Sam Trethewey: Milford Asset Management Portfolio Manager on the market reactions to the latest OCR cut

The Reserve Bank ended the year on a hopeful note and brought down the OCR for the end of 2025.

The central bank cut the Official Cash Rate another 25 basis points today - bringing it to 2.25 percent.

Milford Asset Management's Sam Trethewey explained further.

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Episode Transcript

Speaker 1 (00:00):
Samtrathor Wey Milford Acid Management.

Speaker 2 (00:01):
Hi, I Sam, good evening.

Speaker 1 (00:03):
He So what did you make of that for sher
and PIKEL result.

Speaker 2 (00:07):
Well, look, it was a big day for the market
because Frishi and Bikel is the largest listed company and
naturally has a big overall influence on performance of the INSIDECX.
So the result the company delivered was what the market
calls a beaten rays. So profit growth for the period
came and ahead of guidance provided in August, and they
also upgraded or raised guidance for the year ahead. So

(00:28):
the company's core product, which is respiratory masks that are
used in intensive care units and elsewhere in hospitals across
the globe, grew at seventeen percent a year on year,
so that's a continuation of pretty strong growth that they
have been seeing there for every long time. And the
company also demonstrated some good cost control, benefiting a bit
from the weakening New Zealand dollar to deliver overall profit

(00:48):
growth of and pretty impressive thirty nine percent. So despite
the headwinds from Trump's tariffs, they managed to pull off
a big number there. So it's impressive company world class
technology and stands out when we look across the globe.

Speaker 1 (01:00):
Yeah, well, what impact does the tariffs having on them?
How are they managing that?

Speaker 2 (01:05):
Yes, that's certainly been, I guess an area of concern
for investors over this year with the US essentially being
Fresh and Piper's largest customer and the company is getting
head on tariffs from product source to here and New
zeal And sold into the US and about a third
of their production as based here locally. So over the
past couple of months, the team at Fresh and bikel
have found a range of essentially manufacturing efficiency improvements to

(01:30):
offset the cost of the tariffs. That's literally, in the
words and the CEO, thousands of small changes across what
is a very large production line to offset that impact
on their cost base. And that's a positive compared to
the alternative, say simply putting up prices and pushing it
through to hospital. So there's more impact to come from taofs,
but they backed themselves to continue to do that to

(01:51):
offset the cost. At the headline.

Speaker 1 (01:53):
Hey, what was the impact that you saw on the
market today from the OCR Cup.

Speaker 2 (01:57):
Yeah, that was the other big event. So the surprise
across the market was clearly the optimism that it was
expressed by the RBNZ that the easing cycle is now
largely done and the economic recovery is underway, so reflected
in what they provided in their forward track of where
and straits are heading that was above market expectations. So

(02:18):
we did see the ki dollar jump higher, it got
across against key crosses on the back of that. But look,
going forward, I think there's two clear areas that will
be interesting. So firstly, mortgage activity, given the message today
as a catalyst for those with mortgages to rethink how
far out they are fixed, and it was pretty hot
topic of conversation in the press conference this afternoon. You

(02:39):
could argue as well that the lack of refixing by
mortgage holders onto those lower fixed term rates rather than
floating has been a key reason that we haven't seen
the economic activity of economic impact of rate cuts flow
through to activity so far. And then secondly, it's really
around term deposits, so that three percent level where they're
just sitting above at the moment, has been historically at

(03:02):
sort of a level where many holders up to pen
term deposits go hey, look I can do better than
that three percent lest tax is not worth it, they
start to look for higher attends elsewhere, turn to things
like guest dividend paying stocks on the sheer market, property companies, etc.
That trend has been underway on the nze X in
recent months and those companies has been strong performers. But
they are the two clear things that do come out

(03:23):
of this announcement that could flow through in the coming months.

Speaker 1 (03:26):
Sam always good to talk to you mate. Thank you,
Sam tra through we have milfed Acid Management. For more
from Hither Duplessy Allen Drive.

Speaker 2 (03:32):
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