April 12, 2026 • 41 mins
The hot topic on everyone's minds right now is the price of petrol and diesel.
It seems to be impacting the price of just about everything else, and we're staring down the barrel of a major risk of high inflation.
The OCR remains steady for now, but it's only a matter of time before interest rates are on the up once again.
LISTEN ABOVE
See omnystudio.com/listener for privacy information.
Listen
Watch
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talk sedb.
Speaker 2 (00:37):
Ah. Yes, a little bit of midnight all to ease
us into smart money, and welcome back to the Weekend
Collective if you've just joined us as we now, people
come in and out during the course of that. I'm
Tim Beverage and we want your calls and participation. On
eight ten eighty in this hour it is smart Money,
where we talk about money and we try and be
smart about it. I guess great topic for an hour,
isn't it. The hot topic on everyone's minds right now is,
(00:59):
of course, is the price of petrol and diesel, and
it seems to be impacked in the price of just
about everything else. We still down the barrel of we've
got the risk of high inflation.
Speaker 3 (01:08):
Apparently the.
Speaker 2 (01:11):
Governor of the Reserve Bank gave quite a good interview
this morning with Jack Tame on the Q and A. Anyway,
the ocr remains steady for now, but it's probably only
a matter of time before interest rates are on the
app again, what are you focusing on amongst all this noise?
Has it changed the way you spend or sayer? You
just kind of chugging along anyway to discuss this and
many issues, probably starting with the Middle East and what
(01:33):
it all means with brittle cease fires, et cetera. Is
he is the co chief executive officer. He's got a
great title here, a chief investment officer, so that sounds
high for Luton of Harbor Asset Management. And his name
is Andrew Basquan. And Andrew's with me now, Andrew, you're
looking very relaxed this this afternoon. How are you well?
Speaker 3 (01:53):
I haven't had to fill up tank today, so I
guess that's the key thing, right do you.
Speaker 2 (01:58):
I've changed my habits so I you normally just wait
till it's low and then I fill up and I
go ugh. But now I fill up every week to
ten days and I do make a few choices around
to I really need to do that job. I've saved
quite a bit of money just with that simple do
I need to go there today?
Speaker 3 (02:17):
So you're a classic person. The higher prices of course
reducing your demand a bit, but you're also averaging in.
We love the averaging in concept.
Speaker 2 (02:24):
What's averaging?
Speaker 3 (02:24):
And well, you don't know whether the price of petrol's
going to be higher or lower tomorrow, so you're just
topping up your tank regularly so you don't have the
shock of I missed the day. Oh, I missed the day.
You know, I missed the day when it was.
Speaker 2 (02:34):
I was very, very smug a few years back, remember
when the petrel we had it with our petrol spike,
and there was a thing, and look, I know that
I was lucky to be able to do this, and
not everyone can do this. But it was when Z
had had come up with the Z by all your
petrol now if you can. And I thought there was
a I think it was around the day. It was
two twenty nine or two thirty nine, and I looked
(02:55):
at and I thought, it's not going to get any
cheaper right now. So I bought. I bought a thousand
liters of petrol, and for months I was the smuggest
guy in this studio. I filled up against But of
course I had to make that outlay, and not everyone
can do that.
Speaker 3 (03:11):
Yeah, and you had alternative uses for your money as well.
Let me put it out there.
Speaker 2 (03:15):
And I didn't actually do it this time. So I'm
just I'm I'm in with you all now, paying whatever
it is.
Speaker 3 (03:21):
Yeah, Hey, look, there's just all that noise out there,
and obviously just coming fresh into the studio where you
know there's been a bit of a walkout of the
so called negotiations and sees fire and that's been on
the news of course.
Speaker 2 (03:32):
Yeah, ah, I it's interesting. I imagine with what you
guys do at harbor Asset how much. Okay, I'll say
what I what I what I My approach to things
is because it's irresponsible. I know work in news talks
that'd be, but I can't follow it too closely because
it drives me up the wall. So all I do
(03:53):
if I want to know how things are going with
the straight of hormones and negotiations, I simply just drive
past my local goal and see what the price is
and I go, obviously they're making some progress. Well, obviously
they're not, because I'm just judging everything by petrol price.
Speaker 3 (04:07):
Yeah.
Speaker 2 (04:07):
Look, they're very shallow view, isn't it.
Speaker 3 (04:09):
There's more than a thousand traders of the oil price
and aial markets who are you know, who are right
on the button, and they have people in the Middle East,
they have people understanding world flows and the price of
oil is going to signal far more rapidly. What's actually
going on in at will market than you and I
look at the noise and headlines. I think that's that's
the first point, you'd say. The second point is really
you need to take a step back and think what
(04:32):
is the world going to be like in three months,
six months, twelve months, Because what it's going to be
like tomorrow, next week or a week after, you know,
that's that's as good I guess as the headlines. Right well, I.
Speaker 2 (04:43):
Mean, you know, I guess the question is, you know what,
we do have a lot of noise going on with
you know what, there's a huge amount of noise and
news and markets and everything. And I guess what I've
I've done, in my just slightly facile way, is I'm
getting rid of all that noise by just stepping away
from it all. But I mean, there is got to
(05:05):
be a way of people focusing on something where you
don't get distracted by all the noise and the worry
and the emotions that go around with what's going on
in the world right now.
Speaker 3 (05:14):
Yeah, you've got to have a framework and anchoring yourself.
Speaker 2 (05:16):
What I mean is there has to be a thing
that you guys do as well on the investment yeah,
to have a framework. Look, let's step back into that framework.
Three months ago, the key thing we were focusing on
was the world economy was growing by three percent, inflation
was generally tracking toward more attractive levels, and interest rates well,
they were lower than they had been for some time.
(05:36):
So that was a reasonably attractive investment set up and
is the background for the current shock. The other thing that,
of course we can talk about that's been going on
is we would call it AI disruption perhaps, but actually
it's not disruption. It's an incredible advance. It's not a
technology upgrade. It's the invention of a general purpose technology,
(05:56):
almost like you inventing electricity, and that's going to have
an ongoing impact.
Speaker 3 (06:02):
On how we live and how we invest. Then the
long comes, of course, this geopolitical event that we sort
of saw coming but we really didn't really.
Speaker 2 (06:11):
We saw something coming.
Speaker 3 (06:13):
But the old price, your price was sanguine before, and
now the old price is pretty much pretty much doubled
the way the way we'd think about it, right, and
so that shocks come on top of an environment that, well,
only three months ago was in a much better place.
So the world was in a better place to take
this shock, and the way I think about the shock
and where we think about the shock is it's likely
(06:35):
to be a more sustained, permanent influence on how we
observe the energy market. And why we say that is
because it's it's not the case that we can suddenly
bring on again oil, petrochemicals and the downstream energy intensive
industries in a week and a month, even probably three
(06:57):
months or six months. It's sustained and it will have
profound impacts. I think on how we invest in renewable energy,
how the world gains its energy energy security. That's the
thing we're focusing on.
Speaker 2 (07:10):
The thing that's I mean, this is not so much
of well, it is in the wheelhouse, but I think
the thing that struck me from a political point of view,
and it's just it's one thing to listen to political
discussions around renewable energy and how we have to invest
more in it, and you know, the sort of I
don't mean them as virtue signaling conversations, but you know,
(07:32):
the idealizing of where we should get our energy versus
the reality of how massively dependent we are on oil
has been a real should I use the word shock,
there's another way of putting it. I can't think what
it is, but it's been a salutary lesson or reminder
that it's okay, it's great to invest in renewable energies,
(07:54):
but man, we are so dependent on that stuff we
get out of the ground at the moment, aren't we.
Speaker 3 (08:00):
Someone in my age remembers the nineteen seventies, we're sixteen
percent of every is of output we put out there,
sixteen percent relied on oil or fossil fuels sixty Now
today the number is probably sub six might sub five
percent real oil oil. We less dependent on it than
we were in per unit of output, poor, per unit
(08:20):
of out but we're still dependent on oil, don't get
me wrong, per unit of output. And so I think
that's the first point. It's we're in a better place
than we were in the nineteen seventies to sustain just a.
Speaker 2 (08:32):
Few billion more people, even though we're more efficient.
Speaker 3 (08:34):
We're not only more efficient, but we are actually getting
energy from other sources.
Speaker 2 (08:40):
Well, yes, that's good. That's good, isn't it? And eventually
a miracle will work that and there'll be an American
administration that will work out that the renewables are not
a bad thing to also get it.
Speaker 3 (08:50):
Well, it may not be that they have to work
that out. It may just be that the relative price
of oil or the relative price of fossil fuels gets
to the point where actually it just becomes really good
sense to invest in renewable energy. It's just a powerful
technology that's here, already here today, that's affordable, incredibly affordable.
Speaker 2 (09:09):
So for some people they adopt the technology because they
like the idea of adopting the technology. And what you're
suggesting is that, well, actually the price point might be
the inspiration for others to decide, Oh, you know, I
might love oil, but guess what, it's bloody expensive. So
what's this we're going to use here? Something else.
Speaker 3 (09:26):
There's nothing more than the very high price of oil
to stop oil being very high priced, you know, because
people will engage eventually in substitution. And this is what
I'm contemplating and we're thinking about, is that eventually this
is a more permanent change, more permanent change in the
way we think about how oil plays a role in
(09:47):
our economy.
