August 24, 2025 • 41 mins
The OCR got another cut this week, now down to 3%.
While there have been questions for a while around whether banks are passing the cuts down to consumers, the real question is whether the cuts will actually solve anything at all.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks EDB.
Speaker 2 (00:14):
Channel Class.
Speaker 3 (00:32):
Listens.
Speaker 4 (00:38):
Yes, and welcome back or welcome in if you have
just joined us. This is the Weekend Collective on tim
Beverage and this hour is smart money and it's where
we discuss it well, all sorts of things. In fact,
we love to take your calls as well. You can
give us a call on eight hundred and eighty ten
eighty can text on nine two ninety two as well.
And we we've been lucky over the last I'm not
(01:00):
sure how many years, as it is, we've always enjoyed
the company of the guys from Andrew from I was
going to say from Andrew Asset Management. It's actually from
Harbor Asset Management. And normally it's not often we actually
have the privilege and the pleasure of having them in
the studio. But the co CEO he's with me today,
Andrew bask and how are you going?
Speaker 3 (01:19):
How terrific to be here. But what the energy is in
the room compared to just talking into your phone. This
is great.
Speaker 4 (01:24):
We're going to have a great hour. We always have
a good hour. Hey, by the way, did you did
you did you get up to watch shrugby.
Speaker 3 (01:29):
Or anything, or you were traveling today this morning I
heard the rugubary results unless said, probably.
Speaker 4 (01:36):
Funny thing is I was almost because I don't know,
I was was. I was hoping that the Wallabies would
win as well. So there are a couple of disappointments
because I always love to beat the Rps just because
of the traditional rivalry. But anyway, and I just thought
we'd start off with a touch on sport. But hey,
the big topic often that we're going to start we
kick off with today and it's interesting how we become
(02:00):
understandably obsessed with the o c R and everyone's waiting
for the announcement because it's almost this a bit of
a you know, can you guess what it's going to be?
Is it going to be cut by twenty five basis
points or it's it going to be fifty basis points?
But I guess The question I wanted to have a
crack up with you to start the hour off was
(02:21):
how big a deal is the o CR And do
we are we in danger of hanging too much of
our economic prosperity, prosperity, our optimism based on what the
Reserve Bank acting governor I think at the moment says
what's your take on the OCR, and I mean and
where it should be, where it should go? The whole question, Well, let's.
Speaker 3 (02:40):
Come back to that. I think the key number the
question is cutting the OCR going to really influence the
long term growth rate for New Zealand? And the answer
is well no, I mean, if that was the only
thing we had to do, then you know, that would
be a simple thing. But of course growth rates are
all about actually getting on with productivity and investing and
(03:03):
educating the labor for spring foreign investors, and a whole
lot of other things we have to do. Right, Just
cutting rates isn't the panacea for long term growth or employment.
Speaker 4 (03:14):
It's interesting that when you say that, it feels somehow
intuitively right instantly, But it also felt like news to
me when I when you hear that opinion express because
it seems so much of the commentary around our economy
is and when are they going to bring the interest
rates down? And the OCS two are too high? And
what's wrong with the Reserve Bank? These commentators are predicting
(03:36):
another zero point five of a percent. When are the
Reserve Bank going to get with the program? And is
it a distraction in some ways or is there what
is the significance of the ocr really in the broader
picture of things.
Speaker 3 (03:49):
The key thing we're trying to do with the interest
rates settings is to get inflation right back into that
zone where it's no longer a topic of conversation around
household tables. In other words, people are no longer panicking
regarding the cost of living. They get a feeling that
actually they can they can managing their households with their budgets,
and they've got a bit of uncertainty businesses. The same
businesses don't want to see unexpected inflation jumping right in
(04:13):
front of them because they can't plan, they can't invest.
So the big story worth setting those interest rates is
actually getting inflation into a more stable pattern, that's more predictable.
And actually, I think the news of the last two
to three months is where pretty much there in terms
of conquering that story, which is why the big, the
big trend in interest rates is they're coming down, and
(04:37):
they have been coming down already for eighty months, So
it shouldn't be a heck of a surprise to anyone
that rates a cut last week. I think what was
interesting about last week was normally central bankers they're talking.
I think this called Fed speak, made quite famous by
Alan Greenspan, who was I think the US FED governor
(05:00):
in the nineteen eighties.
Speaker 4 (05:01):
Which is the broadly speaking, the equivalent of our reserve,
even though it's different, isn't it? Is it? Yeah?
Speaker 3 (05:07):
Well, the guy, the guy now in charge his power,
and he's the guy that Trump's Trump's giving him a
hard time in his tweets.
Speaker 4 (05:12):
Area stubborn.
Speaker 3 (05:15):
He's a real central banker, right, He's not gonna die worrying.
And the intriguing thing about Greenspan, he made this really
famous speech right in front of the US Senate. He's
another guy never scared, never scared to say what he
really thought to all those senators. He said, you know,
if I seem unduly clear to you, you have clearly
(05:38):
misunderstood what I said.
Speaker 4 (05:40):
So if you think what he said is clear, then
you're not. You're not listening closely enough.
Speaker 3 (05:44):
And he went on to say, I've had to sort
of go to the school to learn to mumble with
great incoherence. And this is central bankers, and it hasn't
been a perfect science for thirty or forty years. What
I loved about last week, I really loved if you
go back and then he wants to go back and
listen to Governor Hawksby talk. He was clear there was
(06:05):
no misunderstanding. There was no and he said, we purposely
have set out to be cut rates and to tell
you that we're being dubvish, and he implied.
Speaker 4 (06:16):
Is it a change of approach to be that.
Speaker 3 (06:19):
I think it was really transparent. I quite liked it,
and the message to me was, well, actually we've got
this inflation thing pretty much under control. I'll play the
I'll play the data as I see it. But it
gave I think it gave us all the direction that
we've been in a cost living crisis behind us, and
now going forward, we're a bit more confident. We're a
(06:41):
bit more confident.
Speaker 4 (06:43):
So they're thinking ahead of the average punter in the
street who feels that things are still a bit crap
at the moment. Well, I have to.
Speaker 3 (06:51):
And actually things are still pretty crap. I mean I
had a chat with you what three months ago, and
I've been to field days, remember that's right. And it
was actually a lot.
Speaker 4 (07:02):
Of fun, was quite things that was quite in fact,
it was a very positive field days, wasn't it because
the farmers well, they see the farmers are doing quite
well and continue to do so, which is good.
Speaker 3 (07:14):
Oh, I think it's true, and the vibe was great.
I think thereafter I went down to Canterbury and Southland
got a field the same things really really great. And
in my chat with you, I got the sense then
that maybe we're producing those green shoots of recovery come through,
you know, in the regions, and maybe that would filter
up to our big cities. Clearly christ Church feels a
(07:37):
lot more positive down there to me anyway.
Speaker 4 (07:39):
But actually that it is, isn't it? And Wellington and
Auckland are not doing so well? Was I f you'
and Mournsville right now? And you're probably feeling pretty good
about things because the farmers are doing so well.
Speaker 3 (07:50):
Yeah, and there's more good news that we can chat
about that happened on Friday unexpectedly as well, of course.
But I back up three months ago. We knew that
Wellington and Auckland distdan't feel have that positive sense and
households consumer confidence just not terrific. I truly had an
expectation things by now would feel a little bit more positive,
(08:12):
and the surprise to me is that it's still not great.
Speaker 4 (08:16):
And why is that? And is there something in the
fact that is it something? And I'm a lay person.
Despite hosting the show, people sometimes think that I know
more than I do about this stuff, and I know
very little, but you do observe what people are talking about.
And a lot of the media conversation around OCRs is
(08:38):
all about homeowners wanting more money to be able to spend.
You know, we're feeling inflation. Costs are going up, and
so the one thing we want to try and save
money on is either our rent or our mortgage. Is
that why we feel there's still some way to go
when we're frustrated, so we're holding off, we're not spending.
I don't know.
Speaker 3 (08:56):
Yeah, well, I think it's all of that. But there's
two sides for every coin. For every homeowner that's got
a mortgage, there's someone who's got their savings in the
bank and they get a lot of interest rate. So
there's I had to really think about this question this week,
and I had a chat to a couple of mates
(09:16):
let's call them, well, let's call them Sam and Steve
that mayor may not be their names, but you are
a different demographics, both from Auckland with experience of Wellington.
So here's the demographic. I was testing out one of them,
a large, a large owner of a house with a
big mortgage on it, and he started, I see what's
going on, Sam, how do you feel? He said, We'll
(09:38):
just do Sam thirsty. Sam said, I feel scarred. I said,
what do you mean you feel scared? You look fine
to me. That's I feel scard What hecarred with well
mortgage rates went up so much and we for a
time we're in trouble with both my wife and I working.
And then my rates went up a lot, and then
my insurance went up a lot, and he went through
(10:00):
a whole lot of other costs that went and truly
times were very difficult a couple of years ago, really difficult,
and I feel scarred.
