NAOS CEO Insights

CEO INSIGHTS – Week Ending 04 October 2019 By NAOS Asset Management

October 4, 2019

"Once upon a time, when we lowered interest rates, people would run off to the bank to borrow to kind of go on a holiday or buy furniture or kind of do some spending, they don't do that anymore." Philip Lowe, Governor, Reserve Bank of Australia

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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Domestic Housing

"Very soon we are going to be in a [housing] supply shortage situation." Susan Lloyd-Hurwitz, CEO, Mirvac Group

"We need 180,000 dwellings a year to keep up with demand, and it's not going to happen." Mark Steinert, CEO, Stockland

Domestic Economy

"There is weakness in telecommunications, infrastructure, financial services but the resource sector is very strong." Alan Joyce, CEO, Qantas Airways Ltd

"Credit is flowing but it's very painful for customers. It just takes so long." Susan Lloyd-Hurwitz, CEO, Mirvac Group

Interest Rates

"There is a diminishing return from further rate cuts, I just don't think there is much more value to add by cutting." Mark Allison, CEO, Elders Ltd

"Once upon a time, when we lowered interest rates, people would run off to the bank to borrow to kind of go on a holiday or buy furniture or kind of do some spending, they don't do that anymore." Philip Lowe, Governor, Reserve Bank of Australia

Labour Markets

“The scale at which the [National Disability Insurance Scheme - NDIS] workforce needs to grow in a short period is significant. It is estimated that the NDIS workforce will need to increase by up to 90,000 full-time equivalent (FTE) employees over the next five years." Market Statement, National Disability Insurance Agency [independent regulatory body for the NDIS]


"The increasing complexity of repairs is driving significant change in the smash repair and parts procurement industry.'' Steve Johnston, CEO, Suncorp Group Ltd


"We haven't had a summer crop really for the last two or three years, and the way that things are looking at the moment, it's highly unlikely that we will this year as well." Greg Hunt, CEO, Nufarm Ltd

Technology & Media

"Over more than two decades consumer electronics continues a very steady line of growth. This runs counter to what may be the conventional but inaccurate wisdom that we work in a volatile and cyclical industry." Corie Barry, CEO, Best Buy Inc [multinational consumer electronics retailer]

Digital Transformation

"What we see is that most of our clients are still in the very early stages of their transformation journeys. The starting points and speed are different by industry and by company, but the scope of the ambition is consistently broad." Julie Sweet, CEO, Accenture plc

Trade Wars

"We believe current market demand for lighting [in the US] is sluggish. We believe the catalysts for these tepid conditions are primarily due to continued concerns over key economic issues including global trade policies and the potential for future tariffs. We expect these market conditions to continue for the foreseeable future and until such time as there is more clarity and certainty regarding these key economic issues." Vern Nagel, Chairman and CEO, Acuity Brands

“Global trade instability has impacted behaviour and supply disruptions as China lifts its environmental and safety standards that continued to be a feature of our industry.” Greg Hunt, CEO, Nufarm Ltd

US Economy

“I'm convinced with the data that I've seen that the solid industry is being supported by the consumer, who remains very confident. Unemployment is at historic lows and we have real wage growth. It has been my experience that despite all the noise when people have jobs and they feel secure on those jobs and confident about the future, then they're buying vehicles. Also gas prices and interest rates remain at historically low levels.” Mark LaNeve, Vice President, Ford USA

“Low unemployment, generally positive job growth, a fairly strong economy, all of these things seem to be driving consumer sentiment more than some of the news stories that we see that seem to be politicized.” Stuart Miller, Executive Chairman, Lennar Corp [major US homebuilder]


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.
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