Speaker 2 (09:47):
Of course, fast, that's a fast I hadn't really thought
of it from that point of view, because, by the way,
if you're listening, we'd love you to climb in on
this because we could throw the mischievous question out there
is that you can argue all you like to save
the planet, but is it going to be saving our
wallets that's going to leaving out leave us to changing
our behavior and our innovation and reliance on different technologies.
(10:09):
I think I think that what I've just said is
it's all great to say I want to save the planet,
but as long as fuel is cheap, then you know,
somebody else can do it, as opposed to I think
we're all going to have to do it.
Speaker 3 (10:21):
I mean, there's there's a combination of both things, because
in the long in the long term, something that's cheap,
that that's killing the planet doesn't makes you a really
good thing either, obviously, But I mean the fact, the
fact is right now today, you know, there are other
energy sources that we can begin to think about tapping
more heavily in the next three, four, five, ten years.
(10:43):
And when's the best time to plant a tree? Today?
Speaker 2 (10:46):
Right? Yesterday?
Speaker 3 (10:47):
Yeah, I can't do it. It has to be today.
Speaker 2 (10:51):
So what do you what do you make of? You know,
we are an energy importer. You know we feel obviously
feeling at all. How how's in New Zealand economy looking
in your view?
Speaker 3 (11:03):
Yeah, today, the next two or three months are going
to feel difficult for many many households. Let's let's just
face that up and that we're not alone there you
hop over the ditch to Australia. It's not about the
price of diesel or the price of petroids. It's going
to become the supply of those things. That's going to
(11:23):
be a disruption that will really impact households and businesses,
not perhaps so much here in the very near term,
but I think that disruption will it'll create an awkwardness
and a sense of perhaps understanding that we're going back
into a more difficult time. But I think we can
look through that. That's my view. I think we're in
(11:44):
a much better place than we were. My views we
actually could become more of an energy export and I'll
touch on that.
Speaker 2 (11:53):
Really it sounds mildly exciting actually to suddenly turn turn
the tables on that one, wouldn't it?
Speaker 3 (11:59):
Absolutely? And this is the intersection of AI and data centers.
Speaker 2 (12:05):
Thinking of that, are you about to talk about that
data center they're planning down somewhere on O Tigo, which
is going to be using some of the power.
Speaker 3 (12:11):
From It's not just that potential development, but yes, that's
one of them. It's okay.
Speaker 2 (12:16):
By the way, we'd love your calls. By the way,
if you're joining the conversation with Andrew Basquin and I.
So far, we've just started talking and we're just having
a chat about what's going on with petrol and diesel.
I guess the question I've got is, you know, many households,
you know, keywis, are just looking at what happens when
they fill the tank up each time. How do you
guys manage your forecasts and analysis in times like these
(12:41):
because obviously you're trying to look through and look at
what's happened in the past and look at trends and
what it will mean, but you have to massage things
back and forth depending on what's happening politically. How do
you guys actually how do you actually do your job?
Speaker 3 (12:58):
When you think about the biggest threat of this current
disruption energy prices, it's what will happen to inflation, not
fflation the next quarter of the quarter after that, but
the medium medium to outlook for inflation. So let's talk
about inflation. The US had some data just just last
night showed inflation there jumped by almost a percent in
the quarter, up up above three percent. Here the Reserve
(13:21):
Bank and their statement said, look, we think New Zealand
inflation will be close to one percent for the quarter.
Maybe we'll get to three percent. But the quarter out again,
we think because of petrol prices and what they've done
and other energy related goods, we could get to one
and a half percent quarter for inflation, which could push
that headline rate to four. Now here's it by itself,
(13:46):
that isn't a major sticking point. It would be a
sticking point if it starts to influence inflation expectations. And
by inflation expectations, I mean, it's the case that households
and businesses start saying, oh my goodness, I need to
put up other prices and I need a wage how
much higher wage to get me through that transitory impact
(14:09):
on the petrol price.
Speaker 2 (14:10):
Yeah, So what did you? Were you surprised that the
cash rape the ACO announcement hasn't changed. I wouldn't say
I was surprised, because I mean, I just guess it's
a vibe thing. I don't follow the fortunes of the
Reserve Bank governor, but she seems to be a fairly
steady hand on the teller at the moment. I don't
know or not, I'm not sure, But what did you think?
(14:33):
What did you make of the announcement? Were you surprised?
Speaker 3 (14:35):
And well, first of all, I think we're pretty lucky
it was a monetary policy statement, and go back a
year or two ago, we would have had no press
statement or press release afterwards, or opportunity to hear directly
from the governor, So this is quite good. We had
a lot of a lot of information and transparency shared
with us all. Did you like what I got? Well,
what I got was a very orthodox, precise view of
(14:59):
how the Reserve Bank is thinking right now about this
energy shock and how they're thinking about the economy and
their singular focus on getting inflation back down to two percent,
And there was no fluff around that. There was that
is our job, this is what we're going to be doing,
and we're looking, we're watching, we're waiting, and right at
(15:22):
the moment, we're aware the New Zealand economy is fragile.
That was the word fragile, and so as a result,
we made a unanimous decision not to change interest rates. Now,
the flavor here was we're still looking what are we
principally worried about inflation expectations? And we're our singular job.
Once inflation does go to three maybe maybe four, maybe not,
(15:44):
maybe maybe just under that level, we want to get
inflation back down again to that two percent. So we
will be looking at the economy through time and maybe
interest rates do have to rise a little bit. Maybe
they do.
Speaker 2 (15:57):
But well, I would assume wouldn't most people be protecting that.
I mean, I'm just I'm a layperson.
Speaker 3 (16:02):
I've got a close so the market, the market is
predicting that, the market has us timber rate rise, the
market has another rate rise after that, and it But
I think it's a question of of you know, what
actually happens to the economy. If the economy is more fragile,
and maybe that won't happen. If inflation has better behaved,
then maybe that won't happen.
Speaker 2 (16:19):
It's an the economy being fragile. I mean, because there
people talk about tradable and non tradeal inflation, but I
mean the oil shock, what's going on at the moment
that's something we have absolutely no say over it. So
to me, intuitively, whether it be right or wrong, raising
interest rates just going to make life worse and would
(16:41):
impact what they're saying as a fragile economy.
Speaker 3 (16:44):
That's effectively what we heard from the governor.
Speaker 2 (16:46):
And did you what did you think? Did you like
what you heard?
Speaker 3 (16:48):
I thought was the language was just so precise, We
understood exactly what she said. I didn't listen to the
jactaym interview. No I haven't, Eyther, but the transcript would
be available and have a look tomorrow. But I would
expect the same messages coming through.
Speaker 1 (17:00):
You know.
Speaker 2 (17:00):
The thing that struck me about her was she was quick.
It was a a little while ago, and maybe was
with Heather or with Mike or but it was an
interview and she was challenged that, well, what of such
and such changes and she says, well, if situations change,
then we will look at it again. But the way
she said it was just so obvious. It's a bit
like in a sport if somebody starts pummeling your backhand,
(17:21):
well we'll deal with that at the time.
Speaker 3 (17:22):
So what was interesting with that Reserve Bank statement? We
hardly saw any volatility in any of the interest rates.
It was a very small move, very small change. Wasn't
very significant in that regard, But we did see the
New Zealand dollar continue to lift a little bit, and
I quite liked that, just a little bit. And I
quite like that because that shows, in my opinion, quite
(17:43):
a lot of confidence that we've got an orthodox approach
that markets can understand that. I didn't mind it, and
in fact, that's a reasonably good indicator of the health.
So when you got all this uncertainty going on in
the wood markets, typically the Qi dollar would be weak,
but in fact what we're seeing is the Key dollar's
been nice and stable. And I think it's a really
(18:04):
important thing.
Speaker 2 (18:06):
Which to me says because I always look for other
meetings in these things that we quite like the new
sheriff in town. Although we shouldn't notice the new sheriff
in town.
Speaker 3 (18:15):
No, no, no comment. I think we don't notice the
new sheriff. We're just we've just got an understanding that
we have a focus on getting that inflation down. I
think that's that's important. It's really important.
Speaker 2 (18:26):
Right, we're going to take a break, of course, it's
twenty five past five, already. If you want to join
the conversation, by the way, you are welcome because I
can chat with Andrew Bascan until the cows come home.
But you're welcome to chip in with your bits as well.
Eight hundred and eighty ten eighty it's twenty five past five.
News Talk s ed B. News Talk said B. We're
with Andrew Baskan. He is from Harbor Asset Management. He's
(18:47):
the co chief executive. I think it is and I
miss that one. Andrew. I've I someddenly lost my place
in the anyway and chat. Sorry, give you a job
description again. Sorry I lost my bit of paper.
Speaker 3 (19:05):
I'm here today specifically just to talk with you about
investment markets.
Speaker 2 (19:09):
That's my job today, right Hey, Now, just a quick
question on the text HI to ask your guests please
if our economy wasn't I think we sort of have
asked this, but we'll ask in his way so you
can answer it in his way. It's from John. It says,
ask Andrew, if our economy is in danger of stalling,
even before the current situation with oil, why interest rates
would be raised when all this current activity is beyond
(19:31):
our control? What happened to the lookthrough influences. And I
think he's taken probably my questioning as an assumption that
interest rates are going to go up and that will
be it. Actually it's my fault.