Speaker 4 (10:08):
That raises a lot of questions actually because excuse me
out had to clean with right for a sent because
when people have a really negative financial experience with something,
you know, once bitten twice shy, I think it really
does linger. I mean, is there a lot of forget
(10:29):
the data, It's just there's certain sentiments where people have
felt really they've gone through the mill, and is that
a lot more to come? Does that take a lot
more to get over? The sentiment and how we're feeling.
Speaker 3 (10:43):
Yeah, And it's an unknown because every cycle is a
bit different and there's a different demographic, a different lot
of SAMs, and Steve's out there thinking about how they're
going to provide for their householder themselves, and the recency
bias of what happened last year is actually the more
dominant effect to be able to go forward because they
(11:04):
can't perfect forecast you know what's going to happen the
next couple of years. So anyway, I asked Sam directly,
you know rate's been cut. That's good for you, right,
he said, yeah, But the feeling is would probably prefer
to do what we've done over the last year or so,
just paid out more of that mortgage. Like, well, yeah,
so how low the rates have to go before the
(11:25):
SAMs of this world start feeling better? Or how long
will it take for him to observe he's got another
five hundred dollars a month.
Speaker 4 (11:35):
To play with? Well, I guess, either to play with
or to pay off the mortgage.
Speaker 3 (11:40):
Paying off the mortgagees, that's what he's going to do
at the moment.
Speaker 4 (11:43):
Do you think that's what happened in a way with
high interest rates? People have we've had more of an
ugly experience with working out the price of money, and
when you realize that when money is not so cheap,
maybe you should make sure you're not having to buy
so much of it. Therefore pay down your debt.
Speaker 3 (11:57):
Yeah, and this has been conflated with high inflation and
wayes not going up and now in some parts of
New Zealand and not all not they it's been in
some parts of New Zealand a little bit considered regarding
my job, you know. And that's that's what you know,
that's why rates are being cut. So I say that,
so I think it's you know, Sam provides that visceral
feeling to me of there are probably quite a few
(12:19):
households and families that a rate cat isn't going to
be their panacea to change right now what they do
running into Christmas, and Christmas by the way, is coming.
Speaker 4 (12:30):
I know, well, you won't have to worry about mailing
anything to your friends in the States because they're like
ut process to the mail at the moment. That's a
separate topic. Andrew, we love your calls on this and
in fact that we're not going to take the break
quite right away because you mentioned metaphorically a couple of names,
Sam and Steve. What's Steve's story? Is there a different
story with the other person colleague or mate or you
(12:51):
spoke to about the cash rate and all that.
Speaker 3 (12:53):
Yeah, So Steve about ten years to go until he retires,
doesn't have a mortgage Aucklander, but has run that cycle
of having owned two or three houses us through time
and always felt that owning a house is a pretty
good thing. It was like his investment with his family,
and they that always sort of had the sense in
(13:14):
which higher house prices meant they could take out a
bigger mortgage and use that maybe to enjoy life a
bit more, do a renovation, etc. And So I said,
what about now for you? What are these lower interest
rates me? And he said, well, tell you what. I
no longer feel as if my house is my investment.
I said, what do you mean by that? Well, I
(13:35):
live in my house and I don't think I can
take out a mortgage to go and do something else
with my home. So it's it's no longer.
Speaker 4 (13:43):
He's not using in the asset as his spending money.
Speaker 3 (13:46):
I said, what's your what's your you know, what's your investment? Said, well,
I got ten years to go to retirement, and my
keepers have a balance is getting there and I'm just
going to work on that and other other investments because
they are truly what's going to help me in my retirement.
So this is an interesting perspective. So what about these
rate cats? You know, what does an interest rate cut
(14:09):
mean to you? And it's actually it means I'm looking
over my shoulder thinking that term deposit. My wife and
I have got what are we going to do with
that when that rolls over? So a different perspective again.
So here's Steve not going to take out a big
mortgage go spend these rate cats to him. It's a
different perspective again, which I thought was quite interesting because
(14:30):
clearly a lower interest rates for Steve doesn't actually promote
for him to run off and spend a lot.
Speaker 4 (14:36):
In fact, I do wonder whether sometimes the accentuation, again
this is making out of us to go along. But
we have a lot of young people in the media,
and I just feel that a lot of people who
are talking about this stuff and the media have all
got mortgages and everyone's just praying for an ocr cup
because they want their mortgage to be cheaper. And yet
there are people like you've just described where they're like, well,
you know, it's not really exactly where we want it
(14:58):
to go. Is this one of the pressures that that
the Reserve Bank is also reflecting, and it's a dubvish
approach to things.
Speaker 3 (15:05):
All, Well, yeah, I think what's happened in the last
three months has been more of these anecdotes. We haven't
seen those green shows come through to the main cities. Therefore,
employment hasn't been as strong, and inflation is really well anchored,
wage growth is really low, and I think we the
Reserve Bank have seen all that and thinking craaky, we
probably need to low interest rates a decent way here
to get that normalization of the economy. I think, I mean,
(15:28):
it's just reflecting what you just said. There are also
quite a few people who are in their early thirties
who have actually now maybe a capacity to get into
the housing market. Some of the stats we're looking at
in terms of new mortgages taken out show an acceleration
of first time buyers. So I think that's an interesting characteristic,
(15:51):
which is probably what we want as well. We want
actually more people to start participating that. And some of
the housing, of course is a bit more affordable in Wellington,
Aukland anyway.
Speaker 4 (16:01):
Oh well, and the government's you know, outwardly expressed how
you know, Chris Bishop, he's right into buying houses. He
doesn't want to see us putting all it pumping all
our money into the real estate market. He wants to
see it go into other things. We want your cause
on this. And look, there are a couple of questions
that you can have your response to what Andrew has
been talking about. Andrew Andrew Baskin from Harbor Asset Management.
But in terms of just your vibe, what's what's it
(16:27):
going to be? What's your panasy are going to be?
Is it are you waiting for another twenty five points
to come off the cash rate or fifty points or
are you someone who's actually I'd like it to stay
the same because I've got money tied up in investments
and i actually want to get a bit of money
from my term deposits. What is it that would make
you feel more optimistic, so you're not just going to
be either focused on well the things that Andrew was
(16:49):
talking about, people paying down their mortgage or being conservative
in their fiscal approach. What's going to open your what's
going to open your purse or your wallet. We'll be
back in just a moment. Eight hundred and eighty ten
eighty is the number, and you can also give your
predictions on where you think it will end up the
oci or we'd like it to end up. It is
twenty four past five News Talks heed B. Welcome back
to smart Money. This is News Talk s head B
(17:12):
and my guest is Andrew Baskan. He's the co chair
of Harbor Asset Management. But by the way, before we
get into it, are you worried about funding a comfortable retirement?
Well you're not alone because the cost of living crisis
is heading home for a lot of people. So it's
no surprise people are looking for ways to make the
most of their savings and get a little bit more
income to supplement their New Zealand super One interesting solution
(17:35):
is to invest in an income fund like the Harbor
Income Fund. It works by holding a mix of interest
paying securities and shares that have been designed to generate
a steady and sustainable income no matter the market. The
Harbor Income Fund is actively managed and currently it pays
a distribution of five four point five percent sorry four
point five percent per annum after fees and taxes paid
(17:57):
out in monthly installments. To find out more about Harbor's
Income Fund, just head to their website or speak with
your financial advisor. This is not intended as personalized advice.
The product Disclosure Statement for Harbor Investment Funds issued by
Harbor Asset Management is available at Harbor asset dot co
dot Nz.
Speaker 1 (18:18):
Pretech, Property, politics plus money, health and the week's debates.
It's all on the Weekend Collective with Tim Beveridge News
Talk zebby.
Speaker 4 (18:27):
Yes, welcome back. We're with, as I said, Andrew Baskin
from Harbor Asset Management, and we're taking your calls as
well about the cash rate. Where do you want it
to go? Where do you think it should hit, where
do you think it should end up? But what do
you think it'll take for us to shift our conversation
to feeling that, oh, things are on the way up,
because you can see from their opinion polls with the
government and everything that they're battling with a degree of
(18:47):
pessimism in the public at the moment. So eight hundred
and eighty ten eighty. Let's go to our first caller, Sean. Hello, Hi,
good Ay, how are you. I'm all right? What would
you like to talk about?
Speaker 2 (19:03):
Sorry, it's not first time. I just want to know,
you know, the textes and things like that.
Speaker 4 (19:15):
Sorry, what was that.
Speaker 2 (19:17):
The text and edy government poses text?
Speaker 4 (19:20):
Yes?
Speaker 2 (19:21):
Yes, yeah, yeah. I won a prize from a company.
It was you know, a hard worker and everything. So
they I won the fifteen thousand dollars and I was
text seven thousand dollars out of it, which is however,
when we were id, they said, if you win money,
(19:43):
you're on the pakis or on the lotto text free.
If I work hard and I win a prize, I
got to pay.
Speaker 4 (19:53):
Oh okay, if you earn your money, you pay text.
And if you if you you win your money, you
you don't pay text. Well, if I win Loto, I
don't really want to pay text on that, I'll be honest, Andrew,
would you want to pay text on your lotto winnings
if you had them?
Speaker 5 (20:05):
Oop?
Speaker 3 (20:05):
Sorry, just turn your microphone on there, that's pretty turn
it on obviously when you invest that lot of money
you'll pay. You'll pay tax. I'm so right, that's the
key thing. You're paying tax.
