Sam Dickie: Fisher Funds expert on what Mastercard's performance says about the economy

One expert explains how Mastercard's market performance is impacted by the concerns global investors have raised.

Recently, investors have been focused on slower economic growth expectations in the US, as well as regulatory risk and the impact this has on new technology like open banking.

Sam Dickie from Fisher Funds explains further.

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Episode Transcript

Speaker 1 (00:00):
Ever, duplicy Ellens.

Speaker 2 (00:02):
Now MasterCard is a great example of what investors are
focused on globally right now. What they're focused on is
the slowdown in US economic growth expectations, regulatory risk and
how that impacts companies, and new technology like open banking
and neo banks and so on. Now, MasterCard, the reason
it's a great example is because it's influenced by all
of those things. And to talk us through it, we've
got Sam Dickey of Fisher Funds with us. Hey, Sam,

(00:24):
there is any So Sam, let's start by talking about
these themes. Okay, slow down in US growth expectations, what's
going on here?

Speaker 1 (00:30):
Yeah, you and I talked about that last week. So
there has been a slow down US economic growth expectations,
still slowly growing, but just slowing slightly. And MISSUS care
because economic growth drives corporate earning growth and that drive
stock prices.

Speaker 2 (00:47):
And then what about the regulatory risk? What are investors
thinking about this?

Speaker 1 (00:52):
Well, that that is super interesting because ideally, of course,
you don't long own companies that run the risk that
the regulator might come knocking. It turns out that if
you aim to invest in some of the highest quality
companies in the world. They tend to attract the attention
they're regulator because they're just so large and important. So
think of companies like Google and Microsoft. They dominate their industries,
have been fabulous investments over time, and almost as night

(01:14):
follows day, attract the unwanted attention of the regulator. Open banking, Yeah,
think about open banking is just another I mean, innovation
is running at the fastest pace ever, which brings competition
and disruption, and open banking is no different an opportunity
and as you know, it allows competitors of or too

(01:35):
traditional banks with customer approval to easily access customer data
and offer new services to those customers. So I think
about that as an open up the competition to banks
and maybe some disintermediation of banks. And investors obviously pay
attention to that because banks are a big part of
global stock market.

Speaker 2 (01:54):
And so how does master Card get affected by all
of these things?

Speaker 1 (02:00):
Yeah, well, I think you did write the start the
best way to bring a live team that a vests
is focused on around the world, and it's through the
lend of a single company, and master Card is one
of a handful of global payments network companies. In fact,
with the second largest in the world mine Visa. It
doesn't isss. Your credit cards are controls of a very
valuable networks and routes the flow of money between so
you and I, the coffee shop down the road, and banks,

(02:22):
and it is getting buffeted by all three of those things.
So when you think about it slowing economy and how
that impacts MasterCard, If we spend one hundred dollars with
our our MasterCard this month, master card clips the ticket
to the tune of about twenty cents. Now, if we
parton our pelts and only spend ninety bucks next month,
master card and eclips eighteen cents of it's the sort
of a direct impact to the top line and then

(02:43):
gottomline you see about the regulator. Master part is kind
of in the round of those companies I talked about,
so Microsoft and Google. It is so critical to global
money flows as it does attract the attention of the
regulator via fines and law, legal cases, et cetera. And
when you think about disruption of opportunity that comes from
say open banking and neo banks, it might face more

(03:06):
competition from so neobanks, from virtual credit cards, for example,
but they can in fact be a beneficiary because these
neobanks don't have their own you know, these networks or
old money routes to control the fly of money. So
in fact, the neo banks will end up up using
master cards valuable networks.

Speaker 2 (03:24):
So what does this all mean for investors in SAM.

Speaker 1 (03:28):
I think most when you think about the economy, the
first one, most high quality companies globala are temporarily impacted
by back macro backdrop. But the trick is to invest
in companies with really long growth runways, almost in respect
of the economic backdrop. So if you take master Card
for example, it is directly impacted by the economy as
we see it as people tighten their belts, But on
a longer term view, there's still a very long runway

(03:51):
to go, believe it or not, of switching cash and
check payments to cards around the world. So take Europe,
which we thought was fairly developed. Still the has forty
percent of payment, particularly in Southern Europe, done by cash
and check. And when you think about regulatory risk, it
really just does go with a territory that most high
quality companies on Earth are tractical area the regulator we

(04:11):
do typically need these companies own. The market can get
overly concerned about regulation. And as for competition, it is
coming secker and faster than you ever given. Innovations running fast.
So make sure any company you invest in has a
really wide economic motivators business and has a service or
product that customers can't do without.

Speaker 2 (04:30):
Oh that's really good advice, Sam, Thank you so much,
As always that Sam Dickie of Fisher Fun.

Speaker 1 (04:35):
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