Speaker 3 (19:43):
Yeah, And I look rates to an accord too. Undcord
is quite easy. It's quite stimilatory, you know. So rates
are designed currently to support the news in an economy recover,
and what we heard from the Reserve bankers, they're going
to stay there for a bit longer. Watch wait, look
very carefully, don't destroy the fragile nature of a recovery.
Most likely look through this inflation. But if it turns
(20:06):
out to be more than just an inflation shock, you
know they're going to be very watchful, very watchful.
Speaker 2 (20:12):
I've got another text i'll throw out to just to
keep the correspondence going. And this is a tricky one
because you're not going to give specific financial advice, and
I will say that on your behalf, because we don't
give specifical financial advice on the show. But anyway, here's
the question from Girardo. Can you please ask what Andrew
would invest five thousand dollars to day? Risk and reward
(20:34):
is all ours. That's what we Kiwis would love to
know direct investment tips. Well, you're not going to get
a specific investment tip, but I guess it's volatile at
the moment. Where's a good place to stick your money? No,
not specifically recommended.
Speaker 3 (20:51):
Look, volatility is a part of investing. If you're an investor,
you've got volatility. And here's a stet. One third of
the time, if you invest your money over one day,
one week, one month, one quarter, one third of the
time you have a negative outcome. That's just life.
Speaker 2 (21:12):
The other two thirds of.
Speaker 3 (21:13):
The time, by the way, they'll be positive. So you know,
but I'm just that is life, and so that's the volatility.
How do you reduce that volatility? Diversification and why people invested,
for example in Kiwi Savor for ten years, fifteen, twenty
thirty years in portfolios that have diversified investments across world
(21:35):
equity markets, equity markets, bonds, and cash. The reason they
have that is that works. That diversification lowers the probability
of a negative return but still gives you a participation
in strong returns.
Speaker 2 (21:49):
Is there do you think that there still is? Within
how much has it change with investors that back back
in the days of the Braleys and all that sort
of stuff and the water cooler talk around. This stock's
the call one, This one you know you can make
a lot of money on. Is there still quite a
bit of an undercarnent with a lot of a key
(22:11):
investors who are just looking for that magic stock. They're
looking for the Nvidia stock that's going to make them
a fortune, and an impatience with the sort of more
sensible investment ideas which are safer, with diversification and taking
a long term view. Do we still have a bit
of that New Zealand and patience right.
Speaker 3 (22:28):
At the margin, we probably do, But the majority of
investors that I see are seriously looking at that keywis
have a balance and saying I'm in the growth fund
that feels right for me. I'm a balanced fund that
feels right for me, and that I have been in
those funds for five years, maybe for ten years, and
I've got the sort of return I expect. Growth fund
(22:50):
over ten percent for ten years, balanced fund around that
eight percent level for ten years, and a conservative fund
sitting around that five percent level for investors that you
need to have a conservative fund for potentially the first
home buyer or or maybe they're towards the end of
their you know they're going to make it withdrawal the
useful work. Yeah, yeah, correct. I didn't like to say that,
(23:14):
but to me, that diversification story is the number one story.
The second story is if you're an investor, you're going
to have some volatility. The other thing worth while pointing out,
great great question, is that if I got concerned with
these headlines in this noise and markets seemed to get scary,
(23:36):
and I took my money out of the markets, and
I put my money back into the markets when all
that noise sort of dissipated and the narrative got easier again,
then we can show and we know that you will
have half the wealth at the end of your journey
than you would have just leaving it a diversified portfolio.
(24:02):
Leave it in and add to it regularly, adding to
it regularly, averages and remember the old petrol processing before
you were lucky buying it two twenty nine, by the way,
the whole thing. But that is luck as opposed to averaging.
And that's the thing you remember, You remember that luck?
You see, can you do it again?
Speaker 2 (24:19):
No? No, I know, I can't do it. No, I
know it was just luck. Actually it's probably quite.
Speaker 3 (24:25):
Good and it's a bit like that lucky thing about
picking the next winner. Yeah, and you know, I really
think that I just don't see that behavior much at all.
Speaker 2 (24:35):
Do you You know when you are looking at different stocks, though,
and you would you would, you know, you'd be aware
of what the idea is, what the investment's gone on
behind it, the management team, the engineering or the science
that's behind a particular business idea or whatever. Do you
sometimes have moments when you look at something and go,
this all tells me that this is going to be
(24:56):
an amazing stock, But there must be a caveat that
goes off in the back of your mind, because then
you're thinking about this one's But I mean, every investment
advises looking at stocks all the time and analyzing is
this going to be a winner or so here's the question.
Speaker 3 (25:08):
It might be an amazing company, it might be an
amazing stock, And then you've got to sit back in
three years time, in five years time, will everyone else
will they have delivered first? Will they have delivered on
the amazing thing you see? And do you believe in
three years time or five years time. The sort of
horizon you need is will everyone else believe that?
Speaker 2 (25:29):
Is? Well, actually, I've got somebody else sent in a
text and about saying, how did all Birds go from
six billion to thirty nine million? That's the sort of
thing where you could if you're obsessed with the fact
that all Birds is the hot new stock, you could
have done your dough. I guess, I don't know if
you've got an insight into all of that.
Speaker 3 (25:48):
And it's a single example of why we don't have
our wealth in one particular observation. And you know, it's
also an observation that just at any one point in times,
a small number of investors who just love to jump
to that side of the ship.
Speaker 2 (26:06):
Yeah, yeah with me, I'm going to share with you
something off here about something I feel guilty about that
it's just to do with the one stock because yeah,
a long time ago, long time ago. But anyway, we
got some calls to take John Hello.
Speaker 4 (26:20):
Yeah, look, I'm interested in the sheer market, and in
particular the Australian cheer market, and in particular game lithium
shares or rare earth minerals, but lithium shares especially since
people really realize that being reliant on petrol, you know,
(26:41):
has big problems, and I thought lithium and also the
Australian scheer market is far is far more steady than
investing in lithium shares in Africa or something like that,
you know, and also the New zeal mark on it
doesn't really.
Speaker 2 (27:00):
You're saying you're a big believer in lithium. How do
you turn that belief in lithium into investing in the
right companies that do that sort of gag? Is that
a fair way of.
Speaker 3 (27:08):
Saying it, John, Thanks for calling them. Thanks for your question.
I think I've got your question. It's a comment, but
I think I can add a little bit to it.
First of all, good on you looking beyond the New
Zealand market for your investment investments. It's still only two
and a half of the world market, but Australia is
close to home and you can understand that they're also
a big producer of minerals terrific, one of four or
(27:31):
five places in the world where, of course surrereaths are
in the ground. Lithium is really interesting because there's ample
supplies of lithium around the world, Lots of lithium, you
just got to get it to market. And you're clearly right,
probably a critical material in battery technology as we know
(27:52):
it today. But I'm not a molecular scientist, so I'm
not a battery expert, and we don't know whether nothing
will still be the thing the next five years. So
this is why, once again, having all your eggs in
one basket, it's a great It's currently lithium is the
narrative that you know we're all looking for. And in
terms of specific exposure, my way of thinking is that
(28:16):
I would prefer to take exposure through a large diversified
resource or mining company that has lithium as part of
its portfolio, rather than a specific lithium producer. You've got
just you're all on a one thing. So there are
without naming the companies, there are three of us.
Speaker 2 (28:37):
So I think John's saying, how do I invest in
a range of credible lithium investment options? So it's not
just one come one mind.
Speaker 3 (28:44):
There are ETFs and funds that you can find that
are rare earth funds specifically, how do you feel about those?
My view would be, once again, my preference for investing
is in the sector is to find the large diversified
mining operators that are the depth of expertise and can
weather lithium going in and out of and reres going in.
Speaker 2 (29:08):
And that's my view, John, what do you reckon?
Speaker 4 (29:13):
Yeah, well, which which sort of company you know? Has
allays is at the main just Minormal Resources and Paul
Barrow and they've performed really well. But I think it's
like you're getto something as a diversified like gold and all.
That would be good, but how do I do that?
Speaker 3 (29:31):
Once again, there are funds available that are diversified funds
that have multiple companies, multiple companies that are investing in
rare earths and lithium. My view would be a more
diversified mining investment could also suit your portfolio. I'm not sure. Obviously,
the hp RIO companies like this, you know that they
(29:53):
have multiple investments in that sector as well.
Speaker 2 (29:56):
You're being very polite, and I'm going to ask the question.
I mean, if he was to go to Harbor Asset Management,
do you guys have the things they can read that
he could read somewhere which are give him a bit
more information about accessing a market like that.
Speaker 4 (30:07):
Yes, that would be good.
Speaker 3 (30:09):
That's that's that's very specific. We don't have a specific
resource fund.
Speaker 2 (30:14):
Yeah.
Speaker 3 (30:15):
I think that's the key, key thing that John's looking for.
Speaker 2 (30:17):
Yeah, okay, so you need to keep asking there, John,
But I'm not sure. I'm not sure if we've helped
John out actually has that sort of steered you.
Speaker 3 (30:26):
My view would be, if he's really interested in this
look beyond Australia. Yeah, that would be my view.
Speaker 2 (30:31):
Okay, John, Hey, thanks for your thanks for a question.
I mean, it's difficult, isn't without giving specific financial advice,
which we're not trying. We're definitely trying to avoid and
we say that they're definitely not specific financial advice. But
it's a discussion. And it's interesting because I think a
lot of people think that there was a time when,
you know, when platinum minds were all the dude. I mean,
I did have a friend of mine who.