Speaker 4 (20:16):
I think Sean was just interested in the ethical dilemma
that you can work really hard and you pay tax
on everything you earn. Whereas if you just buy a
lucky ticket and something and somebody gives you a million
bucks because of the prize, then lucky you. But as
you say, when you invest it, that's when the taxman
comes calling. So yeah, I wait one hundred eighty ten eighty,
Now where do we get to? So what is going
(20:40):
to end up making us feel that where there's the data,
of course about what the economy is doing. But when
are we going to feel that we're growing? Do you
think are we waiting for some sort of shift in
the Ica? What are we actually waiting for? A New Zealand?
Speaker 3 (20:51):
Yeah, I don't think we should wait for infrast rates
to move. They will move. I think they'll still move further.
Speaker 4 (20:57):
Can we go? Lie?
Speaker 3 (20:58):
But I don't think that's the answer. That the real
answer is having an opportunity to find out our true
growth drivers going forward. And I don't think necessarily just
sing house prices going up as a growth driver. We
might have had that historically, and it's great. We're investing
in social housing and getting those first home buyers back
(21:19):
into the market. That's terrific. The real growth drivers are
the egg sector and we can see that here. That's
our sustainable comparative advantage, exporting a great egg product to
particularly the growing, growing economies of Asia.
Speaker 4 (21:31):
Can you put that in context for us what it means?
Because the reason I'm asking is because there were they
do vox pops on the news where the interview people
on the street, and they've had the announcement about Mainland
and the brand's being sold to Lacto little our company.
But I think it's lack to us for a lot
of money three closing on four billion dollars and some
(21:53):
of the and also we've had the Price of Butter
has been filming lighting up the talkways. But the dairy
sector is doing very well. Can you put in context
for what that means for us? Because they do vox
pops and a lot of them, it's just all those
farmers are making a fortune, we're paying a fortune, and
they're all a bit we're all a bit jealous and
a bit miserable about it. So is there another perspective
(22:14):
on that.
Speaker 3 (22:15):
Just think so if the farmers weren't making money, that
wouldn't be a terrific outcome for any of these regional
cities or even actually the large cities, because farmers paid
a lot of tax, they spend a lot on new investment,
and they drive elements of consumption and spending in particularly
those regional economies. But the truth is they're actually bringing
(22:39):
to a very large extent, foreign foreign currency, foreign money
back into New Zealand right now. So this is the
idea we're really good at, and there's four or five
things we're really good at. Egg is one of those
four or five things that we're really good.
Speaker 4 (22:53):
Was that a surprise announcement for you, the sale of
that mainland and that money flowing in.
Speaker 3 (22:59):
After the last nine months, it's pretty well known that
Frontierra have been working away to either listing mainland or
we're selling it, And as the months have gone by,
it's been more clear than in fact, the listing wasn't
necessarily the way it was going to go. It seemed
to me quite a few buyers interested. The price was
the surprise, A good price, a really good price, and
(23:20):
so a really good price in the context of that
part of Fonterra has never really fired consistently, it's never
really charged hard. Managing a global brand business is tough.
Speaker 4 (23:33):
It intuitively felt like a really good idea, though, doesn't it,
Because when they talk about us doing what we do best,
and what we do best is create the raw material
of the raw ingredients for what the world wants to consume.
Speaker 3 (23:44):
We are definitely one of the best global producers of
a whole range of dairy product and we do it
incredibly efficiently and incredibly well. In the world wants that
dairy product, we can clearly see that what's intriguing. In
the same week, we did have a Too Milk announce
their acquisition of a very large canning facility in Auckland
(24:07):
and Poconoa's south of Auckland and their announcement they're going
to invest hundreds of millions of dollars in that kit
and new kit. So this is a great announcement. And
here's a Kiwi company sort of doing the opposite to
what Frontier have just done. They're actually investing in global
brand to take to the world's largest market and one
of the highest margin products being infant formula. So I
(24:28):
thought that was pretty exciting. And then they then announced
the sale of their plant down in Southland, Attire Valley,
to Open Country Cheese, another great processing and brand manager.
And so we don't just have Frontier playing this game.
We have at the margin other great companies in the
dairy sector.
Speaker 4 (24:48):
Actually, if people are interested in that sort of thing,
I mean, is it possible for just the average investor
to get there get a staken some of these companies
you're talking about.
Speaker 3 (24:58):
Yeah, not Open Country Cheese, privately held company Talley Family Perfect,
it's done a great job, but a too Definitely. It's
listed on the Australian and musing on stock exchangers.
Speaker 4 (25:08):
Ye, hey, luck, we're going to take some more calls.
Eight hundred eighty Christ Hello.
Speaker 6 (25:13):
Yeah, good evening. Look, I'm grateful that you know that
you know less. You know, the economy is probably getting
a bit back on track, but it's not getting back
on track as expected. Firstly, the rents are still high,
(25:34):
the cost of living is too much. And what we
need to do and focusing on the country getting back
to how it used to be is is to put
a whole on immigration and get our housing sorted out
for the people that haven't got them first, instead of
(25:56):
letting everybody in who wants to come and not saying
it's a big problem. But this, you know, we can't
even keep up with the man what's hosing? So how
how are we posed to how they own? If we
want to grow, If we're going to keep letting more
people and leaving people.
Speaker 4 (26:14):
Who are you well, we can't stop people from leaving,
and we do need to replace them with people as well.
And I think it's back in the immigration settings, right,
But do you have any comment on that, Andrew?
Speaker 3 (26:23):
Look like I think the cases we've had an economy
that's expanded for a number of different reasons. We need labor.
We need labor force coming into the country to service
many of our sectors. The healthcare sector is a classic.
You know, we we need a vibrant and successful immigration
(26:44):
policy that works. One interesting change that's Kurd Chris is
the reinant, reinvigoration of what's called the aop visa scheme.
This is the visa scheme for business migrants. And so that's.
Speaker 4 (26:57):
When they're coming in with investment to talk about whether
they can buy the house they want to housing.
Speaker 3 (27:02):
So they have to come in and put either five
five million dollars into a business growth opportunity or ten
million dollars invested in the New Zealand Stock Exchange or
with the New Zealand government with bonds and now have
to hold that money there for five years, so a
long period of time. And so we now know, based
on the number of people who are applying, not approved,
(27:23):
but applying, that there's probably upwards as well over a
billion dollars worth of fresh capital coming into New Zealand.
And this is a change in those migration settings that
I think will benefit And.
Speaker 4 (27:33):
So it's one thing to announce a policy, but there
we know know what the interest is and this is
the news.
Speaker 3 (27:39):
Absolute news, and we know that the bulk of that
money isn't just purely going into New Zealand bonds. It's
going directly into growth opportunities that are that are that
are approved by invest New Zealand. And I just think
that we've sort of had three or four goes at
(27:59):
these settings for migration. It just feels to me as
actually we've getting them in terms of striking the balance.
Speaker 4 (28:07):
Okay, Hey, thanks for cool Chris Chuck.
Speaker 5 (28:09):
Hello, Oh hi Tim and Andrew. Yes, I've I just
put my money in shares and not into bonds and
all that, and that seems to work good for me.
Nobody would have predicted that we've got the Dow at
a record high. Come under you.
Speaker 4 (28:30):
Yeah, well it's had its it's been a fun ride.
But yeah, it's doing quite well now, isn't it. Andrew?
What do you reckon?
Speaker 3 (28:36):
Yeah? Oh, check, that's terrific that you've taken. I guess
your own financial advice, and I can't provide you need
direct financial advice, but you've done well. And I guess
the obvious thing is over the long term, we know
that equities and shares will perform more strongly than just
having your money in the bank, but actually a diversified portfolio.
(28:58):
It's pretty good for a lot of vestas and a
lot of people listening here today. Global market's done really well.
I've got a lot of concentration of ten or ten
or fifteen names that are performing strongly at the moment. Jack,
and so I think it's important just to have that
real balance and what you've got.
Speaker 4 (29:15):
How did you make your decisions around I mean you
for you you just described that as a decision between
bonds and shares. How did you make your decisions about
what shares.
Speaker 5 (29:26):
Oh, I discuss it with my share broker. I don't
invest in a mixed thing like that. I make the
odd mistake and sometimes, you know, but I get a
lot more wins and losses and I do better spec
(29:47):
But I've got good solid shares. I think I'll buy
some rocket Lab support, a good Kiwi.
Speaker 3 (29:54):
Yeah, got good good deep tech there. Ah and Jack,
that's that's terrific that you're you know, you're taking interest
in the market and you have a capacity to spend
time with your financial advisor.
Speaker 4 (30:07):
I've got a question for both of you, actually, Chuck
as well, because I know you like to show a
keen interest in this stuff as well. Either of you
nervous about another housing boom that we get the interest
rates to a point where suddenly interest checks in and
everyone starts pouring their money into housing again. Because from
an economic point of view and growth and investing in
(30:30):
jobs and all that sort of stuff, I'm not sure
quite they quite match up, do they. I'll throw to
you first check, and then we'll go to Andrew.
