NAOS CEO Insights

CEO INSIGHTS – Week Ending 15 May 2020 By NAOS Asset Management

May 15, 2020

“There will be a long-term adjustment in how we think about our location strategy...the notion of putting 7,000 people in a building may be a thing of the past” Jes Staley, CEO, Barclays plc

CEO INSIGHTS – Week Ending 15 May 2020 By NAOS Asset Management

“There will be a long-term adjustment in how we think about our location strategy...the notion of putting 7,000 people in a building may be a thing of the past” Jes Staley, CEO, Barclays plc


As part of the NAOS investment process, we pay particular attention to the comments made by company CEOs and business leaders in order to gain a greater understanding of the current investment environment and key trends that may be emerging. Below are quotes from the week which in our view detail some of the most important and prominent industry trends and economic factors impacting their businesses.  
 
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Residential Property

“Do I think real estate will plunge? No chance. While interest rates are low the sector will remain sound. I have no doubt the market will come off…but with interest rates so low it’s just as affordable to pay off a mortgage as to pay rent” James Symond, CEO, Aussie Home Loans

“We saw a trough in residential inquiry in late March and since then we have seen a very substantial increase back to pre-crisis levels” Mark Steinert, CEO, Stockland Ltd

“In an environment where most people have been working from home, we have seen an increase in buyer activity for layouts that offer extra study/office space” Harry Triguboff, CEO, Meriton Group

Retail

“When experts write about the demise of old world retail, they will mean, the retail behemoths that had come to rely on the physics; how fast, how big and often how cheap, but did not develop their magic chemistry. They were already out of touch before. It’s not taken a global pandemic to reach this realisation, they were in the retailer emergency ward and were terminally ill, COVID-19 has simply accelerated the inevitable” Shaun Bonett, CEO, Precision Group [AU/NZ commercial property management group]

Workplace

“There will be a long-term adjustment in how we think about our location strategy...the notion of putting 7,000 people in a building may be a thing of the past” Jes Staley, CEO, Barclays plc

“I think it would be fair to say demand for physical office space will reduce” John McMurtrie, CEO, Link Group

“What we've learned through this experience is in fact that there is a different way of working open to us now. We’re not going to move 46,000 people back to work. We’re going to move some back and have some work from home” Chris Ashton, CEO, Worley Parsons Ltd

Chinese Economy

“There is clearly pent-up demand for activity. If you look at what’s going on in Beijing and Shanghai, the go back to work and resume production campaign that has been launched, there is a lot of activity” Matt Maddox, CEO, Wynn Resorts Ltd

Travel, Tourism & Hospitality

“We are starting to see double-digit increases in digital traffic and booking activity across all segments. Global occupancy levels have gone from a low point of 13% to 23% currently. Assuming we start to see mobility and we don’t have a significant recurrence, demand should slowly rebuild in the third quarter” Chris Nassetta, CEO, Hilton Hotels & Resorts

“The only way [international travel] has any hope of getting back up is the trans-Tasman border, which will require a consistent approach in terms of health screening and approvals between Australia and New Zealand” Simon Westaway, CEO, Australian Tourism Industry Council

Media & Advertising

“We have seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago” Mark Zuckerberg, CEO, Facebook Inc

“We have seen, and expect to continue to see, adverse effects on advertising and single-copy [newspaper] sales revenues as a result of widespread business closures, social distancing measures and economic uncertainty” Market Announcement, News Corporation

Transport & Logistics

“The element I’m more worried about is whether the pandemic will lead to a rise in protectionism. I continue to be worried about the US-China situation. But there are a number of other areas where you could see flare-ups, It would be a huge mistake for global growth” Soren Skou, CEO, AP Moller-Maersk [world’s largest container shipping company]

“The strong demand for airfreight has carried into the second quarter...We expect the positive trends that we are currently experiencing to continue throughout the remainder of the year” John W. Dietrich, CEO, Atlas Air Worldwide Holdings [multinational cargo airline]

“As Australia recovers from the impact of COVID-19, there is potential for lower economic activity to dampen demand in the logistics sector” Market Announcement, Stockland Ltd

Automotive

“The coronavirus has dealt us a bigger shock than the 2008 global financial crisis” Akio Toyoda, CEO, Toyota Motor Corporation

 “As we come back online, we will prioritise [production of] trucks...as well as geographies that are running light from an inventory standpoint” Dhivya Suryadevara, CFO, General Motors Company

“There’s a drumbeat around personal safety and personal space - this is what customers are telling us as they come to look at vehicles. They’re planning to drive on their next vacation, and they want personal space. There’s obviously pent-up demand” Mike Jackson, CEO, Autonation Inc [largest US car dealership group]

Technology

“There was a significant, very steep fall-off in February. That began to recover some in March, and we’ve seen further recovery in April. So, it leaves us room for optimism” Tim Cook, CEO, Apple Inc

“Video conferencing, working remotely, creating and streaming content, and gaming are long-term secular trends driving our business. The pandemic hasn’t changed these trends; it has accelerated them” Bracken Darrell, CEO, Logitech International S.A. [computer accessories manufacturer]

“In today's ICT [information & communications technology] market, which includes telecommunications, 5G is becoming the mainstream. All industries are accelerating the pace of digital transformation, and we are experiencing great changes in our daily lives since the outbreak of COVID-19” Kyung-Keun Yoon, CFO, KT Corp [South Korea’s largest telco & the global leader in 5G commercialisation]

Important information: This material has been prepared by NAOS Asset Management Limited (ABN 23 107 624 126, AFSL 273529) (NAOS) for general information purposes only and must not be construed as investment advice. Certain economic, market or company information contained in this material may have been obtained from published sources prepared by third parties. Nothing contained herein should be construed as granting by implication or otherwise, any license or right to use such third party content without the written permission of the owner.