Speaker 3 (30:48):
Was he it was only three months ago that gold
was absolutely thing. Right, Yeah, gold went from meks gold
now three thousand all the way well about five thousand, right,
what does it? That's four? It's got a four in
front of it. Four. Okay, But you know, obviously people
have been never interested in all the Aussie gold miners
and in silver.
Speaker 2 (31:07):
And that can be I think when something becomes a
darling stock, you've got to be careful about thinking this
is where all my money it's got to go.
Speaker 3 (31:13):
It's part of a very diversified portfolio. No problem wanning money,
that's for sure.
Speaker 2 (31:18):
Remember that is the magic word today. I think Andrew
would like us remember is diversified. Diversified portfolios. And if
you think you're going to be clever and I've got
the latest stock, then you're sort of just it's not gambling,
but maybe it is. Anyway, it is. Gosh, we've gone,
time is flying by. It's nineteen minutes to sex with
Andrew Bascan. We're going to actually we're going to come
(31:40):
back and have a chat about because Andrew we were
talking about how we import our energy. And Andrew made
a comment just about data and exporting energy and I'm
going to dig into that with Andrew, and just to
teck you can jump the cure if you like. Maybe
I'll let you get in ahead of me if you like.
But it's nineteen minutes to sex. News talks. He'd be Yes,
News talks, he'd be We're with Andrew basscan we've barely
(32:03):
scratched the surface of the notes that I had that
we had prepared for the today's chat, because time flies
when you're having fun. Now, Andrew, you did mention, and
I think there'll be a lot of people interested in
hearing your thoughts about that seed you so around data
data management or I can't remember the way you put it.
But also it was in the context of exporting energy
(32:25):
or at the moment we're an energy importer. I've forgotten
how we got onto it. But over to you.
Speaker 3 (32:35):
All those photos you've got on your mobile phone, they
get stored somewhere, right, yes, go to the cloud, get
stored somewhere there. Yes, in the old days they got
stored in data centers and data centers the principal role
of a data center was this store basically videos and
photos and all that content that you photos of your
cat and things like that.
Speaker 2 (32:52):
Right, it's a dizzying amount of information. You must be out.
Speaker 3 (32:55):
There now data centers, that's what they do. But the
key thing data centers are doing is for the last
two to three years they have been at the absolute
center of this disruption disruptive technology, which is artificial intelligence
and developing urgentic learning and.
Speaker 2 (33:13):
So thesegentic learning do we know what that is? So
what we know is that is that is learning that
creates it's its own capacity to ask the questions effectively
and create not just a narrative coming back to you,
not just machine learning. And it sounds scary, so well,
(33:36):
it's not scary, it's terrific because this is like the
creation of electricity. This is like the invention of creating electricity.
It's going to create a whole lot of new industries
and a whole lot of new workflows and improvement and productivity,
which I think would be important in controlling that inflation
down the line. However, here we go these data centers.
What do they need? You tell me, power?
Speaker 3 (33:58):
What's this? What's what's the second thing? They need.
Speaker 2 (34:02):
Metals, You're onto it.
Speaker 3 (34:04):
But they need a great they need power, and they
need a great to create that power. They need connectivity,
so we need optic fiber cables eccefference, and they need
they prefer to operate in environments that are cooler because
of all that power they get.
Speaker 2 (34:23):
You know, that's why there's these underwater ones they hear about.
Speaker 3 (34:27):
Correct, And so New Zealand has a lot of those
things and we have of course sunlight as well, and
we have wind, and we have an ability to through
combinations of wind and solar, create that power. We have
a grid that can be enabled, and we have potential
(34:48):
access with new optic fiber connections to the world. So
when you think about our ability to put in data
centers in New Zealand utilizing those resources, they're actually pretty
good and they stack up really well relative to most
other economies. Why but because we have access to wind,
(35:09):
access to solar, and back up access to hydrology lakes.
Speaker 2 (35:15):
I have people who, you know, because a little bit
of information you just hear that about something that's going
to use a huge amount of power, and yet consumers thinking, oh,
they're going to use the power, power price is going
to go up.
Speaker 3 (35:25):
Yeah, that isn't that That isn't likely because projects like
this need to have contracted power from new development of
new development.
Speaker 2 (35:36):
Are we confident that that's how it's going to roll out?
Speaker 3 (35:38):
I don't see. I don't see how anyone would sign
up to a new data center without having knowledge of
a capacity for power to be delivered at the right price.
Speaker 2 (35:48):
And right so they wouldn't be happy with the status
quo in other words, if you're coming here of Google's
coming here with a power a data center idea, they
want to know that they can create access, harness power
in addition to what's already there.
Speaker 3 (36:02):
Correct, Okay, And so this is the thematic going globally
at the moment. You basically almost can't put a new
data center anyway anywhere if you're not bring bringing your
own power b yop, bringing your own power, because that
is the that's what it's called.
Speaker 2 (36:17):
No longer bre yo d it's bring b yop.
Speaker 3 (36:19):
B op and and and there's I guess I rational
politically here for us and for society as well, is
that you know, we have this tension between consumers wanting
power a fair price and also society wanting to push
your head worth its its ability to harness the value
of AI.
Speaker 2 (36:40):
So in terms of investment opportunities, I guess and there'll
be people listening going, well, how do I invest in this?
Andrews got me all excited. I like the idea that
New Zealand's you know, could be getting into this. We've
had that now the announcement that there's that there's been
an announcement of a possible what data center which is collot.
Speaker 3 (36:59):
Okay, let's take a step back. There are already three
or four large data center groups in Australia and New Zealand. Infantal,
our second largest company, owns forty nine percent of one
of them, called CDC, and for those listening Infrato, already
uses in its pipeline of potential data centers that it's
(37:20):
it's contracted to put in power worth sixty percent of
New Zealand's power today. Now it's got Australia as the
bulk of that, but that's how much power they are
already utilizing today. And effectively, this is exporting power through
the monetization of this into the large global hyperscals.
Speaker 2 (37:44):
Effectively, I'm have to get my head round that from it, okay,
But well.
Speaker 3 (37:48):
Think of it another way. Already we export goods out
of New Zealand already, right, we export lots of goods.
Those goods have power embedded in them because we need
power to create those goods. Yes, power is a critical
element for nearly everything we produce in New Zealand, even
if it's milk powder. Take milk powder, you got the
on farm energy costs lots of them, and then you've
(38:08):
got to turn that milk into powder. You got to
can it. A lot of energy goes into doing that,
and then we export that can. So already we are
exporting power. The most extreme example of this is our
alimineum we export out of south On today utilizing our
power resources rat we export the value of that power.
Think about it this way. Imagine there were there was
(38:30):
a data center put him down south which had fresh
power built for it, and that data center was the
size of say, ten or eleven football fields. It's a big, right,
but we've got the land down there. Click to the grid.
Speaker 2 (38:43):
I'm trying to think of an analogy, but it could
be a bit clumsy. So might you might take the
break and run it past you? Okay, we'll be back
in just to take it. Is eight and a half
minutes to six. News Talk said B. News Talk said B.
Where with Andrew Baskan from Harbor Asset Management. Actually we're
going to finish on a positive note because Andrew, you
are positive sort of guy, and that story about the
data centers, that is going to be a great news
(39:05):
story for New Zealand, do, isn't it.
Speaker 3 (39:07):
We have all the resources, we have the people we
have the expertise, and my view, would you know, the
new industries aren't just created over night, They're created over decades.
And here's a new industry we can get into. Why
wouldn't we? If you know, everything else stacks up, So
my view would be, yeah, we should be as a
country thinking about how we can contribute to this new
(39:28):
How does technology, How does.
Speaker 2 (39:29):
Our potential contributional investment and that sorte of things compare
with other countries obviously want to get into it. Can
we how significant a player can New Zealand be on this?
Speaker 3 (39:37):
I think in an Asia Pacific sense we can be
significant the US. The US absolute dominates the sector, absolute
dominates the sector. But in an Asia Pacific sense where
we're ranking alongly with countries like Malaysia who are just
going at about the same the same same pace, and
so you know, I think we can become a point
(39:57):
of difference. Is we we you know, we have the power,
we have the grid, and we are politically a little
bit more neutral, if you know what I mean.
Speaker 2 (40:08):
I mean, we're only go about a minute to go.
People are feeling a bit tense about the ups and
downs and the unpredictability. What's going on with the economy.
What are your final sort.
Speaker 3 (40:15):
Of thoughts to leave You know, I think it's really
difficult with petrol where it is, but we'll get through this.
Look out over three months, six months, we've had a
lot of disruption and transitions historically. This is another one.
It's very powerful and painful, but I'm convinced that as
a country we'll get through this. And you know, we
live in paradise when it comes down to it. Thoughts
(40:37):
to those who have been in the face of the
cyclone today, so hopefully a bit of drying out tomorrow.
Hopefully no one got injured today.
Speaker 2 (40:44):
Hey, great to see you, Andrew. Thanks so much for
coming and always love chatting to you guys. And well,
if you've missed any of the hours, please do go
and check out our podcast and we'll be back same
time next weekend. Enjoy your evening Sunday, It's six is next.
Have a great Sunday evening, Keep safe, catch your soon.
Speaker 1 (41:05):
Thanks for more from the Weekend Collective. Listen live to
News Talk ZEDB weekends from three pm or follow the
podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talk sedb.