Speaker 5 (30:39):
Okay, well, I started off with flats, I got made redundant,
had some cash back. Embody in one Betty flats. But
I've changed from that, and you know, I'm past eighty,
so I do not want rental houses. Got too many headaches,
(31:01):
whereas a share market does not have those sort of
head aches. And guaranteed there's depths in that. And I'm
not going to bail out because the market drops a bit.
So it's a really good way to invest, if you,
you know, if you can afford it, well, Chack, can
(31:22):
I live all right off my dividends?
Speaker 3 (31:24):
It's not terrific. I've got I've got a client who's
ninety seven, and he has the same the same philosophy
as you. He's pretty much fully invested in the New
Zealand and global share markets, and he takes a keen interest.
Still says his financial advisor doesn't change much.
Speaker 4 (31:43):
Chuck.
Speaker 3 (31:44):
He's not that active. He likes the shares he's got.
He listens to what the companies say once a year,
he tells me, and that's enough for him. But it's
ninety seven to a check. You've got it a couple
of decades ahead of you, hopefully to enjoy that one
thing of one thing I like a bit of Chuck.
He's not going to worry about what that OCR changes
tomorrow because he's got a long to he's anchored that
(32:06):
long term approach to investing.
Speaker 4 (32:07):
To most people. Actually, I'll say that question we have
to take on the break because time is flying. It
is eighteen minutes to Sex News Talk, said Bo eight
hundred and eighty ten eighty side. He's welcome back to
(32:32):
Smart Money. This is the weekend collective. By the way,
if you miss any of the hour and you want
to go back and catch up with the conversations. My
guest is Andrew Bascanti's co CEO at Harbor Asset Management.
We've been well, we started talking about the OCR. We're
talking about the vibe around growth in the economy and
when's it going to kick and when are we going
to start feeling better about things and people. Yeah, the
conversation has it's been a rich tapestry. So we will
(32:54):
consit to with that tapestry right now by saying God
to Christina loo.
Speaker 5 (32:58):
Oh hello, is some.
Speaker 3 (33:01):
Go gold dot com?
Speaker 5 (33:02):
Dot s like is gold investment for a beginner money?
Speaker 4 (33:07):
And that, well, we won't give you specific financial advice.
And Andrew away on that. I always think though from
what I've heard is that gold generally keeps pace with
inflation and has some flash moments, and they're not so
flash moments, but you can probably do better. But no
specific financial advice, Andrew, tell me I'm wrong or right
or whatever.
Speaker 3 (33:25):
First when you write no specific advice, particularly regarding gold.
And I'm going to say something, I have never been
an investor in gold, so I'm biased. It's this air
set because it exhibits times of quite a lot of
risk and volatility in your price. So you really don't
know in a month, a year, or two year or
(33:46):
three years time where the gold price is going to be. Now,
over the long term, it's kept running with inflation, right,
it's got so long, whereas the S and P in
the past five years sort of three times inflation, four
times inflation. So that's that's the question. So we know
in the long term the like eighty or ninety years,
investing in a portfolio of equities gives you an eight
(34:08):
and a half to nine percent return per anum where
and that's like five six percent ahead of inflation. Gold
around about that inflation rate.
Speaker 5 (34:18):
Right.
Speaker 4 (34:19):
I always feel the need to sort of push back
against people who would like to talk about gold as
if it's the b on and the end all, Because
it's one of those things where people will talk about
a particular moment in time. It's like, did you know
the price of gold has gone up x in the
past period, And I'm like, well, okay, all very well
and good, but that ship has sailed.
Speaker 3 (34:39):
If you're going to invest in that material secten it's
and material gold, it has industrial uses terrific. I would
actually go away and find yourself a really top quality
resource analyst and work out what are the resources we're
truly going to need over the next decade and where
are there clear supply shortages? And so I think that's
(35:04):
the way I I would consider my investment as opposed
to say, I'm just going to invest in gold.
Speaker 4 (35:08):
Yeah, I mean, and that's pretty Yeah.
Speaker 3 (35:11):
Wouldn't I rather invest in some I don't know, Tell
me magnesiums and there's just a whole lot of aluminium copper.
Speaker 4 (35:19):
Tell me we won't dig into the We're not going
to dig into that. I suddenly I had a whole
bunch of questions that wracked up in my brain there.
But we'll move on to let's just because time is
racing by, we've barely scratched the surface of all the
topics we were planning on talking about. But what's your
What are your feelings about the attitude of New Zealanders
(35:39):
to investing in things like shares and business as opposed
to know the good old housing market. Where do you
think we are with that? Because I sense that, regardless
of what the figures get to, it's going to take
a while before people fall back in love with the
real estate market.
Speaker 3 (35:57):
Well, first of all, we need high quality housing in
New Zealands. Yes, so people do need to invest in
their first time people do need to find rental accommodation.
And what I really like is we're now invigorating our
capital market to invest in a number of different built
built to rent or rent to buy schemes. There are
a lot of houses that are more affordable coming into
(36:18):
the market and I'm proud of that ecosystem. But I
strongly feel that the investment ecosystem is moving on from
thinking about my house is where I'm going to build
up my nest egg for my retirement and look into Australia.
(36:39):
They have changed their psyche there to consider now my
superannuation is actually my nestic They are about fifteen years
ahead of us. But if I cast forward where Kiwisaver
will be, people are going to be looking at balances
that are going to be meaningful if they aren't already meaningful.
And that's going to be number one. Number two is
I'm seeing a greater participation in thinking about investing in
(37:04):
businesses from that younger generation. I went along to I'll
call it out because a very public thing, the ice
House Ventures Showcase last week. I think there might have
been eight hundred and fifty people in the room, and
then across seven other locations in New Zealand they hosted
virtual reality as well. So it's the big wow, a
(37:25):
big dash of Now. The demographic in that room, historically,
I can tell you has been like people my age
in their sixties who have money. The demographic has changing significantly.
In that room. We had everyone from university students, you know.
Speaker 4 (37:39):
Just or looking for ideas, to invest.
Speaker 3 (37:42):
In ideas and to learn about to learn about the
companies of the future, you know. So what we learned
this week. One hundred and fifty six companies have presented
in the last fourteen years at at ice House Showcase events.
Still today, eighty two of those are thriving. Now some
of these, of course don't make it, they get exited,
(38:02):
they close down because they're just great ideas and deep
ten but we know some of them have gone on
to be huge billion dollar companies. Rocket lay Well obviously
the biggest one in that regard, but holder think about
that Crimson, there are there is a large ecer system
here that is bringing back into New Zealand something like
a billion dollars in revenue every year from that venture
(38:24):
capital ec system.
Speaker 7 (38:27):
A few things that excited you at the time. I'm
always I'm always excited about about our venture capital ecosystem,
and it's not for everyone, but I think what we'll
find going forward, increasingly in our key we save accounts,
a small slice, a small slice will be allocated to
investing in young New Zealand companies, and hopefully many of
(38:50):
them will come on. They'll be big billion dollar companies
employing thousands and thousands of people. There was one one
stat I quite like, Robbie Pool, and congrats Robbie Pool
for what the ex system you've set up along with
many others in your industry, said that every day we've
got more than a million dollars coming into New Zealand
from just this.
Speaker 4 (39:11):
Venture's casing more. It's great, isn't that brilliant? Hey, look,
we'll be back in just a moment. Our time is
racing by. It's eight minutes to six. News Talk said,
b News Talk said, be welcome back. So really just
for some closing remarks from Andrew Baskan, he's co citio
at Harbor Asset Management. We started the show talking about
the ocr and we had a bit of a chat
about how people still feel it's a bit glum. But
I'm getting from you, Andrew that you think in a
(39:32):
way that eventually we're going to catch on that the
economy is in a better position to start growing and
we should start feeling a bit more optimism soon. Yeah.
Speaker 3 (39:42):
Look, if we've solved the inflation problem, and I think
we have inflation, expectations of well anchored interest rates have
come down, they'll continue coming down. I think the key
the key thing then is what are the growth drivers
going forward? Egg clearly's leading the charge at the moment,
probably will continue to more money coming in there. I'm
really encouraged by some infrastructure spending options ahead, and that's
that's a slow burn, but I think it's happening. I
(40:03):
love this tech sector.
Speaker 4 (40:04):
In New Zealand.
Speaker 3 (40:04):
I think it's it's it's got great, it's it's where
we're we we're moving forward. I really like that social
housing all good. So I think moving forward it's going
to feel different in twenty six. It's just that right now,
I don't see the sudden punchline for a lot of
growth between now and Christmas. And I just think one
thing that this rate cap we've just had, I think
(40:27):
it's a quarter action for many people in New Zealand
to go see their financial advisor.
Speaker 4 (40:30):
I just think it really is okay. And if people
want to, by the way, read more about harbor Asset Management,
they can just go to harbor Asset dot co dot Z.
Hey great to see it, and thanks so much for
coming into the studio. We're going to try and make
that a trends all the best. If you want to
catch the any of this hour or the previous hours,
please go to news Talk ZB, dot coted and ZED
(40:52):
look for the Weekend Collective and we'll look forward to
your company next weekend. Thanks to my producer, Tyra Roberts.
