NAOS CEO Insights

CEO INSIGHTS – Week Ending 3 June 2022 By NAOS Asset Management

June 3, 2022

3rd June CEO Insights - “There are 500,000 fewer temporary migrants and half as many international students in Australia now, compared with 2019” Ross McEwan, CEO, National Australia Bank Ltd

CEO INSIGHTS – Week Ending 3 June 2022 By NAOS Asset Management

“There are 500,000 fewer temporary migrants and half as many international students in Australia now, compared with 2019” Ross McEwan, CEO, National Australia Bank Ltd

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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Housing & Finance

“Housing markets across developed economies are surprisingly synchronised…Just as this global boom in building activity is linked to a reduction in the official cash rate, it will be rising interest rates that bring it to an end” Market Statement, Housing Industry Association

“The refinance market is pretty hot at the moment, there’s a lot of people moving around. We are starting to see a bit of a pause on purchases. I’d encourage everybody to continue to look around. It will remain a very competitive market.” Scott McWilliam, CEO, Resimac Ltd

Steel

“For thermal coal today there are substitutions, you can get renewables, you can use other power sources. I think when it comes to metallurgical coal you need it to make steel. Ultimately green steel will come via hydrogen, and that is probably 20-ish years away” Graham Kerr, CEO, South32 Ltd

Television

“There’s a whole raft of programs that are now accessible through BVOD [broadcaster video on demand] whenever people want to get them, that are getting large audiences, which is why we are seeing such substantial growth in BVOD minutes at the moment” Kim Portrate, CEO, ThinkTV, [a television industry body]

Agriculture

“We believe that the digitalisation of agriculture will unlock opportunities and efficiencies that will benefit society at large and the environment” Chen Lei, CEO, Pinduoduo Inc [China’s largest agriculture e-commerce platform]

“At current prices [growing] almonds are an attractive option with many alternative commodity prices increasing dramatically, due to supply issues” Paul Thompson, CEO, Select Harvest Ltd

Lithium Supply

“Of course, that [new] supply is coming, the question is when. There’ll be some coming on, but is it really going to tip the scales in the near term? Dale Henderson, CEO, Pilbara Minerals Ltd

Insurance

“Because there is hardening of the [insurance] market taking place, we will continue to increase rates and there has to be an expansion of risk taking” Satoru Komiya, CEO, Tokio Marine Holdings Inc [major multinational insurance company]

Border Closures & COVID-19

“We're seeing good signs right now [with logistics]. You're seeing Shanghai reopen” Michael Roman, CEO, 3M Co.

“That [relaxing social distancing] is happening partially because of the tools that we have. We can reduce deaths and hospitalisations. But the main reason is because people are really ready to accept lower bar, maybe some people can die, if we can have our lives back” Albert Bourla, CEO, Pfizer Inc

Labour Markets

“We do have a labour crisis in Australia, across many, many sectors” Stephen Cain, CEO, Coles Group Ltd

“There are 500,000 fewer temporary migrants and half as many international students in Australia now, compared with 2019” Ross McEwan, CEO, National Australia Bank Ltd

Travel & Transport

“[Approximately] 1 in 10 cars are damaged through collisions annually” Market Statement, AMA Group Ltd

“The budget decision for consumer fuel price relief has produced an unintended consequence…The loss of the tax credit cannot be absorbed by truck operators, large or small. Operators who cannot replace or offset those funds will inevitably collapse in the coming months” David Smith, Chairman, Australian Trucking Association

“I think demand is coming in every constituent, it’s coming with leisure, it's coming with premium consumer, it's coming with businesses, coming with international. It doesn't matter what the category is, the demand is off the charts” Edward Bastian, CEO, Delta Air Lines Inc

Inflation

“But as I sit here today, we have got five times as many requests for price increases as we had last year. Five times…And they’re not small amounts. It’s not 2 per cent or 3 per cent being asked for either” Stephen Cain, CEO, Coles Group Ltd

Small Business

“Economists are saying things are going gangbusters, but small businesses can’t take advantage because they don’t have the workers and [they have] issues with supply chains…We’re seeing it across business sectors – they can’t take advantage. It’s almost like a profitless boom” Alexi Boyd, CEO, Council of Small Business Organisations

Macroeconomic

“I said there's storm clouds, they're big storm clouds, it's a hurricane...right now it's kind of sunny, things are doing fine, everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way” Jamie Dimon, CEO, JPMorgan Chase & Co

“I've heard both sides of that [inflation] argument...But based on all those background conditions and we have not seen the customer really react to ‘the CNBC noise of inflation’, we all look at it a lot more than most consumers see it” Peter Kern, CEO, Expedia Group Inc

Semiconductor

“We are confident in the stability of our supply chain for the second half of this year” Liu Young-Way, CEO, Foxconn [the world's largest electronics manufacturer]

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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.