Latest / The SME Stream / Shane Solly: Harbour Asset Management spokesperson on the new wave of policies designed to stimulate China's economy

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Shane Solly: Harbour Asset Management spokesperson on the new wave of policies designed to stimulate China's economy · The SME Stream

• 0:00
  Speaker 1: And there may be some hope coming from the Chinese economy.
• 0:03
  Speaker 1: Last week, authorities there announced the range of monetary and
• 0:06
  Speaker 1: fiscal stimulus policies to try and get the massive economy
• 0:09
  Speaker 1: moving again. So what do we see and what might
• 0:12
  Speaker 1: it mean for New Zealand harbor Asset Management. Shane Solly
• 0:14
  Speaker 1: has been looking into this for us this evening Keilder
• 0:16
  Speaker 1: Shane Jack So just do you good things. Just talk
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  Speaker 1: to us first of all, a bit about what the
• 0:21
  Speaker 1: Chinese have actually done.
• 0:23
  Speaker 2: Yeah, So the move started last Tuesday when we saw
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  Speaker 2: cuts to official interest rates. Much like other central banks,
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  Speaker 2: they've cut the cost of borrowing and they also ease
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  Speaker 2: mortgage availability.
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  Speaker 3: This came out of the People's Bank of China.
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  Speaker 2: Remember they've been battling a presidential property market the last
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  Speaker 2: probably decade. They've got out of control and we're coming
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  Speaker 2: through the other side of it. So now they're trying
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  Speaker 2: to ease up a bit interesting that that was backed
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  Speaker 2: up later and by the week by the Polpreau, which
• 0:48
  Speaker 2: is the main policy making organization of the Chinese government.
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  Speaker 2: They came out with a bunch of announcements also aiming
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  Speaker 2: at stabilizing housing, supporting consumption and really it was a
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  Speaker 2: bit don't expect it, you know, really this new found
• 1:03
  Speaker 2: sense of urgency.
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  Speaker 3: But none of that.
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  Speaker 2: Then it was backed up by some of the local
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  Speaker 2: government authorities announcing and easing up and home ownership policies
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  Speaker 2: that really sort of let people go and buy homes again.
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  Speaker 3: There's more to come, potentially.
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  Speaker 2: Jack, and there's a bit of speculation that there's some
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  Speaker 2: more fiscal stimulus, particularly propping up some of the banks,
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  Speaker 2: giving them some more capital.
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  Speaker 3: Certainly, that's got people were excited.
• 1:24
  Speaker 2: It's all the Chinese shoe market up almost sixteen percent
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  Speaker 2: last week, and even today it's up six point seven percent.
• 1:31
  Speaker 3: So another big day in the Chinese shaar market.
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  Speaker 1: Yeah, no, that's huge. So what has been the broader
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  Speaker 1: global reaction to it?
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  Speaker 3: Yeah, so, certainly markets are still a little bit cautious, a.
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  Speaker 2: Lot of detail to come out, but we have seen
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  Speaker 2: a bit of a pop and anything that's China related,
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  Speaker 2: and certainly we've seen the resource stocks do quite well
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  Speaker 2: and closer to home, you know, it is supportive for
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  Speaker 2: our commodity exports. So if we do see Chinese consumers
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  Speaker 2: getting a bit optimistic, it's helpful for a new zone
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  Speaker 2: produce helpful his own travel.
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  Speaker 3: One interesting one for certain the dairy industry is there's.
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  Speaker 2: Been in that's another monthly child allowance for second children,
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  Speaker 2: and it's quite chunky if you're a Chinese family, up
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  Speaker 2: to potentially eight hundred remember per month per child, right,
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  Speaker 2: so that is relative to average person earning fifteen thousand
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  Speaker 2: and one a year if you're in a second tier city,
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  Speaker 2: that's big.
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  Speaker 1: Yeah, yeah, that's huge. So what about New Zealand, how
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  Speaker 1: might these changes in the stimulus impact us?
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  Speaker 3: Yeah, I think we certainly see it come through. Our
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  Speaker 3: dairy sector should do better into this, but it's.
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  Speaker 2: Quite a broad range of activities that will benefit. Depends
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  Speaker 2: a little bit on where and how fast the policies
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  Speaker 2: come through, but I think need it's a wind for
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  Speaker 2: New Zealand, definitely a win for Australia, and by second derivative,
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  Speaker 2: work's a wind for New Zealand. Australia obviously still one
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  Speaker 2: of the big trading partners of China's huge Australia huge
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  Speaker 2: net net positive.
• 2:58
  Speaker 1: Back home, Fontira has got a new strategy.
• 3:02
  Speaker 3: Yeah. Look, they've undertaken quite in depth review.
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  Speaker 2: They've come out and said, look, we're really good at
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  Speaker 2: business to business theory nutrition and so as a result,
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  Speaker 2: they're going to focus back on this high performing ingredients
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  Speaker 2: food service and looking to divest some of its global
• 3:15
  Speaker 2: consumer businesses. So what does it mean. It may create
• 3:18
  Speaker 2: a better path to value creation. So fo Terra, they've
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  Speaker 2: come out and announced some higher financial targets, higher reternal
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  Speaker 2: capital and a different dividend policy, which is an increase
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  Speaker 2: in dividend. So for farmers and for investors in the
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  Speaker 2: Fonterra share funds might see data returns in the future.
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  Speaker 1: It's not all positive in the dairy sector. There siles
• 3:40
  Speaker 1: results throughout today and they're not great.
• 3:42
  Speaker 2: No, unfortunately, some of they are still going through some
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  Speaker 2: tough times. They came out and announced their financial year
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  Speaker 2: twenty twenty four results. Their earnings before interest, tax, appreciation
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  Speaker 2: and amortization bit of a mouthfulm sorry, that was at
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  Speaker 2: forty five mil down from seventy five million last year
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  Speaker 2: on lower ingredients consumer gross profits. One of the things
• 4:02
  Speaker 2: they have done though, they've they've added an increased one
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  Speaker 2: off payment to South Island farmers who remain with Similey,
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  Speaker 2: the bigger ship of Sinlay's trying to retain them. People
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  Speaker 2: are a bit weary, so they've decided to ad another
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  Speaker 2: twenty cents per kilogram of milk solids to the mix
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  Speaker 2: to try and retain those farmers. But unfortunately Sinlay didn't
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  Speaker 2: provide any financial year twenty five guidance and didn't talk
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  Speaker 2: about volumes, didn't talk about anything, so it was a
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  Speaker 2: pretty tough day for Cinlay.
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  Speaker 1: Hey, thanks for your time, Jane really appreciate it. Shane
• 4:32
  Speaker 1: from Harmer Asset Management, thank you for your feedback as well.