Enjoy the rest of you Sunday evening. Catch you soond
is a Little
Speaker 1 (41:09):
For more from the Weekend Collective, Listen live to news
talks it Be weekends from three pm, or follow the
podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talks EDB.
Speaker 2 (00:14):
Channel Class.
Speaker 3 (00:32):
Listens.
Speaker 4 (00:38):
Yes, and welcome back or welcome in if you have
just joined us. This is the Weekend Collective on tim
Beverage and this hour is smart money and it's where
we discuss it well, all sorts of things. In fact,
we love to take your calls as well. You can
give us a call on eight hundred and eighty ten
eighty can text on nine two ninety two as well.
And we we've been lucky over the last I'm not
(01:00):
sure how many years, as it is, we've always enjoyed
the company of the guys from Andrew from I was
going to say from Andrew Asset Management. It's actually from
Harbor Asset Management. And normally it's not often we actually
have the privilege and the pleasure of having them in
the studio. But the co CEO he's with me today,
Andrew bask and how are you going?
Speaker 3 (01:19):
How terrific to be here. But what the energy is in
the room compared to just talking into your phone. This
is great.
Speaker 4 (01:24):
We're going to have a great hour. We always have
a good hour. Hey, by the way, did you did
you did you get up to watch shrugby.
Speaker 3 (01:29):
Or anything, or you were traveling today this morning I
heard the rugubary results unless said, probably.
Speaker 4 (01:36):
Funny thing is I was almost because I don't know,
I was was. I was hoping that the Wallabies would
win as well. So there are a couple of disappointments
because I always love to beat the Rps just because
of the traditional rivalry. But anyway, and I just thought
we'd start off with a touch on sport. But hey,
the big topic often that we're going to start we
kick off with today and it's interesting how we become
(02:00):
understandably obsessed with the o c R and everyone's waiting
for the announcement because it's almost this a bit of
a you know, can you guess what it's going to be?
Is it going to be cut by twenty five basis
points or it's it going to be fifty basis points?
But I guess The question I wanted to have a
crack up with you to start the hour off was
(02:21):
how big a deal is the o CR And do
we are we in danger of hanging too much of
our economic prosperity, prosperity, our optimism based on what the
Reserve Bank acting governor I think at the moment says
what's your take on the OCR, and I mean and
where it should be, where it should go? The whole question, Well, let's.
Speaker 3 (02:40):
Come back to that. I think the key number the
question is cutting the OCR going to really influence the
long term growth rate for New Zealand? And the answer
is well no, I mean, if that was the only
thing we had to do, then you know, that would
be a simple thing. But of course growth rates are
all about actually getting on with productivity and investing and
(03:03):
educating the labor for spring foreign investors, and a whole
lot of other things we have to do. Right, Just
cutting rates isn't the panacea for long term growth or employment.
Speaker 4 (03:14):
It's interesting that when you say that, it feels somehow
intuitively right instantly, But it also felt like news to
me when I when you hear that opinion express because
it seems so much of the commentary around our economy
is and when are they going to bring the interest
rates down? And the OCS two are too high? And
what's wrong with the Reserve Bank? These commentators are predicting
(03:36):
another zero point five of a percent. When are the
Reserve Bank going to get with the program? And is
it a distraction in some ways or is there what
is the significance of the ocr really in the broader
picture of things.
Speaker 3 (03:49):
The key thing we're trying to do with the interest
rates settings is to get inflation right back into that
zone where it's no longer a topic of conversation around
household tables. In other words, people are no longer panicking
regarding the cost of living. They get a feeling that
actually they can they can managing their households with their budgets,
and they've got a bit of uncertainty businesses. The same
businesses don't want to see unexpected inflation jumping right in
(04:13):
front of them because they can't plan, they can't invest.
So the big story worth setting those interest rates is
actually getting inflation into a more stable pattern, that's more predictable.
And actually, I think the news of the last two
to three months is where pretty much there in terms
of conquering that story, which is why the big, the
big trend in interest rates is they're coming down, and
(04:37):
they have been coming down already for eighty months, So
it shouldn't be a heck of a surprise to anyone
that rates a cut last week. I think what was
interesting about last week was normally central bankers they're talking.
I think this called Fed speak, made quite famous by
Alan Greenspan, who was I think the US FED governor
(05:00):
in the nineteen eighties.
Speaker 4 (05:01):
Which is the broadly speaking, the equivalent of our reserve,
even though it's different, isn't it? Is it? Yeah?
Speaker 3 (05:07):
Well, the guy, the guy now in charge his power,
and he's the guy that Trump's Trump's giving him a
hard time in his tweets.
Speaker 4 (05:12):
Area stubborn.
Speaker 3 (05:15):
He's a real central banker, right, He's not gonna die worrying.
And the intriguing thing about Greenspan, he made this really
famous speech right in front of the US Senate. He's
another guy never scared, never scared to say what he
really thought to all those senators. He said, you know,
if I seem unduly clear to you, you have clearly
(05:38):
misunderstood what I said.
Speaker 4 (05:40):
So if you think what he said is clear, then
you're not. You're not listening closely enough.
Speaker 3 (05:44):
And he went on to say, I've had to sort
of go to the school to learn to mumble with
great incoherence. And this is central bankers, and it hasn't
been a perfect science for thirty or forty years. What
I loved about last week, I really loved if you
go back and then he wants to go back and
listen to Governor Hawksby talk. He was clear there was
(06:05):
no misunderstanding. There was no and he said, we purposely
have set out to be cut rates and to tell
you that we're being dubvish, and he implied.
Speaker 4 (06:16):
Is it a change of approach to be that.
Speaker 3 (06:19):
I think it was really transparent. I quite liked it,
and the message to me was, well, actually we've got
this inflation thing pretty much under control. I'll play the
I'll play the data as I see it. But it
gave I think it gave us all the direction that
we've been in a cost living crisis behind us, and
now going forward, we're a bit more confident. We're a
(06:41):
bit more confident.
Speaker 4 (06:43):
So they're thinking ahead of the average punter in the
street who feels that things are still a bit crap
at the moment. Well, I have to.
Speaker 3 (06:51):
And actually things are still pretty crap. I mean I
had a chat with you what three months ago, and
I've been to field days, remember that's right. And it
was actually a lot.
Speaker 4 (07:02):
Of fun, was quite things that was quite in fact,
it was a very positive field days, wasn't it because
the farmers well, they see the farmers are doing quite
well and continue to do so, which is good.
Speaker 3 (07:14):
Oh, I think it's true, and the vibe was great.
I think thereafter I went down to Canterbury and Southland
got a field the same things really really great. And
in my chat with you, I got the sense then
that maybe we're producing those green shoots of recovery come through,
you know, in the regions, and maybe that would filter
up to our big cities. Clearly christ Church feels a
(07:37):
lot more positive down there to me anyway.
Speaker 4 (07:39):
But actually that it is, isn't it? And Wellington and
Auckland are not doing so well? Was I f you'
and Mournsville right now? And you're probably feeling pretty good
about things because the farmers are doing so well.
Speaker 3 (07:50):
Yeah, and there's more good news that we can chat
about that happened on Friday unexpectedly as well, of course.
But I back up three months ago. We knew that
Wellington and Auckland distdan't feel have that positive sense and
households consumer confidence just not terrific. I truly had an
expectation things by now would feel a little bit more positive,
(08:12):
and the surprise to me is that it's still not great.
Speaker 4 (08:16):
And why is that? And is there something in the
fact that is it something? And I'm a lay person.
Despite hosting the show, people sometimes think that I know
more than I do about this stuff, and I know
very little, but you do observe what people are talking about.
And a lot of the media conversation around OCRs is
(08:38):
all about homeowners wanting more money to be able to spend.
You know, we're feeling inflation. Costs are going up, and
so the one thing we want to try and save
money on is either our rent or our mortgage. Is
that why we feel there's still some way to go
when we're frustrated, so we're holding off, we're not spending.
I don't know.
Speaker 3 (08:56):
Yeah, well, I think it's all of that. But there's
two sides for every coin. For every homeowner that's got
a mortgage, there's someone who's got their savings in the
bank and they get a lot of interest rate. So
there's I had to really think about this question this week,
and I had a chat to a couple of mates
(09:16):
let's call them, well, let's call them Sam and Steve
that mayor may not be their names, but you are
a different demographics, both from Auckland with experience of Wellington.
So here's the demographic. I was testing out one of them,
a large, a large owner of a house with a
big mortgage on it, and he started, I see what's
going on, Sam, how do you feel? He said, We'll
(09:38):
just do Sam thirsty. Sam said, I feel scarred. I said,
what do you mean you feel scared? You look fine
to me. That's I feel scard What hecarred with well
mortgage rates went up so much and we for a
time we're in trouble with both my wife and I working.
And then my rates went up a lot, and then
my insurance went up a lot, and he went through
(10:00):
a whole lot of other costs that went and truly
times were very difficult a couple of years ago, really difficult,
and I feel scarred.
Speaker 4 (10:08):
That raises a lot of questions actually because excuse me
out had to clean with right for a sent because
when people have a really negative financial experience with something,
you know, once bitten twice shy, I think it really
does linger. I mean, is there a lot of forget
(10:29):
the data, It's just there's certain sentiments where people have
felt really they've gone through the mill, and is that
a lot more to come? Does that take a lot
more to get over? The sentiment and how we're feeling.