Speaker 2 (00:37):
Ah. Yes, a little bit of midnight all to ease
us into smart money, and welcome back to the Weekend
Collective if you've just joined us as we now, people
come in and out during the course of that. I'm
Tim Beverage and we want your calls and participation. On
eight ten eighty in this hour it is smart Money,
where we talk about money and we try and be
smart about it. I guess great topic for an hour,
isn't it. The hot topic on everyone's minds right now is,
(00:59):
of course, is the price of petrol and diesel, and
it seems to be impacked in the price of just
about everything else. We still down the barrel of we've
got the risk of high inflation.
Speaker 3 (01:08):
Apparently the.
Speaker 2 (01:11):
Governor of the Reserve Bank gave quite a good interview
this morning with Jack Tame on the Q and A. Anyway,
the ocr remains steady for now, but it's probably only
a matter of time before interest rates are on the
app again, what are you focusing on amongst all this noise?
Has it changed the way you spend or sayer? You
just kind of chugging along anyway to discuss this and
many issues, probably starting with the Middle East and what
(01:33):
it all means with brittle cease fires, et cetera. Is
he is the co chief executive officer. He's got a
great title here, a chief investment officer, so that sounds
high for Luton of Harbor Asset Management. And his name
is Andrew Basquan. And Andrew's with me now, Andrew, you're
looking very relaxed this this afternoon. How are you well?
Speaker 3 (01:53):
I haven't had to fill up tank today, so I
guess that's the key thing, right do you.
Speaker 2 (01:58):
I've changed my habits so I you normally just wait
till it's low and then I fill up and I
go ugh. But now I fill up every week to
ten days and I do make a few choices around
to I really need to do that job. I've saved
quite a bit of money just with that simple do
I need to go there today?
Speaker 3 (02:17):
So you're a classic person. The higher prices of course
reducing your demand a bit, but you're also averaging in.
We love the averaging in concept.
Speaker 2 (02:24):
What's averaging?
Speaker 3 (02:24):
And well, you don't know whether the price of petrol's
going to be higher or lower tomorrow, so you're just
topping up your tank regularly so you don't have the
shock of I missed the day. Oh, I missed the day.
You know, I missed the day when it was.
Speaker 2 (02:34):
I was very, very smug a few years back, remember
when the petrel we had it with our petrol spike,
and there was a thing, and look, I know that
I was lucky to be able to do this, and
not everyone can do this. But it was when Z
had had come up with the Z by all your
petrol now if you can. And I thought there was
a I think it was around the day. It was
two twenty nine or two thirty nine, and I looked
(02:55):
at and I thought, it's not going to get any
cheaper right now. So I bought. I bought a thousand
liters of petrol, and for months I was the smuggest
guy in this studio. I filled up against But of
course I had to make that outlay, and not everyone
can do that.
Speaker 3 (03:11):
Yeah, and you had alternative uses for your money as well.
Let me put it out there.
Speaker 2 (03:15):
And I didn't actually do it this time. So I'm
just I'm I'm in with you all now, paying whatever
it is.
Speaker 3 (03:21):
Yeah, Hey, look, there's just all that noise out there,
and obviously just coming fresh into the studio where you
know there's been a bit of a walkout of the
so called negotiations and sees fire and that's been on
the news of course.
Speaker 2 (03:32):
Yeah, ah, I it's interesting. I imagine with what you
guys do at harbor Asset how much. Okay, I'll say
what I what I what I My approach to things
is because it's irresponsible. I know work in news talks
that'd be, but I can't follow it too closely because
it drives me up the wall. So all I do
(03:53):
if I want to know how things are going with
the straight of hormones and negotiations, I simply just drive
past my local goal and see what the price is
and I go, obviously they're making some progress. Well, obviously
they're not, because I'm just judging everything by petrol price.
Speaker 3 (04:07):
Yeah.
Speaker 2 (04:07):
Look, they're very shallow view, isn't it.
Speaker 3 (04:09):
There's more than a thousand traders of the oil price
and aial markets who are you know, who are right
on the button, and they have people in the Middle East,
they have people understanding world flows and the price of
oil is going to signal far more rapidly. What's actually
going on in at will market than you and I
look at the noise and headlines. I think that's that's
the first point, you'd say. The second point is really
you need to take a step back and think what
(04:32):
is the world going to be like in three months,
six months, twelve months, Because what it's going to be
like tomorrow, next week or a week after, you know,
that's that's as good I guess as the headlines. Right well, I.
Speaker 2 (04:43):
Mean, you know, I guess the question is, you know what,
we do have a lot of noise going on with
you know what, there's a huge amount of noise and
news and markets and everything. And I guess what I've
I've done, in my just slightly facile way, is I'm
getting rid of all that noise by just stepping away
from it all. But I mean, there is got to
(05:05):
be a way of people focusing on something where you
don't get distracted by all the noise and the worry
and the emotions that go around with what's going on
in the world right now.
Speaker 3 (05:14):
Yeah, you've got to have a framework and anchoring yourself.
Speaker 2 (05:16):
What I mean is there has to be a thing
that you guys do as well on the investment yeah,
to have a framework. Look, let's step back into that framework.
Three months ago, the key thing we were focusing on
was the world economy was growing by three percent, inflation
was generally tracking toward more attractive levels, and interest rates well,
they were lower than they had been for some time.
(05:36):
So that was a reasonably attractive investment set up and
is the background for the current shock. The other thing that,
of course we can talk about that's been going on
is we would call it AI disruption perhaps, but actually
it's not disruption. It's an incredible advance. It's not a
technology upgrade. It's the invention of a general purpose technology,
(05:56):
almost like you inventing electricity, and that's going to have
an ongoing impact.
Speaker 3 (06:02):
On how we live and how we invest. Then the
long comes, of course, this geopolitical event that we sort
of saw coming but we really didn't really.
Speaker 2 (06:11):
We saw something coming.
Speaker 3 (06:13):
But the old price, your price was sanguine before, and
now the old price is pretty much pretty much doubled
the way the way we'd think about it, right, and
so that shocks come on top of an environment that, well,
only three months ago was in a much better place.
So the world was in a better place to take
this shock, and the way I think about the shock
and where we think about the shock is it's likely
(06:35):
to be a more sustained, permanent influence on how we
observe the energy market. And why we say that is
because it's it's not the case that we can suddenly
bring on again oil, petrochemicals and the downstream energy intensive
industries in a week and a month, even probably three
(06:57):
months or six months. It's sustained and it will have
profound impacts. I think on how we invest in renewable energy,
how the world gains its energy energy security. That's the
thing we're focusing on.
Speaker 2 (07:10):
The thing that's I mean, this is not so much
of well, it is in the wheelhouse, but I think
the thing that struck me from a political point of view,
and it's just it's one thing to listen to political
discussions around renewable energy and how we have to invest
more in it, and you know, the sort of I
don't mean them as virtue signaling conversations, but you know,
(07:32):
the idealizing of where we should get our energy versus
the reality of how massively dependent we are on oil
has been a real should I use the word shock,
there's another way of putting it. I can't think what
it is, but it's been a salutary lesson or reminder
that it's okay, it's great to invest in renewable energies,
(07:54):
but man, we are so dependent on that stuff we
get out of the ground at the moment, aren't we.
Speaker 3 (08:00):
Someone in my age remembers the nineteen seventies, we're sixteen
percent of every is of output we put out there,
sixteen percent relied on oil or fossil fuels sixty Now
today the number is probably sub six might sub five
percent real oil oil. We less dependent on it than
we were in per unit of output, poor, per unit
(08:20):
of out but we're still dependent on oil, don't get
me wrong, per unit of output. And so I think
that's the first point. It's we're in a better place
than we were in the nineteen seventies to sustain just a.
Speaker 2 (08:32):
Few billion more people, even though we're more efficient.
Speaker 3 (08:34):
We're not only more efficient, but we are actually getting
energy from other sources.
Speaker 2 (08:40):
Well, yes, that's good. That's good, isn't it? And eventually
a miracle will work that and there'll be an American
administration that will work out that the renewables are not
a bad thing to also get it.
Speaker 3 (08:50):
Well, it may not be that they have to work
that out. It may just be that the relative price
of oil or the relative price of fossil fuels gets
to the point where actually it just becomes really good
sense to invest in renewable energy. It's just a powerful
technology that's here, already here today, that's affordable, incredibly affordable.
Speaker 2 (09:09):
So for some people they adopt the technology because they
like the idea of adopting the technology. And what you're
suggesting is that, well, actually the price point might be
the inspiration for others to decide, Oh, you know, I
might love oil, but guess what, it's bloody expensive. So
what's this we're going to use here? Something else.
Speaker 3 (09:26):
There's nothing more than the very high price of oil
to stop oil being very high priced, you know, because
people will engage eventually in substitution. And this is what
I'm contemplating and we're thinking about, is that eventually this
is a more permanent change, more permanent change in the
way we think about how oil plays a role in
(09:47):
our economy.
Speaker 2 (09:47):
Of course, fast, that's a fast I hadn't really thought
of it from that point of view, because, by the way,
if you're listening, we'd love you to climb in on
this because we could throw the mischievous question out there
is that you can argue all you like to save
the planet, but is it going to be saving our
wallets that's going to leaving out leave us to changing
our behavior and our innovation and reliance on different technologies.
(10:09):
I think I think that what I've just said is
it's all great to say I want to save the planet,
but as long as fuel is cheap, then you know,
somebody else can do it, as opposed to I think
we're all going to have to do it.
