00:00What are you seeing in terms of pretty low volatility, particularly when it comes to
00:04international stocks, right, despite still a lot of uncertainty over the geopolitical situation?
00:09Absolutely. Look, a market has taken the view that we will find a path through. And, you know,
00:14at this moment certainly looks like we're progressing forward. Now, I guess the challenge
00:19is that, you know, actually it's not challenging. Essentially what the market is looking for is for
00:23the inflation. So, you know, it's trading with the inflationary expectation. So as long as the
00:28oil price will fall, the market will move forward and regardless what the outcome might be. Now,
00:33we are seeing the oil hovering around that level right now. And, you know, we're waiting for the
00:39final outcome. And that does happen. You know, we will see a risk rally, you know, across the board,
00:44even though the market has already been pretty strong. Is that even if, you know, we've been
00:48told that even if we see an agreement, it's going to take some time for oil prices to normalise,
00:53we might still see that path through. And we might have a situation where a toll is being charged for
00:58vessels, right? Absolutely. Does that sort of minutiae matter to markets that clearly just
01:02want to find a reason to go higher? Yeah, that's right. The market seems to be by every possible
01:07outcome. No, I do think the market, what they want to see is essentially some of the ships go
01:12through the straits. And whether there will be a toll and other, you know, outcome, I think the
01:18likely effect in the short term certainly is not going to be significant. I think essentially they just
01:22want to ships go through the go through that part. And then 20 percent of oil can be then, you
01:27know,
01:27go through the can then be dispersed. So, you know, so we do need some sort of resolution on that
01:34front.
01:34Now, the tricky thing is at the moment for the market because it's rallying forward so much and then we're
01:39looking past any of those negativity. You know, we are really need to see is oil going to fall really
01:44quickly.
01:45You know, if they do put a toll, what does that mean for the long term oil prices? What's interesting
01:49is that, you know,
01:50the market just assumes oil price will go down to, you know, perhaps a slight premium to what it was
01:55before. But my view is that the oil might remain elevated just simply because it will take time for a
02:02lot of
02:02those backlog ships to go through. At the same time, some of those spread will remain elevated. And at the
02:08same time, aside from oil prices itself, every manufacturer and every consumer company has already put through
02:14price increases through. And these, you know, these price pressure, you know, is likely to remain
02:21elevated. And that might take a long time to come through. And that will have real economic consequences.
02:26There's also the inflationary risk of AI, right, of the massive amounts of infrastructure investment
02:32and build out. How do you think that plays into things? And do you do you look for sort of
02:39diversification at this point? Because this is a rally that's still so concentrated. Yeah, absolutely.
02:43So, look, we do think that the thematic is real because all of us are using more and more AI
02:47every
02:48day. We use agents and help us to be more efficient. So I think that is still to come. So
02:52and all these
02:52investment into the, you know, the hyperscaler investment into the data center and everything else.
02:58And that's all real. The demand for commodity, demand for energy, all of that demand is going to be real.
03:03So we look for that whole supply chain as we have been for the last 12 months. You know, we
03:07think the AI
03:07leader will continue perhaps power on. But there is risk that, you know, the return they're likely to
03:12generate from over the longer period. But we much, much more prefer to play in that whole, what do
03:19they call it, picks and shovel sort of space where you can actually see real demand guaranteed for years
03:24to come. Are there picks and shovels in the Australian market? Yeah, Australian market. Absolutely.
03:28We see a lot of them, right. So we see all the mineral, whether it's copper, aluminium and then the
03:32whole
03:33whole supply chain. We also seen companies that's in the engineering space. So aside from the data center.
03:38So look at all the people that supply to the data center, engineers installing all of these things.
03:43So we see a lot of companies in this space are doing particularly well. And what's interesting though,
03:47many of them are still quite small. So, you know, so we do think that's the next wave of growth
03:52in the Australian market and globally as well. What do you like in China right now?
03:56Oh, I think in China is the stats even look a little bit softer, but we continue to like the
04:00areas where they go,
04:02where the government is pouring a lot of, you know, focus into whether it's technology, AI,
04:07whether it's electrification. Again, the same thematic is happening around the world. You've got to keep
04:11doing that. That's right. The consumer though is still a soft spot for China. I think the problem
04:18is consumer is actually a soft spot, soft spot for everywhere. Right now consumer in China actually
04:23is not doing too badly. It certainly comes from very, very low levels. We are seeing the housing
04:28stabilizing, not as bad as it was. You know, consumer, they are traveling. We're seeing all the
04:33early indicators. Actually, consumer is not doing too badly. And the consumer started investing in
04:38the share market as well. The share market is doing quite well too. So, you know, all of that is
04:41just
04:41feeding back into the consumer confidence. We just need to see the real income growth for another couple
04:46of quarters. And I do think the consumer will come back in a big way in China. But around the
04:51world,
04:51I do think consumer sector is going to be a tough spot. You know, whether here in Australia, in the
04:55US,
04:55US consumer is still holding up together. Okay. But I think with the commodities doing well,
05:01with the industrial businesses doing well, generally just means more inflationary pressure,
05:06you know, and just put pressure on the consumer spending. A little bit sort of left field, but the
05:12recent tax changes in the budget, do you think they're going to have a meaningful impact on risk
05:17assets? Yeah. So for Australia, absolutely. You know, particularly housing related, the interest rate
05:22sensitive space. We think the housing related, there's now a lot of reports and just deep analysis
05:27into what it means. I think with the negative gearing and capital gains changes for the housing
05:32market in particular, that's going to slow down the housing turnover because of the different
05:37investors, different tax brackets. You know, the expectations for prices are very, very different now.
05:42So that means, you know, we think the listings will fall. We do think that the prices for houses
05:48is going to fall, but not to a huge extent. You know, Australian house prices seems to be going,
05:54ever going up. But, you know, we are predicting something like 5% fall in the next 12 months.
05:59That is going to put pressure into, you know, consumer confidence and everything else.
06:03Yeah. But not for equities, though, in terms of the impact of the tax changes.
06:06Yeah. I don't think it's a meaningful impact. Ultimately, people say, oh, look, you know,
06:09does that mean you're going to invest more in the income shares than the growth shares? So if I'm
06:14a new investor, I want to buy a growth company. I'm not going to think about how much tax I'm
06:18going
06:18to pay. Ultimately, I'm thinking this company is going to grow a lot. So I just think they're
06:22different investors. So I don't think that has a meaningful impact. But if anything,
06:26it does look like politics is shifting in the way that potentially that gets, you know, reversed.
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