Speaker 3 (10:43):
Yeah, And it's an unknown because every cycle is a
bit different and there's a different demographic, a different lot
of SAMs, and Steve's out there thinking about how they're
going to provide for their householder themselves, and the recency
bias of what happened last year is actually the more
dominant effect to be able to go forward because they
(11:04):
can't perfect forecast you know what's going to happen the
next couple of years. So anyway, I asked Sam directly,
you know rate's been cut. That's good for you, right,
he said, yeah, But the feeling is would probably prefer
to do what we've done over the last year or so,
just paid out more of that mortgage. Like, well, yeah,
so how low the rates have to go before the
(11:25):
SAMs of this world start feeling better? Or how long
will it take for him to observe he's got another
five hundred dollars a month.
Speaker 4 (11:35):
To play with? Well, I guess, either to play with
or to pay off the mortgage.
Speaker 3 (11:40):
Paying off the mortgagees, that's what he's going to do
at the moment.
Speaker 4 (11:43):
Do you think that's what happened in a way with
high interest rates? People have we've had more of an
ugly experience with working out the price of money, and
when you realize that when money is not so cheap,
maybe you should make sure you're not having to buy
so much of it. Therefore pay down your debt.
Speaker 3 (11:57):
Yeah, and this has been conflated with high inflation and
wayes not going up and now in some parts of
New Zealand and not all not they it's been in
some parts of New Zealand a little bit considered regarding
my job, you know. And that's that's what you know,
that's why rates are being cut. So I say that,
so I think it's you know, Sam provides that visceral
feeling to me of there are probably quite a few
(12:19):
households and families that a rate cat isn't going to
be their panacea to change right now what they do
running into Christmas, and Christmas by the way, is coming.
Speaker 4 (12:30):
I know, well, you won't have to worry about mailing
anything to your friends in the States because they're like
ut process to the mail at the moment. That's a
separate topic. Andrew, we love your calls on this and
in fact that we're not going to take the break
quite right away because you mentioned metaphorically a couple of names,
Sam and Steve. What's Steve's story? Is there a different
story with the other person colleague or mate or you
(12:51):
spoke to about the cash rate and all that.
Speaker 3 (12:53):
Yeah, So Steve about ten years to go until he retires,
doesn't have a mortgage Aucklander, but has run that cycle
of having owned two or three houses us through time
and always felt that owning a house is a pretty
good thing. It was like his investment with his family,
and they that always sort of had the sense in
(13:14):
which higher house prices meant they could take out a
bigger mortgage and use that maybe to enjoy life a
bit more, do a renovation, etc. And So I said,
what about now for you? What are these lower interest
rates me? And he said, well, tell you what. I
no longer feel as if my house is my investment.
I said, what do you mean by that? Well, I
(13:35):
live in my house and I don't think I can
take out a mortgage to go and do something else
with my home. So it's it's no longer.
Speaker 4 (13:43):
He's not using in the asset as his spending money.
Speaker 3 (13:46):
I said, what's your what's your you know, what's your investment? Said, well,
I got ten years to go to retirement, and my
keepers have a balance is getting there and I'm just
going to work on that and other other investments because
they are truly what's going to help me in my retirement.
So this is an interesting perspective. So what about these
rate cats? You know, what does an interest rate cut
(14:09):
mean to you? And it's actually it means I'm looking
over my shoulder thinking that term deposit. My wife and
I have got what are we going to do with
that when that rolls over? So a different perspective again.
So here's Steve not going to take out a big
mortgage go spend these rate cats to him. It's a
different perspective again, which I thought was quite interesting because
(14:30):
clearly a lower interest rates for Steve doesn't actually promote
for him to run off and spend a lot.
Speaker 4 (14:36):
In fact, I do wonder whether sometimes the accentuation, again
this is making out of us to go along. But
we have a lot of young people in the media,
and I just feel that a lot of people who
are talking about this stuff and the media have all
got mortgages and everyone's just praying for an ocr cup
because they want their mortgage to be cheaper. And yet
there are people like you've just described where they're like, well,
you know, it's not really exactly where we want it
(14:58):
to go. Is this one of the pressures that that
the Reserve Bank is also reflecting, and it's a dubvish
approach to things.
Speaker 3 (15:05):
All, Well, yeah, I think what's happened in the last
three months has been more of these anecdotes. We haven't
seen those green shows come through to the main cities. Therefore,
employment hasn't been as strong, and inflation is really well anchored,
wage growth is really low, and I think we the
Reserve Bank have seen all that and thinking craaky, we
probably need to low interest rates a decent way here
to get that normalization of the economy. I think, I mean,
(15:28):
it's just reflecting what you just said. There are also
quite a few people who are in their early thirties
who have actually now maybe a capacity to get into
the housing market. Some of the stats we're looking at
in terms of new mortgages taken out show an acceleration
of first time buyers. So I think that's an interesting characteristic,
(15:51):
which is probably what we want as well. We want
actually more people to start participating that. And some of
the housing, of course is a bit more affordable in Wellington,
Aukland anyway.
Speaker 4 (16:01):
Oh well, and the government's you know, outwardly expressed how
you know, Chris Bishop, he's right into buying houses. He
doesn't want to see us putting all it pumping all
our money into the real estate market. He wants to
see it go into other things. We want your cause
on this. And look, there are a couple of questions
that you can have your response to what Andrew has
been talking about. Andrew Andrew Baskin from Harbor Asset Management.
But in terms of just your vibe, what's what's it
(16:27):
going to be? What's your panasy are going to be?
Is it are you waiting for another twenty five points
to come off the cash rate or fifty points or
are you someone who's actually I'd like it to stay
the same because I've got money tied up in investments
and i actually want to get a bit of money
from my term deposits. What is it that would make
you feel more optimistic, so you're not just going to
be either focused on well the things that Andrew was
(16:49):
talking about, people paying down their mortgage or being conservative
in their fiscal approach. What's going to open your what's
going to open your purse or your wallet. We'll be
back in just a moment. Eight hundred and eighty ten
eighty is the number, and you can also give your
predictions on where you think it will end up the
oci or we'd like it to end up. It is
twenty four past five News Talks heed B. Welcome back
to smart Money. This is News Talk s head B
(17:12):
and my guest is Andrew Baskan. He's the co chair
of Harbor Asset Management. But by the way, before we
get into it, are you worried about funding a comfortable retirement?
Well you're not alone because the cost of living crisis
is heading home for a lot of people. So it's
no surprise people are looking for ways to make the
most of their savings and get a little bit more
income to supplement their New Zealand super One interesting solution
(17:35):
is to invest in an income fund like the Harbor
Income Fund. It works by holding a mix of interest
paying securities and shares that have been designed to generate
a steady and sustainable income no matter the market. The
Harbor Income Fund is actively managed and currently it pays
a distribution of five four point five percent sorry four
point five percent per annum after fees and taxes paid
(17:57):
out in monthly installments. To find out more about Harbor's
Income Fund, just head to their website or speak with
your financial advisor. This is not intended as personalized advice.
The product Disclosure Statement for Harbor Investment Funds issued by
Harbor Asset Management is available at Harbor asset dot co
dot Nz.
Speaker 1 (18:18):
Pretech, Property, politics plus money, health and the week's debates.
It's all on the Weekend Collective with Tim Beveridge News
Talk zebby.
Speaker 4 (18:27):
Yes, welcome back. We're with, as I said, Andrew Baskin
from Harbor Asset Management, and we're taking your calls as
well about the cash rate. Where do you want it
to go? Where do you think it should hit, where
do you think it should end up? But what do
you think it'll take for us to shift our conversation
to feeling that, oh, things are on the way up,
because you can see from their opinion polls with the
government and everything that they're battling with a degree of
(18:47):
pessimism in the public at the moment. So eight hundred
and eighty ten eighty. Let's go to our first caller, Sean. Hello, Hi,
good Ay, how are you. I'm all right? What would
you like to talk about?
Speaker 2 (19:03):
Sorry, it's not first time. I just want to know,
you know, the textes and things like that.
Speaker 4 (19:15):
Sorry, what was that.
Speaker 2 (19:17):
The text and edy government poses text?
Speaker 4 (19:20):
Yes?
Speaker 2 (19:21):
Yes, yeah, yeah. I won a prize from a company.
It was you know, a hard worker and everything. So
they I won the fifteen thousand dollars and I was
text seven thousand dollars out of it, which is however,
when we were id, they said, if you win money,
(19:43):
you're on the pakis or on the lotto text free.
If I work hard and I win a prize, I
got to pay.
Speaker 4 (19:53):
Oh okay, if you earn your money, you pay text.
And if you if you you win your money, you
you don't pay text. Well, if I win Loto, I
don't really want to pay text on that, I'll be honest, Andrew,
would you want to pay text on your lotto winnings
if you had them?
Speaker 5 (20:05):
Oop?
Speaker 3 (20:05):
Sorry, just turn your microphone on there, that's pretty turn
it on obviously when you invest that lot of money
you'll pay. You'll pay tax. I'm so right, that's the
key thing. You're paying tax.
