there
18:29
Speaker 1: was a long presentation about this hedge fund. And I
18:32
Speaker 1: remember asking have you ever launched a hedge fund before?
18:36
Speaker 1: Is this new to you? And they said no, we
18:38
Speaker 1: haven't done one before. This is our first. I remember thinking,
18:41
Speaker 1: I will say anything now, but when these guys go,
18:43
Speaker 1: I'm just going to say, why on earth would you
18:45
Speaker 1: go with someone who hasn't any experience when there's plenty
18:49
Speaker 1: who do. Okay, we will leave that tangled not to
18:54
Speaker 1: one side for the moment and we will take a break.
18:57
Speaker 1: I'll be back with some great questions. Hello, Welcome back
19:07
Speaker 1: to The Australian's Money Puzzle podcast. I'm James Kirby talking
19:11
Speaker 1: to Will Hamilton. Now, Will really good questions here. I'll
19:16
Speaker 1: read the first one from Simeon and that's not Simon.
19:19
Speaker 1: It's Simeon who sent a piece which was an article
19:22
Speaker 1: and it says this article talks about pension fund exposure
19:25
Speaker 1: to China and the difficulty they are having selling their
19:28
Speaker 1: China acquisitions due to China's slowing economy and restrictive government policy.
19:34
Speaker 1: I was wondering the extent to which Australian super funds
19:36
Speaker 1: are exposed to China. Okay, Simeon, I'm just going to
19:39
Speaker 1: break down that question and try and make it a
19:41
Speaker 1: bit more feasible for Will to answer. I mean, the
19:45
Speaker 1: exposure to China from super funds comes in a million guises.
19:48
Speaker 1: I mean, if you had shares in Fortescue, well, you'd
19:52
Speaker 1: have big exposure to China, right because that's their main business,
19:56
Speaker 1: shipping our north to China. So it comes in different guyses.
19:59
Speaker 1: But this very specific exposure in relation to pension big
20:06
Speaker 1: pension funds going into China and having difficulty. To be honest,
20:11
Speaker 1: I can only tell you about the news right that
20:13
Speaker 1: I'm across, and last year several very large Australian pension funds,
20:19
Speaker 1: among the biggest in the country that we all know,
20:21
Speaker 1: the top five, several of them had big problems, big
20:25
Speaker 1: write offs. But it wasn't in China. It was in
20:28
Speaker 1: the US smack in the middle of the main game.
20:32
Speaker 1: I haven't really seen any chakras out of China, have you?
20:36
Speaker 2: Will not since Yeah, the Evergreen.
20:40
Speaker 1: Yeah, which was ago more.
20:42
Speaker 2: Yeah, but it's going to take an index approach depending
20:45
Speaker 2: on risk. The risk profile. Emerging markets is going to
20:49
Speaker 2: be six to eight percent of the total portfolio. China's
20:53
Speaker 2: thirty six thirty seven percent of them index, so you're
20:57
Speaker 2: looking at probably two point seven to five to three
21:01
Speaker 2: and a half percent probably index. Yeah, they're therefore total
21:08
Speaker 2: exposure if they're at index. But a lot of a
21:12
Speaker 2: lot of fund managers and they're and also the industry funds,
21:18
Speaker 2: they're taking a negative view on China and an underweight
21:21
Speaker 2: view on China. So the exposure to China will be
21:25
Speaker 2: I would say, significantly less than that.
21:28
Speaker 1: Okay, that's interesting, And of course that was an international piece, Simeon.
21:34
Speaker 1: And it would seem that our particular large pension funds
21:38
Speaker 1: are not in terms of exposure in any way over exposed.
21:43
Speaker 1: It would seem on that front. Rather that's an international problem. Okay,
21:48
Speaker 1: hopefully that's useful to you. Can you see a question
21:50
Speaker 1: from Tina?
21:51
Speaker 2: I can. So I'm reading that property trusts A rates
21:54
Speaker 2: are ready to rebound, especially if we have rate cuts.
21:57
Speaker 2: What do you think, Well, Tina, they're up fifty cent
22:00
Speaker 2: last year.
22:01
Speaker 1: So oh they really it was the sector the sub
22:04
Speaker 1: industries was a fifty percent.
22:05
Speaker 2: Really, so forty percent of the RADI index approximately is
22:09
Speaker 2: the Goodman Group. Oh, which is why they bounced me
22:12
Speaker 2: on data centers, et cetera. So they've probably been bashed
22:15
Speaker 2: around in the last twenty four to forty eight hours. Yeah,
22:20
Speaker 2: that's exactly what happened. That a rates often look ahead.
22:23
Speaker 2: They are liquid, remember, and so a lot of property
22:26
Speaker 2: has been illiquid. Well, a lot of property is a
22:28
Speaker 2: liquid and therefore people were looking ahead and that the
22:32
Speaker 2: next moving interest rates was down and that sector has
22:35
Speaker 2: run and it's run hard.
22:37
Speaker 1: It's interconnectivity in some ways, it's kind of it's really
22:41
Speaker 1: it becomes ludicrous, doesn't it that the Goodman Group is
22:45
Speaker 1: a property trust in Australia were sold off midweek because
22:49
Speaker 1: the Chinese startup that no one had heard of some
22:52
Speaker 1: days ago. I'm sorry, not midweek, but if you remember
22:54
Speaker 1: in at the very end of January, the Deep Seek
22:59
Speaker 1: sell off, which was a Chinese startup that no one
23:01
Speaker 1: had heard of, triggered a sell off because they seem
23:04
Speaker 1: to challenge in Nvidia, and that triggered a sell off
23:08
Speaker 1: on a day not a huge sell off, but a
23:11
Speaker 1: sell off in Goodman Group, which is the leading property
23:14
Speaker 1: to us in Australia. So properties in Australia were downgraded
23:19
Speaker 1: on the back of a Chinese startup that no one
23:22
Speaker 1: ever heard of, suggesting and promising that they had taken
23:24
Speaker 1: on in Vidia, a stock that no one had ever
23:26
Speaker 1: heard of a few years ago but was briefly the
23:28
Speaker 1: biggest stock in the world. That is what you call
23:31
Speaker 1: interconnectivity at its barmeest Okay, last question from Mick, something
23:37
Speaker 1: I haven't been able to find a clear answer to.
