Latest / Best of Business / 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 · Best of Business

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