Speaker 4 (20:16):
I think Sean was just interested in the ethical dilemma
that you can work really hard and you pay tax
on everything you earn. Whereas if you just buy a
lucky ticket and something and somebody gives you a million
bucks because of the prize, then lucky you. But as
you say, when you invest it, that's when the taxman
comes calling. So yeah, I wait one hundred eighty ten eighty,
Now where do we get to? So what is going
(20:40):
to end up making us feel that where there's the data,
of course about what the economy is doing. But when
are we going to feel that we're growing? Do you
think are we waiting for some sort of shift in
the Ica? What are we actually waiting for? A New Zealand?
Speaker 3 (20:51):
Yeah, I don't think we should wait for infrast rates
to move. They will move. I think they'll still move further.
Speaker 4 (20:57):
Can we go? Lie?
Speaker 3 (20:58):
But I don't think that's the answer. That the real
answer is having an opportunity to find out our true
growth drivers going forward. And I don't think necessarily just
sing house prices going up as a growth driver. We
might have had that historically, and it's great. We're investing
in social housing and getting those first home buyers back
(21:19):
into the market. That's terrific. The real growth drivers are
the egg sector and we can see that here. That's
our sustainable comparative advantage, exporting a great egg product to
particularly the growing, growing economies of Asia.
Speaker 4 (21:31):
Can you put that in context for us what it means?
Because the reason I'm asking is because there were they
do vox pops on the news where the interview people
on the street, and they've had the announcement about Mainland
and the brand's being sold to Lacto little our company.
But I think it's lack to us for a lot
of money three closing on four billion dollars and some
(21:53):
of the and also we've had the Price of Butter
has been filming lighting up the talkways. But the dairy
sector is doing very well. Can you put in context
for what that means for us? Because they do vox
pops and a lot of them, it's just all those
farmers are making a fortune, we're paying a fortune, and
they're all a bit we're all a bit jealous and
a bit miserable about it. So is there another perspective
(22:14):
on that.
Speaker 3 (22:15):
Just think so if the farmers weren't making money, that
wouldn't be a terrific outcome for any of these regional
cities or even actually the large cities, because farmers paid
a lot of tax, they spend a lot on new investment,
and they drive elements of consumption and spending in particularly
those regional economies. But the truth is they're actually bringing
(22:39):
to a very large extent, foreign foreign currency, foreign money
back into New Zealand right now. So this is the
idea we're really good at, and there's four or five
things we're really good at. Egg is one of those
four or five things that we're really good.
Speaker 4 (22:53):
Was that a surprise announcement for you, the sale of
that mainland and that money flowing in.
Speaker 3 (22:59):
After the last nine months, it's pretty well known that
Frontierra have been working away to either listing mainland or
we're selling it, And as the months have gone by,
it's been more clear than in fact, the listing wasn't
necessarily the way it was going to go. It seemed
to me quite a few buyers interested. The price was
the surprise, A good price, a really good price, and
(23:20):
so a really good price in the context of that
part of Fonterra has never really fired consistently, it's never
really charged hard. Managing a global brand business is tough.
Speaker 4 (23:33):
It intuitively felt like a really good idea, though, doesn't it,
Because when they talk about us doing what we do best,
and what we do best is create the raw material
of the raw ingredients for what the world wants to consume.
Speaker 3 (23:44):
We are definitely one of the best global producers of
a whole range of dairy product and we do it
incredibly efficiently and incredibly well. In the world wants that
dairy product, we can clearly see that what's intriguing. In
the same week, we did have a Too Milk announce
their acquisition of a very large canning facility in Auckland
(24:07):
and Poconoa's south of Auckland and their announcement they're going
to invest hundreds of millions of dollars in that kit
and new kit. So this is a great announcement. And
here's a Kiwi company sort of doing the opposite to
what Frontier have just done. They're actually investing in global
brand to take to the world's largest market and one
of the highest margin products being infant formula. So I
(24:28):
thought that was pretty exciting. And then they then announced
the sale of their plant down in Southland, Attire Valley,
to Open Country Cheese, another great processing and brand manager.
And so we don't just have Frontier playing this game.
We have at the margin other great companies in the
dairy sector.
Speaker 4 (24:48):
Actually, if people are interested in that sort of thing,
I mean, is it possible for just the average investor
to get there get a staken some of these companies
you're talking about.
Speaker 3 (24:58):
Yeah, not Open Country Cheese, privately held company Talley Family Perfect,
it's done a great job, but a too Definitely. It's
listed on the Australian and musing on stock exchangers.
Speaker 4 (25:08):
Ye, hey, luck, we're going to take some more calls.
Eight hundred eighty Christ Hello.
Speaker 6 (25:13):
Yeah, good evening. Look, I'm grateful that you know that
you know less. You know, the economy is probably getting
a bit back on track, but it's not getting back
on track as expected. Firstly, the rents are still high,
(25:34):
the cost of living is too much. And what we
need to do and focusing on the country getting back
to how it used to be is is to put
a whole on immigration and get our housing sorted out
for the people that haven't got them first, instead of
(25:56):
letting everybody in who wants to come and not saying
it's a big problem. But this, you know, we can't
even keep up with the man what's hosing? So how
how are we posed to how they own? If we
want to grow, If we're going to keep letting more
people and leaving people.
Speaker 4 (26:14):
Who are you well, we can't stop people from leaving,
and we do need to replace them with people as well.
And I think it's back in the immigration settings, right,
But do you have any comment on that, Andrew?
Speaker 3 (26:23):
Look like I think the cases we've had an economy
that's expanded for a number of different reasons. We need labor.
We need labor force coming into the country to service
many of our sectors. The healthcare sector is a classic.
You know, we we need a vibrant and successful immigration
(26:44):
policy that works. One interesting change that's Kurd Chris is
the reinant, reinvigoration of what's called the aop visa scheme.
This is the visa scheme for business migrants. And so that's.
Speaker 4 (26:57):
When they're coming in with investment to talk about whether
they can buy the house they want to housing.
Speaker 3 (27:02):
So they have to come in and put either five
five million dollars into a business growth opportunity or ten
million dollars invested in the New Zealand Stock Exchange or
with the New Zealand government with bonds and now have
to hold that money there for five years, so a
long period of time. And so we now know, based
on the number of people who are applying, not approved,
(27:23):
but applying, that there's probably upwards as well over a
billion dollars worth of fresh capital coming into New Zealand.
And this is a change in those migration settings that
I think will benefit And.
Speaker 4 (27:33):
So it's one thing to announce a policy, but there
we know know what the interest is and this is
the news.
Speaker 3 (27:39):
Absolute news, and we know that the bulk of that
money isn't just purely going into New Zealand bonds. It's
going directly into growth opportunities that are that are that
are approved by invest New Zealand. And I just think
that we've sort of had three or four goes at
(27:59):
these settings for migration. It just feels to me as
actually we've getting them in terms of striking the balance.
Speaker 4 (28:07):
Okay, Hey, thanks for cool Chris Chuck.
Speaker 5 (28:09):
Hello, Oh hi Tim and Andrew. Yes, I've I just
put my money in shares and not into bonds and
all that, and that seems to work good for me.
Nobody would have predicted that we've got the Dow at
a record high. Come under you.
Speaker 4 (28:30):
Yeah, well it's had its it's been a fun ride.
But yeah, it's doing quite well now, isn't it. Andrew?
What do you reckon?
Speaker 3 (28:36):
Yeah? Oh, check, that's terrific that you've taken. I guess
your own financial advice, and I can't provide you need
direct financial advice, but you've done well. And I guess
the obvious thing is over the long term, we know
that equities and shares will perform more strongly than just
having your money in the bank, but actually a diversified portfolio.
(28:58):
It's pretty good for a lot of vestas and a
lot of people listening here today. Global market's done really well.
I've got a lot of concentration of ten or ten
or fifteen names that are performing strongly at the moment. Jack,
and so I think it's important just to have that
real balance and what you've got.
Speaker 4 (29:15):
How did you make your decisions around I mean you
for you you just described that as a decision between
bonds and shares. How did you make your decisions about
what shares.
Speaker 5 (29:26):
Oh, I discuss it with my share broker. I don't
invest in a mixed thing like that. I make the
odd mistake and sometimes, you know, but I get a
lot more wins and losses and I do better spec
(29:47):
But I've got good solid shares. I think I'll buy
some rocket Lab support, a good Kiwi.
Speaker 3 (29:54):
Yeah, got good good deep tech there. Ah and Jack,
that's that's terrific that you're you know, you're taking interest
in the market and you have a capacity to spend
time with your financial advisor.
Speaker 4 (30:07):
I've got a question for both of you, actually, Chuck
as well, because I know you like to show a
keen interest in this stuff as well. Either of you
nervous about another housing boom that we get the interest
rates to a point where suddenly interest checks in and
everyone starts pouring their money into housing again. Because from
an economic point of view and growth and investing in
(30:30):
jobs and all that sort of stuff, I'm not sure
quite they quite match up, do they. I'll throw to
you first check, and then we'll go to Andrew.