Speaker 3 (10:21):
I mean, there's there's a combination of both things, because
in the long in the long term, something that's cheap,
that that's killing the planet doesn't makes you a really
good thing either, obviously, But I mean the fact, the
fact is right now today, you know, there are other
energy sources that we can begin to think about tapping
more heavily in the next three, four, five, ten years.
(10:43):
And when's the best time to plant a tree? Today?
Speaker 2 (10:46):
Right? Yesterday?
Speaker 3 (10:47):
Yeah, I can't do it. It has to be today.
Speaker 2 (10:51):
So what do you what do you make of? You know,
we are an energy importer. You know we feel obviously
feeling at all. How how's in New Zealand economy looking
in your view?
Speaker 3 (11:03):
Yeah, today, the next two or three months are going
to feel difficult for many many households. Let's let's just
face that up and that we're not alone there you
hop over the ditch to Australia. It's not about the
price of diesel or the price of petroids. It's going
to become the supply of those things. That's going to
(11:23):
be a disruption that will really impact households and businesses,
not perhaps so much here in the very near term,
but I think that disruption will it'll create an awkwardness
and a sense of perhaps understanding that we're going back
into a more difficult time. But I think we can
look through that. That's my view. I think we're in
(11:44):
a much better place than we were. My views we
actually could become more of an energy export and I'll
touch on that.
Speaker 2 (11:53):
Really it sounds mildly exciting actually to suddenly turn turn
the tables on that one, wouldn't it?
Speaker 3 (11:59):
Absolutely? And this is the intersection of AI and data centers.
Speaker 2 (12:05):
Thinking of that, are you about to talk about that
data center they're planning down somewhere on O Tigo, which
is going to be using some of the power.
Speaker 3 (12:11):
From It's not just that potential development, but yes, that's
one of them. It's okay.
Speaker 2 (12:16):
By the way, we'd love your calls. By the way,
if you're joining the conversation with Andrew Basquin and I.
So far, we've just started talking and we're just having
a chat about what's going on with petrol and diesel.
I guess the question I've got is, you know, many households,
you know, keywis, are just looking at what happens when
they fill the tank up each time. How do you
guys manage your forecasts and analysis in times like these
(12:41):
because obviously you're trying to look through and look at
what's happened in the past and look at trends and
what it will mean, but you have to massage things
back and forth depending on what's happening politically. How do
you guys actually how do you actually do your job?
Speaker 3 (12:58):
When you think about the biggest threat of this current
disruption energy prices, it's what will happen to inflation, not
fflation the next quarter of the quarter after that, but
the medium medium to outlook for inflation. So let's talk
about inflation. The US had some data just just last
night showed inflation there jumped by almost a percent in
the quarter, up up above three percent. Here the Reserve
(13:21):
Bank and their statement said, look, we think New Zealand
inflation will be close to one percent for the quarter.
Maybe we'll get to three percent. But the quarter out again,
we think because of petrol prices and what they've done
and other energy related goods, we could get to one
and a half percent quarter for inflation, which could push
that headline rate to four. Now here's it by itself,
(13:46):
that isn't a major sticking point. It would be a
sticking point if it starts to influence inflation expectations. And
by inflation expectations, I mean, it's the case that households
and businesses start saying, oh my goodness, I need to
put up other prices and I need a wage how
much higher wage to get me through that transitory impact
(14:09):
on the petrol price.
Speaker 2 (14:10):
Yeah, So what did you? Were you surprised that the
cash rape the ACO announcement hasn't changed. I wouldn't say
I was surprised, because I mean, I just guess it's
a vibe thing. I don't follow the fortunes of the
Reserve Bank governor, but she seems to be a fairly
steady hand on the teller at the moment. I don't
know or not, I'm not sure, But what did you think?
(14:33):
What did you make of the announcement? Were you surprised?
Speaker 3 (14:35):
And well, first of all, I think we're pretty lucky
it was a monetary policy statement, and go back a
year or two ago, we would have had no press
statement or press release afterwards, or opportunity to hear directly
from the governor, So this is quite good. We had
a lot of a lot of information and transparency shared
with us all. Did you like what I got? Well,
what I got was a very orthodox, precise view of
(14:59):
how the Reserve Bank is thinking right now about this
energy shock and how they're thinking about the economy and
their singular focus on getting inflation back down to two percent,
And there was no fluff around that. There was that
is our job, this is what we're going to be doing,
and we're looking, we're watching, we're waiting, and right at
(15:22):
the moment, we're aware the New Zealand economy is fragile.
That was the word fragile, and so as a result,
we made a unanimous decision not to change interest rates. Now,
the flavor here was we're still looking what are we
principally worried about inflation expectations? And we're our singular job.
Once inflation does go to three maybe maybe four, maybe not,
(15:44):
maybe maybe just under that level, we want to get
inflation back down again to that two percent. So we
will be looking at the economy through time and maybe
interest rates do have to rise a little bit. Maybe
they do.
Speaker 2 (15:57):
But well, I would assume wouldn't most people be protecting that.
I mean, I'm just I'm a layperson.
Speaker 3 (16:02):
I've got a close so the market, the market is
predicting that, the market has us timber rate rise, the
market has another rate rise after that, and it But
I think it's a question of of you know, what
actually happens to the economy. If the economy is more fragile,
and maybe that won't happen. If inflation has better behaved,
then maybe that won't happen.
Speaker 2 (16:19):
It's an the economy being fragile. I mean, because there
people talk about tradable and non tradeal inflation, but I
mean the oil shock, what's going on at the moment
that's something we have absolutely no say over it. So
to me, intuitively, whether it be right or wrong, raising
interest rates just going to make life worse and would
(16:41):
impact what they're saying as a fragile economy.
Speaker 3 (16:44):
That's effectively what we heard from the governor.
Speaker 2 (16:46):
And did you what did you think? Did you like
what you heard?
Speaker 3 (16:48):
I thought was the language was just so precise, We
understood exactly what she said. I didn't listen to the
jactaym interview. No I haven't, Eyther, but the transcript would
be available and have a look tomorrow. But I would
expect the same messages coming through.
Speaker 1 (17:00):
You know.
Speaker 2 (17:00):
The thing that struck me about her was she was quick.
It was a a little while ago, and maybe was
with Heather or with Mike or but it was an
interview and she was challenged that, well, what of such
and such changes and she says, well, if situations change,
then we will look at it again. But the way
she said it was just so obvious. It's a bit
like in a sport if somebody starts pummeling your backhand,
(17:21):
well we'll deal with that at the time.
Speaker 3 (17:22):
So what was interesting with that Reserve Bank statement? We
hardly saw any volatility in any of the interest rates.
It was a very small move, very small change. Wasn't
very significant in that regard, But we did see the
New Zealand dollar continue to lift a little bit, and
I quite liked that, just a little bit. And I
quite like that because that shows, in my opinion, quite
(17:43):
a lot of confidence that we've got an orthodox approach
that markets can understand that. I didn't mind it, and
in fact, that's a reasonably good indicator of the health.
So when you got all this uncertainty going on in
the wood markets, typically the Qi dollar would be weak,
but in fact what we're seeing is the Key dollar's
been nice and stable. And I think it's a really
(18:04):
important thing.
Speaker 2 (18:06):
Which to me says because I always look for other
meetings in these things that we quite like the new
sheriff in town. Although we shouldn't notice the new sheriff
in town.
Speaker 3 (18:15):
No, no, no comment. I think we don't notice the
new sheriff. We're just we've just got an understanding that
we have a focus on getting that inflation down. I
think that's that's important. It's really important.
Speaker 2 (18:26):
Right, we're going to take a break, of course, it's
twenty five past five, already. If you want to join
the conversation, by the way, you are welcome because I
can chat with Andrew Bascan until the cows come home.
But you're welcome to chip in with your bits as well.
Eight hundred and eighty ten eighty it's twenty five past five.
News Talk s ed B. News Talk said B. We're
with Andrew Baskan. He is from Harbor Asset Management. He's
(18:47):
the co chief executive. I think it is and I
miss that one. Andrew. I've I someddenly lost my place
in the anyway and chat. Sorry, give you a job
description again. Sorry I lost my bit of paper.
Speaker 3 (19:05):
I'm here today specifically just to talk with you about
investment markets.
Speaker 2 (19:09):
That's my job today, right Hey, Now, just a quick
question on the text HI to ask your guests please
if our economy wasn't I think we sort of have
asked this, but we'll ask in his way so you
can answer it in his way. It's from John. It says,
ask Andrew, if our economy is in danger of stalling,
even before the current situation with oil, why interest rates
would be raised when all this current activity is beyond
(19:31):
our control? What happened to the lookthrough influences. And I
think he's taken probably my questioning as an assumption that
interest rates are going to go up and that will
be it. Actually it's my fault.
Speaker 3 (19:43):
Yeah, And I look rates to an accord too. Undcord
is quite easy. It's quite stimilatory, you know. So rates
are designed currently to support the news in an economy recover,
and what we heard from the Reserve bankers, they're going
to stay there for a bit longer. Watch wait, look
very carefully, don't destroy the fragile nature of a recovery.
Most likely look through this inflation. But if it turns
(20:06):
out to be more than just an inflation shock, you
know they're going to be very watchful, very watchful.