23:40
Speaker 1: I know the family home is exempt from the age
23:43
Speaker 1: pension test in regards to pension eligibility, but due to
23:45
Speaker 1: high house prices, my wife and I haven't been able
23:49
Speaker 1: to purchase in Sydney and we're looking at retiring abroad.
23:53
Speaker 1: This is really interesting. Some are more affordable, most likely Italy.
23:58
Speaker 1: Is an owner occupied home that is located overseas still
24:02
Speaker 1: considered exempt from the asset test if it is the
24:04
Speaker 1: only property owned and it has been used as our
24:07
Speaker 1: principal praise of residence. This is never advice, Mick, to
24:11
Speaker 1: all the mix in the world out there who might
24:13
Speaker 1: be thinking of moving from Australia. To your little Tuscan
24:18
Speaker 1: farmyard with your lasagna on the terrace. The question is
24:22
Speaker 1: is your house and it may not Besily, Oh, it
24:24
Speaker 1: could be Bali, it could be anywhere. It could be Vietnam.
24:27
Speaker 1: Is your house is still is your host exempt? I
24:30
Speaker 1: have an over feeling it mightn't be. Have you any idea?
24:32
Speaker 2: Well again I doubt it as well, But I think
24:35
Speaker 2: what you've got to do is there are other It's
24:39
Speaker 2: not straightforward and what's happening in Europe at the moment,
24:41
Speaker 2: especially with the state taxes and duties and changes in
24:45
Speaker 2: government and the whole non dom, which is if you
24:50
Speaker 2: live in a country and you have assets elsewhere, you
24:53
Speaker 2: do need to get some very careful and detailed the
25:00
Speaker 2: planning advice and texas because you, yeah, unfortunately one of
25:04
Speaker 2: the things that is absolutely sure as we all die
25:08
Speaker 2: or a state may become the property of the Italian government, So.
25:13
Speaker 1: Very careful on that to making anyone else thinking about that.
25:16
Speaker 1: And one an other. Sorry we didn't give you a
25:18
Speaker 1: clear answer on that. We didn't give you clear answer
25:20
Speaker 1: on that because that is a very complicated question that
25:24
Speaker 1: unfortunately sometimes we can answer these, but not that one.
25:28
Speaker 1: We don't know enough for a start about the whole situation.
25:32
Speaker 1: But one thing I would add is that many older
25:35
Speaker 1: Australians I have discovered as they get older or whatever,
25:38
Speaker 1: whether they're buying property overseas or spending time overseas maybe
25:42
Speaker 1: a month a year or whatever you like to do
25:45
Speaker 1: that increasingly as you get older you can't get insurance,
25:48
Speaker 1: and health insurance is particularly difficult. But there are particular
25:52
Speaker 1: countries where there is reciprocal arrangements. Greece is one, and
25:56
Speaker 1: almost such initially is another, so are the UK and
25:59
Speaker 1: I And that is something that's really worth checking. If
26:03
Speaker 1: you were thinking about as an older person moving overseas
26:07
Speaker 1: or living there, check out whether there's reciprocal health arrangements.
26:10
Speaker 1: That's really important because if there is, it's terrific, right,
26:12
Speaker 1: so you're going to end up in hospital more often
26:15
Speaker 1: than when you were younger. And if the country has
26:18
Speaker 1: that's important as to whether you can be exempt from
26:22
Speaker 1: the age pension. I know there's there's days, isn't there's
26:25
Speaker 1: so many days you can be overseas. You can't be
26:27
Speaker 1: overseas permanently.
26:28
Speaker 2: Whether you then become correct, do you become a well,
26:32
Speaker 2: that's when the whole state tax thing also further kicks in.
26:35
Speaker 2: So it's a really really it's really complex, and there's
26:38
Speaker 2: set there's specialist lawyers and accountants in yeah, therese international
26:44
Speaker 2: matters and you're really I would get some very good advice, okay.
26:50
Speaker 1: And there is a thing about how many days you
26:52
Speaker 1: are overseas and how many days you can be to
26:54
Speaker 1: retain pension and pension entitlements and arrangements that I imagine would
26:57
Speaker 1: be pivotal for Mick and any thinking along those lines. Okay,
27:01
Speaker 1: but interesting question. We would like to come back to it.
27:05
Speaker 1: Maybe we got even more clarification on it than we
27:08
Speaker 1: could have a better crack at answering it. Okay. Thank you, Mick,
27:12
Speaker 1: Tina and Simeon, and thank you Will Hamilton. Great to
27:15
Speaker 1: talk to you.
27:16
Speaker 2: You're welcome, games, thanks for having me.
27:18
Speaker 1: We'll be by the time we get to the budget
27:20
Speaker 1: on the twenty fifth of March, we will be right
27:24
Speaker 1: up there and tuned up big time by the time
27:26
Speaker 1: we sit down together to do the Budget podcast. One
27:29
Speaker 1: of the favorites of the year. Okay, that was Will Hamilton. Well, partners,
27:33
Speaker 1: thank you very much for listening. Let's have some emails.
27:36
Speaker 1: The money puzzle at the Australian dot com DOTU. Today's
27:38
Speaker 1: show was produced by Leah Sammaglu. Talk to you Soon,