Speaker 5 (30:39):
Okay, well, I started off with flats, I got made redundant,
had some cash back. Embody in one Betty flats. But
I've changed from that, and you know, I'm past eighty,
so I do not want rental houses. Got too many headaches,
(31:01):
whereas a share market does not have those sort of
head aches. And guaranteed there's depths in that. And I'm
not going to bail out because the market drops a bit.
So it's a really good way to invest, if you,
you know, if you can afford it, well, Chack, can
(31:22):
I live all right off my dividends?
Speaker 3 (31:24):
It's not terrific. I've got I've got a client who's
ninety seven, and he has the same the same philosophy
as you. He's pretty much fully invested in the New
Zealand and global share markets, and he takes a keen interest.
Still says his financial advisor doesn't change much.
Speaker 4 (31:43):
Chuck.
Speaker 3 (31:44):
He's not that active. He likes the shares he's got.
He listens to what the companies say once a year,
he tells me, and that's enough for him. But it's
ninety seven to a check. You've got it a couple
of decades ahead of you, hopefully to enjoy that one
thing of one thing I like a bit of Chuck.
He's not going to worry about what that OCR changes
tomorrow because he's got a long to he's anchored that
(32:06):
long term approach to investing.
Speaker 4 (32:07):
To most people. Actually, I'll say that question we have
to take on the break because time is flying. It
is eighteen minutes to Sex News Talk, said Bo eight
hundred and eighty ten eighty side. He's welcome back to
(32:32):
Smart Money. This is the weekend collective. By the way,
if you miss any of the hour and you want
to go back and catch up with the conversations. My
guest is Andrew Bascanti's co CEO at Harbor Asset Management.
We've been well, we started talking about the OCR. We're
talking about the vibe around growth in the economy and
when's it going to kick and when are we going
to start feeling better about things and people. Yeah, the
conversation has it's been a rich tapestry. So we will
(32:54):
consit to with that tapestry right now by saying God
to Christina loo.
Speaker 5 (32:58):
Oh hello, is some.
Speaker 3 (33:01):
Go gold dot com?
Speaker 5 (33:02):
Dot s like is gold investment for a beginner money?
Speaker 4 (33:07):
And that, well, we won't give you specific financial advice.
And Andrew away on that. I always think though from
what I've heard is that gold generally keeps pace with
inflation and has some flash moments, and they're not so
flash moments, but you can probably do better. But no
specific financial advice, Andrew, tell me I'm wrong or right
or whatever.
Speaker 3 (33:25):
First when you write no specific advice, particularly regarding gold.
And I'm going to say something, I have never been
an investor in gold, so I'm biased. It's this air
set because it exhibits times of quite a lot of
risk and volatility in your price. So you really don't
know in a month, a year, or two year or
(33:46):
three years time where the gold price is going to be. Now,
over the long term, it's kept running with inflation, right,
it's got so long, whereas the S and P in
the past five years sort of three times inflation, four
times inflation. So that's that's the question. So we know
in the long term the like eighty or ninety years,
investing in a portfolio of equities gives you an eight
(34:08):
and a half to nine percent return per anum where
and that's like five six percent ahead of inflation. Gold
around about that inflation rate.
Speaker 5 (34:18):
Right.
Speaker 4 (34:19):
I always feel the need to sort of push back
against people who would like to talk about gold as
if it's the b on and the end all, Because
it's one of those things where people will talk about
a particular moment in time. It's like, did you know
the price of gold has gone up x in the
past period, And I'm like, well, okay, all very well
and good, but that ship has sailed.
Speaker 3 (34:39):
If you're going to invest in that material secten it's
and material gold, it has industrial uses terrific. I would
actually go away and find yourself a really top quality
resource analyst and work out what are the resources we're
truly going to need over the next decade and where
are there clear supply shortages? And so I think that's
(35:04):
the way I I would consider my investment as opposed
to say, I'm just going to invest in gold.
Speaker 4 (35:08):
Yeah, I mean, and that's pretty Yeah.
Speaker 3 (35:11):
Wouldn't I rather invest in some I don't know, Tell
me magnesiums and there's just a whole lot of aluminium copper.
Speaker 4 (35:19):
Tell me we won't dig into the We're not going
to dig into that. I suddenly I had a whole
bunch of questions that wracked up in my brain there.
But we'll move on to let's just because time is
racing by, we've barely scratched the surface of all the
topics we were planning on talking about. But what's your
What are your feelings about the attitude of New Zealanders
(35:39):
to investing in things like shares and business as opposed
to know the good old housing market. Where do you
think we are with that? Because I sense that, regardless
of what the figures get to, it's going to take
a while before people fall back in love with the
real estate market.
Speaker 3 (35:57):
Well, first of all, we need high quality housing in
New Zealands. Yes, so people do need to invest in
their first time people do need to find rental accommodation.
And what I really like is we're now invigorating our
capital market to invest in a number of different built
built to rent or rent to buy schemes. There are
a lot of houses that are more affordable coming into
(36:18):
the market and I'm proud of that ecosystem. But I
strongly feel that the investment ecosystem is moving on from
thinking about my house is where I'm going to build
up my nest egg for my retirement and look into Australia.
(36:39):
They have changed their psyche there to consider now my
superannuation is actually my nestic They are about fifteen years
ahead of us. But if I cast forward where Kiwisaver
will be, people are going to be looking at balances
that are going to be meaningful if they aren't already meaningful.
And that's going to be number one. Number two is
I'm seeing a greater participation in thinking about investing in
(37:04):
businesses from that younger generation. I went along to I'll
call it out because a very public thing, the ice
House Ventures Showcase last week. I think there might have
been eight hundred and fifty people in the room, and
then across seven other locations in New Zealand they hosted
virtual reality as well. So it's the big wow, a
(37:25):
big dash of Now. The demographic in that room, historically,
I can tell you has been like people my age
in their sixties who have money. The demographic has changing significantly.
In that room. We had everyone from university students, you know.
Speaker 4 (37:39):
Just or looking for ideas, to invest.
Speaker 3 (37:42):
In ideas and to learn about to learn about the
companies of the future, you know. So what we learned
this week. One hundred and fifty six companies have presented
in the last fourteen years at at ice House Showcase events.
Still today, eighty two of those are thriving. Now some
of these, of course don't make it, they get exited,
(38:02):
they close down because they're just great ideas and deep
ten but we know some of them have gone on
to be huge billion dollar companies. Rocket lay Well obviously
the biggest one in that regard, but holder think about
that Crimson, there are there is a large ecer system
here that is bringing back into New Zealand something like
a billion dollars in revenue every year from that venture
(38:24):
capital ec system.
Speaker 7 (38:27):
A few things that excited you at the time. I'm
always I'm always excited about about our venture capital ecosystem,
and it's not for everyone, but I think what we'll
find going forward, increasingly in our key we save accounts,
a small slice, a small slice will be allocated to
investing in young New Zealand companies, and hopefully many of
(38:50):
them will come on. They'll be big billion dollar companies
employing thousands and thousands of people. There was one one
stat I quite like, Robbie Pool, and congrats Robbie Pool
for what the ex system you've set up along with
many others in your industry, said that every day we've
got more than a million dollars coming into New Zealand
from just this.
Speaker 4 (39:11):
Venture's casing more. It's great, isn't that brilliant? Hey, look,
we'll be back in just a moment. Our time is
racing by. It's eight minutes to six. News Talk said,
b News Talk said, be welcome back. So really just
for some closing remarks from Andrew Baskan, he's co citio
at Harbor Asset Management. We started the show talking about
the ocr and we had a bit of a chat
about how people still feel it's a bit glum. But
I'm getting from you, Andrew that you think in a
(39:32):
way that eventually we're going to catch on that the
economy is in a better position to start growing and
we should start feeling a bit more optimism soon. Yeah.
Speaker 3 (39:42):
Look, if we've solved the inflation problem, and I think
we have inflation, expectations of well anchored interest rates have
come down, they'll continue coming down. I think the key
the key thing then is what are the growth drivers
going forward? Egg clearly's leading the charge at the moment,
probably will continue to more money coming in there. I'm
really encouraged by some infrastructure spending options ahead, and that's
that's a slow burn, but I think it's happening. I
(40:03):
love this tech sector.
Speaker 4 (40:04):
In New Zealand.
Speaker 3 (40:04):
I think it's it's it's got great, it's it's where
we're we we're moving forward. I really like that social
housing all good. So I think moving forward it's going
to feel different in twenty six. It's just that right now,
I don't see the sudden punchline for a lot of
growth between now and Christmas. And I just think one
thing that this rate cap we've just had, I think
(40:27):
it's a quarter action for many people in New Zealand
to go see their financial advisor.
Speaker 4 (40:30):
I just think it really is okay. And if people
want to, by the way, read more about harbor Asset Management,
they can just go to harbor Asset dot co dot Z.
Hey great to see it, and thanks so much for
coming into the studio. We're going to try and make
that a trends all the best. If you want to
catch the any of this hour or the previous hours,
please go to news Talk ZB, dot coted and ZED
(40:52):
look for the Weekend Collective and we'll look forward to
your company next weekend. Thanks to my producer, Tyra Roberts.
Enjoy the rest of you Sunday evening. Catch you soond
is a Little
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