Speaker 2 (20:12):
I've got another text i'll throw out to just to
keep the correspondence going. And this is a tricky one
because you're not going to give specific financial advice, and
I will say that on your behalf, because we don't
give specifical financial advice on the show. But anyway, here's
the question from Girardo. Can you please ask what Andrew
would invest five thousand dollars to day? Risk and reward
(20:34):
is all ours. That's what we Kiwis would love to
know direct investment tips. Well, you're not going to get
a specific investment tip, but I guess it's volatile at
the moment. Where's a good place to stick your money? No,
not specifically recommended.
Speaker 3 (20:51):
Look, volatility is a part of investing. If you're an investor,
you've got volatility. And here's a stet. One third of
the time, if you invest your money over one day,
one week, one month, one quarter, one third of the
time you have a negative outcome. That's just life.
Speaker 2 (21:12):
The other two thirds of.
Speaker 3 (21:13):
The time, by the way, they'll be positive. So you know,
but I'm just that is life, and so that's the volatility.
How do you reduce that volatility? Diversification and why people invested,
for example in Kiwi Savor for ten years, fifteen, twenty
thirty years in portfolios that have diversified investments across world
(21:35):
equity markets, equity markets, bonds, and cash. The reason they
have that is that works. That diversification lowers the probability
of a negative return but still gives you a participation
in strong returns.
Speaker 2 (21:49):
Is there do you think that there still is? Within
how much has it change with investors that back back
in the days of the Braleys and all that sort
of stuff and the water cooler talk around. This stock's
the call one, This one you know you can make
a lot of money on. Is there still quite a
bit of an undercarnent with a lot of a key
(22:11):
investors who are just looking for that magic stock. They're
looking for the Nvidia stock that's going to make them
a fortune, and an impatience with the sort of more
sensible investment ideas which are safer, with diversification and taking
a long term view. Do we still have a bit
of that New Zealand and patience right.
Speaker 3 (22:28):
At the margin, we probably do, But the majority of
investors that I see are seriously looking at that keywis
have a balance and saying I'm in the growth fund
that feels right for me. I'm a balanced fund that
feels right for me, and that I have been in
those funds for five years, maybe for ten years, and
I've got the sort of return I expect. Growth fund
(22:50):
over ten percent for ten years, balanced fund around that
eight percent level for ten years, and a conservative fund
sitting around that five percent level for investors that you
need to have a conservative fund for potentially the first
home buyer or or maybe they're towards the end of
their you know they're going to make it withdrawal the
useful work. Yeah, yeah, correct. I didn't like to say that,
(23:14):
but to me, that diversification story is the number one story.
The second story is if you're an investor, you're going
to have some volatility. The other thing worth while pointing out,
great great question, is that if I got concerned with
these headlines in this noise and markets seemed to get scary,
(23:36):
and I took my money out of the markets, and
I put my money back into the markets when all
that noise sort of dissipated and the narrative got easier again,
then we can show and we know that you will
have half the wealth at the end of your journey
than you would have just leaving it a diversified portfolio.
(24:02):
Leave it in and add to it regularly, adding to
it regularly, averages and remember the old petrol processing before
you were lucky buying it two twenty nine, by the way,
the whole thing. But that is luck as opposed to averaging.
And that's the thing you remember, You remember that luck?
You see, can you do it again?
Speaker 2 (24:19):
No? No, I know, I can't do it. No, I
know it was just luck. Actually it's probably quite.
Speaker 3 (24:25):
Good and it's a bit like that lucky thing about
picking the next winner. Yeah, and you know, I really
think that I just don't see that behavior much at all.
Speaker 2 (24:35):
Do you You know when you are looking at different stocks, though,
and you would you would, you know, you'd be aware
of what the idea is, what the investment's gone on
behind it, the management team, the engineering or the science
that's behind a particular business idea or whatever. Do you
sometimes have moments when you look at something and go,
this all tells me that this is going to be
(24:56):
an amazing stock, But there must be a caveat that
goes off in the back of your mind, because then
you're thinking about this one's But I mean, every investment
advises looking at stocks all the time and analyzing is
this going to be a winner or so here's the question.
Speaker 3 (25:08):
It might be an amazing company, it might be an
amazing stock, And then you've got to sit back in
three years time, in five years time, will everyone else
will they have delivered first? Will they have delivered on
the amazing thing you see? And do you believe in
three years time or five years time. The sort of
horizon you need is will everyone else believe that?
Speaker 2 (25:29):
Is? Well, actually, I've got somebody else sent in a
text and about saying, how did all Birds go from
six billion to thirty nine million? That's the sort of
thing where you could if you're obsessed with the fact
that all Birds is the hot new stock, you could
have done your dough. I guess, I don't know if
you've got an insight into all of that.
Speaker 3 (25:48):
And it's a single example of why we don't have
our wealth in one particular observation. And you know, it's
also an observation that just at any one point in times,
a small number of investors who just love to jump
to that side of the ship.
Speaker 2 (26:06):
Yeah, yeah with me, I'm going to share with you
something off here about something I feel guilty about that
it's just to do with the one stock because yeah,
a long time ago, long time ago. But anyway, we
got some calls to take John Hello.
Speaker 4 (26:20):
Yeah, look, I'm interested in the sheer market, and in
particular the Australian cheer market, and in particular game lithium
shares or rare earth minerals, but lithium shares especially since
people really realize that being reliant on petrol, you know,
(26:41):
has big problems, and I thought lithium and also the
Australian scheer market is far is far more steady than
investing in lithium shares in Africa or something like that,
you know, and also the New zeal mark on it
doesn't really.
Speaker 2 (27:00):
You're saying you're a big believer in lithium. How do
you turn that belief in lithium into investing in the
right companies that do that sort of gag? Is that
a fair way of.
Speaker 3 (27:08):
Saying it, John, Thanks for calling them. Thanks for your question.
I think I've got your question. It's a comment, but
I think I can add a little bit to it.
First of all, good on you looking beyond the New
Zealand market for your investment investments. It's still only two
and a half of the world market, but Australia is
close to home and you can understand that they're also
a big producer of minerals terrific, one of four or
(27:31):
five places in the world where, of course surrereaths are
in the ground. Lithium is really interesting because there's ample
supplies of lithium around the world, Lots of lithium, you
just got to get it to market. And you're clearly right,
probably a critical material in battery technology as we know
(27:52):
it today. But I'm not a molecular scientist, so I'm
not a battery expert, and we don't know whether nothing
will still be the thing the next five years. So
this is why, once again, having all your eggs in
one basket, it's a great It's currently lithium is the
narrative that you know we're all looking for. And in
terms of specific exposure, my way of thinking is that
(28:16):
I would prefer to take exposure through a large diversified
resource or mining company that has lithium as part of
its portfolio, rather than a specific lithium producer. You've got
just you're all on a one thing. So there are
without naming the companies, there are three of us.
Speaker 2 (28:37):
So I think John's saying, how do I invest in
a range of credible lithium investment options? So it's not
just one come one mind.
Speaker 3 (28:44):
There are ETFs and funds that you can find that
are rare earth funds specifically, how do you feel about those?
My view would be, once again, my preference for investing
is in the sector is to find the large diversified
mining operators that are the depth of expertise and can
weather lithium going in and out of and reres going in.
Speaker 2 (29:08):
And that's my view, John, what do you reckon?
Speaker 4 (29:13):
Yeah, well, which which sort of company you know? Has
allays is at the main just Minormal Resources and Paul
Barrow and they've performed really well. But I think it's
like you're getto something as a diversified like gold and all.
That would be good, but how do I do that?
Speaker 3 (29:31):
Once again, there are funds available that are diversified funds
that have multiple companies, multiple companies that are investing in
rare earths and lithium. My view would be a more
diversified mining investment could also suit your portfolio. I'm not sure. Obviously,
the hp RIO companies like this, you know that they
(29:53):
have multiple investments in that sector as well.
Speaker 2 (29:56):
You're being very polite, and I'm going to ask the question.
I mean, if he was to go to Harbor Asset Management,
do you guys have the things they can read that
he could read somewhere which are give him a bit
more information about accessing a market like that.
Speaker 4 (30:07):
Yes, that would be good.
Speaker 3 (30:09):
That's that's that's very specific. We don't have a specific
resource fund.
Speaker 2 (30:14):
Yeah.
Speaker 3 (30:15):
I think that's the key, key thing that John's looking for.
Speaker 2 (30:17):
Yeah, okay, so you need to keep asking there, John,
But I'm not sure. I'm not sure if we've helped
John out actually has that sort of steered you.
Speaker 3 (30:26):
My view would be, if he's really interested in this
look beyond Australia. Yeah, that would be my view.
Speaker 2 (30:31):
Okay, John, Hey, thanks for your thanks for a question.
I mean, it's difficult, isn't without giving specific financial advice,
which we're not trying. We're definitely trying to avoid and
we say that they're definitely not specific financial advice. But
it's a discussion. And it's interesting because I think a
lot of people think that there was a time when,
you know, when platinum minds were all the dude. I mean,
I did have a friend of mine who.
Speaker 3 (30:48):
Was he it was only three months ago that gold
was absolutely thing. Right, Yeah, gold went from meks gold
now three thousand all the way well about five thousand, right,
what does it? That's four? It's got a four in
front of it. Four. Okay, But you know, obviously people
have been never interested in all the Aussie gold miners
and in silver.
Speaker 2 (31:07):
And that can be I think when something becomes a
darling stock, you've got to be careful about thinking this
is where all my money it's got to go.
Speaker 3 (31:13):
It's part of a very diversified portfolio. No problem wanning money,
that's for sure.
Speaker 2 (31:18):
Remember that is the magic word today. I think Andrew
would like us remember is diversified. Diversified portfolios. And if
you think you're going to be clever and I've got
the latest stock, then you're sort of just it's not gambling,
but maybe it is. Anyway, it is. Gosh, we've gone,
time is flying by. It's nineteen minutes to sex with
Andrew Bascan. We're going to actually we're going to come
(31:40):
back and have a chat about because Andrew we were
talking about how we import our energy. And Andrew made
a comment just about data and exporting energy and I'm
going to dig into that with Andrew, and just to
teck you can jump the cure if you like. Maybe
I'll let you get in ahead of me if you like.
But it's nineteen minutes to sex. News talks. He'd be Yes,
News talks, he'd be We're with Andrew basscan we've barely
(32:03):
scratched the surface of the notes that I had that
we had prepared for the today's chat, because time flies
when you're having fun. Now, Andrew, you did mention, and
I think there'll be a lot of people interested in
hearing your thoughts about that seed you so around data
data management or I can't remember the way you put it.
But also it was in the context of exporting energy
(32:25):
or at the moment we're an energy importer. I've forgotten
how we got onto it. But over to you.
Speaker 3 (32:35):
All those photos you've got on your mobile phone, they
get stored somewhere, right, yes, go to the cloud, get
stored somewhere there. Yes, in the old days they got
stored in data centers and data centers the principal role
of a data center was this store basically videos and
photos and all that content that you photos of your
cat and things like that.
Speaker 2 (32:52):
Right, it's a dizzying amount of information. You must be out.
Speaker 3 (32:55):
There now data centers, that's what they do. But the
key thing data centers are doing is for the last
two to three years they have been at the absolute
center of this disruption disruptive technology, which is artificial intelligence
and developing urgentic learning and.
Speaker 2 (33:13):
So thesegentic learning do we know what that is? So
what we know is that is that is learning that
creates it's its own capacity to ask the questions effectively
and create not just a narrative coming back to you,
not just machine learning. And it sounds scary, so well,
(33:36):
it's not scary, it's terrific because this is like the
creation of electricity. This is like the invention of creating electricity.
It's going to create a whole lot of new industries
and a whole lot of new workflows and improvement and productivity,
which I think would be important in controlling that inflation
down the line. However, here we go these data centers.
What do they need? You tell me, power?
Speaker 3 (33:58):
What's this? What's what's the second thing? They need.
Speaker 2 (34:02):
Metals, You're onto it.
Speaker 3 (34:04):
But they need a great they need power, and they
need a great to create that power. They need connectivity,
so we need optic fiber cables eccefference, and they need
they prefer to operate in environments that are cooler because
of all that power they get.
Speaker 2 (34:23):
You know, that's why there's these underwater ones they hear about.
Speaker 3 (34:27):
Correct, And so New Zealand has a lot of those
things and we have of course sunlight as well, and
we have wind, and we have an ability to through
combinations of wind and solar, create that power. We have
a grid that can be enabled, and we have potential
(34:48):
access with new optic fiber connections to the world. So
when you think about our ability to put in data
centers in New Zealand utilizing those resources, they're actually pretty
good and they stack up really well relative to most
other economies. Why but because we have access to wind,
(35:09):
access to solar, and back up access to hydrology lakes.
Speaker 2 (35:15):
I have people who, you know, because a little bit
of information you just hear that about something that's going
to use a huge amount of power, and yet consumers thinking, oh,
they're going to use the power, power price is going
to go up.
Speaker 3 (35:25):
Yeah, that isn't that That isn't likely because projects like
this need to have contracted power from new development of
new development.
Speaker 2 (35:36):
Are we confident that that's how it's going to roll out?
Speaker 3 (35:38):
I don't see. I don't see how anyone would sign
up to a new data center without having knowledge of
a capacity for power to be delivered at the right price.
Speaker 2 (35:48):
And right so they wouldn't be happy with the status
quo in other words, if you're coming here of Google's
coming here with a power a data center idea, they
want to know that they can create access, harness power
in addition to what's already there.
Speaker 3 (36:02):
Correct, Okay, And so this is the thematic going globally
at the moment. You basically almost can't put a new
data center anyway anywhere if you're not bring bringing your
own power b yop, bringing your own power, because that
is the that's what it's called.
Speaker 2 (36:17):
No longer bre yo d it's bring b yop.
Speaker 3 (36:19):
B op and and and there's I guess I rational
politically here for us and for society as well, is
that you know, we have this tension between consumers wanting
power a fair price and also society wanting to push
your head worth its its ability to harness the value
of AI.
Speaker 2 (36:40):
So in terms of investment opportunities, I guess and there'll
be people listening going, well, how do I invest in this?
Andrews got me all excited. I like the idea that
New Zealand's you know, could be getting into this. We've
had that now the announcement that there's that there's been
an announcement of a possible what data center which is collot.
Speaker 3 (36:59):
Okay, let's take a step back. There are already three
or four large data center groups in Australia and New Zealand. Infantal,
our second largest company, owns forty nine percent of one
of them, called CDC, and for those listening Infrato, already
uses in its pipeline of potential data centers that it's
(37:20):
it's contracted to put in power worth sixty percent of
New Zealand's power today. Now it's got Australia as the
bulk of that, but that's how much power they are
already utilizing today. And effectively, this is exporting power through
the monetization of this into the large global hyperscals.
Speaker 2 (37:44):
Effectively, I'm have to get my head round that from it, okay,
But well.
Speaker 3 (37:48):
Think of it another way. Already we export goods out
of New Zealand already, right, we export lots of goods.
Those goods have power embedded in them because we need
power to create those goods. Yes, power is a critical
element for nearly everything we produce in New Zealand, even
if it's milk powder. Take milk powder, you got the
on farm energy costs lots of them, and then you've
(38:08):
got to turn that milk into powder. You got to
can it. A lot of energy goes into doing that,
and then we export that can. So already we are
exporting power. The most extreme example of this is our
alimineum we export out of south On today utilizing our
power resources rat we export the value of that power.
Think about it this way. Imagine there were there was
(38:30):
a data center put him down south which had fresh
power built for it, and that data center was the
size of say, ten or eleven football fields. It's a big, right,
but we've got the land down there. Click to the grid.
Speaker 2 (38:43):
I'm trying to think of an analogy, but it could
be a bit clumsy. So might you might take the
break and run it past you? Okay, we'll be back
in just to take it. Is eight and a half
minutes to six. News Talk said B. News Talk said B.
Where with Andrew Baskan from Harbor Asset Management. Actually we're
going to finish on a positive note because Andrew, you
are positive sort of guy, and that story about the
data centers, that is going to be a great news
(39:05):
story for New Zealand, do, isn't it.
Speaker 3 (39:07):
We have all the resources, we have the people we
have the expertise, and my view, would you know, the
new industries aren't just created over night, They're created over decades.
And here's a new industry we can get into. Why
wouldn't we? If you know, everything else stacks up, So
my view would be, yeah, we should be as a
country thinking about how we can contribute to this new
(39:28):
How does technology, How does.
Speaker 2 (39:29):
Our potential contributional investment and that sorte of things compare
with other countries obviously want to get into it. Can
we how significant a player can New Zealand be on this?
Speaker 3 (39:37):
I think in an Asia Pacific sense we can be
significant the US. The US absolute dominates the sector, absolute
dominates the sector. But in an Asia Pacific sense where
we're ranking alongly with countries like Malaysia who are just
going at about the same the same same pace, and
so you know, I think we can become a point
(39:57):
of difference. Is we we you know, we have the power,
we have the grid, and we are politically a little
bit more neutral, if you know what I mean.
Speaker 2 (40:08):
I mean, we're only go about a minute to go.
People are feeling a bit tense about the ups and
downs and the unpredictability. What's going on with the economy.
What are your final sort.
Speaker 3 (40:15):
Of thoughts to leave You know, I think it's really
difficult with petrol where it is, but we'll get through this.
Look out over three months, six months, we've had a
lot of disruption and transitions historically. This is another one.
It's very powerful and painful, but I'm convinced that as
a country we'll get through this. And you know, we
live in paradise when it comes down to it. Thoughts
(40:37):
to those who have been in the face of the
cyclone today, so hopefully a bit of drying out tomorrow.
Hopefully no one got injured today.
Speaker 2 (40:44):
Hey, great to see you, Andrew. Thanks so much for
coming and always love chatting to you guys. And well,
if you've missed any of the hours, please do go
and check out our podcast and we'll be back same
time next weekend. Enjoy your evening Sunday, It's six is next.
Have a great Sunday evening, Keep safe, catch your soon.
Speaker 1 (41:05):
Thanks for more from the Weekend Collective. Listen live to
News Talk ZEDB weekends from three pm or follow the
podcast on iHeartRadio.
Popular Podcasts
Hey Jonas!
Hey Jonas! The official Jonas Brothers podcast. Hosted by Kevin, Joe, and Nick Jonas. It’s the Jonas Brothers you know... musicians, actors, and well, yes, brothers. Now, they’re sharing another side of themselves in the playful, intimate, and irreverent way only they can. Spend time with the Jonas Brothers here and stay a little bit longer for deep conversations like never before.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com