InvestNow News – 13th August – Pie Funds – A Message from Mike: Chinese tech giants fall… bringing opportunity?

Article written by Mike Taylor, Pie Funds – 9th August 2021

This month CEO and Founder Mike Taylor discusses the surprise move by Chinese regulators.

Investors panic, tech giant prices fall

Chinese tech stocks fell foul of the regulator/government, which is one in the same in China, during the month as they sought to crackdown on companies that were operating against the regime’s objectives. This sent investors into a panic, with nothing in the sector being immune.

Our funds have modest exposure to Chinese tech, but those that we do hold, such as e-commerce giant Alibaba, were impacted. However, in a surprise move late in the month, China’s securities regulator convened executives of major investment banks attempting to ease fears. The takeaway message was education companies had been targeted and the policy was not intended to hurt companies in other industries, regulators said. However, investors are rightly sceptical and will remain wary. This of course creates opportunities and we have been looking for areas to add exposure. This is one of the benefits of Pie’s active management strategy – we can change and adapt according to the environment.

The latest in July

The key themes dominating headlines in July were Chinese tech stocks, guessing when the RBNZ will move and, once again, inflation. Overall, markets were slightly weaker. NZ, China and Japan are now showing negative returns YTD.
The funds performed well in this environment, with the Australasian Growth Fund taking out the honours as top-performing fund for the month on 5.1%. The other strategies were all in the green or close to it. Despite cycling off the Covid lows, 12-month performance remains strong at Pie with the Dividend Growth Fund on 47.4%, and international funds still strong. Pie’s UK & Europe Fund’s unbroken run of month-on-month gains held again to now be 16 positive months in a row. We were worried mid-month that I had jinxed it. No doubt I have now, for sure!

Commodities fall

Interestingly as the media buzz still surrounds inflation, which is a lagging indicator, US Treasury and commodity prices all fell during the month of July. Commodities such as lumber, iron ore and coffee are now all well off their peaks. Lumber fell from a peak of $1,600 in May to around $500 this July. What this is telling us is the market is now less concerned with inflation and that the price rises we saw were likely “transitory”. Therefore, we can probably expect inflation to fall back into the 2-3% range within the next 12 months. Central Bankers can breathe a little easier now with the pressure coming off to hike rates in order to dampen inflation. Certainly the hyperinflation worries are overblown. Nothing like a bit of scaremongering to grab headlines!

Labour shortages continue

The New Zealand economy is likely to remain closed for a similar length of time as Australia, which earlier announced they will open to the world once they achieve a vaccination rate of 80%, hopefully early 2022. This means markets have priced a rate-hiking cycle starting within the next few months, due mainly to the tightening of the labour market. We are well beyond full employment now, with labour shortages all over the place. The caveat would be a Covid Delta strain outbreak and further lockdowns before year-end, which I believe would only delay the inevitable rate rises.

Farewell Doug

Senior Investment Analyst and Portfolio Manager Doug Jopling, who has been with Pie for three years, has decided to go back into a management role in Hawke’s Bay (Doug was previously a CFO before joining Pie). During his tenure, Doug has assisted the finance team and, of course, managed the Australasian Growth Fund. He was a popular team member, known for his dry sense of humour and ability to talk! He will be missed in the Hawke’s Bay office. Doug can feel proud of the return achieved by the Growth Fund in the three years he managed it, with 17.5% p.a. versus an index return of 7.9% over the same period. Thanks Doug, and we wish you all the best. Doug’s last day at Pie is the end of August. The Growth Fund will be managed in the interim by the three senior portfolio managers Mark Devcich, Chris Bainbridge and Mike Ross. We are in the midst of a recruitment process and aim to have a senior analyst/portfolio manager dedicated to Growth within the next three months.

As always, thank you for your support. If you have any questions please don’t hesitate to call me on
(09) 486 1701, or email me, mike@piefunds.co.nz.

Mike Taylor, Founder and CEO

Information is current as at 31 July 2021. Pie Funds Management Limited is the manager of the funds in the Pie Funds Management Scheme. Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Pie Funds Management Scheme investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary.

InvestNow News – 13th August – Pie Funds – A Message from Mike: Chinese tech giants fall… bringing opportunity?

Article written by Mike Taylor, Pie Funds – 9th August 2021

This month CEO and Founder Mike Taylor discusses the surprise move by Chinese regulators.

Investors panic, tech giant prices fall

Chinese tech stocks fell foul of the regulator/government, which is one in the same in China, during the month as they sought to crackdown on companies that were operating against the regime’s objectives. This sent investors into a panic, with nothing in the sector being immune.

Our funds have modest exposure to Chinese tech, but those that we do hold, such as e-commerce giant Alibaba, were impacted. However, in a surprise move late in the month, China’s securities regulator convened executives of major investment banks attempting to ease fears. The takeaway message was education companies had been targeted and the policy was not intended to hurt companies in other industries, regulators said. However, investors are rightly sceptical and will remain wary. This of course creates opportunities and we have been looking for areas to add exposure. This is one of the benefits of Pie’s active management strategy – we can change and adapt according to the environment.

The latest in July

The key themes dominating headlines in July were Chinese tech stocks, guessing when the RBNZ will move and, once again, inflation. Overall, markets were slightly weaker. NZ, China and Japan are now showing negative returns YTD.
The funds performed well in this environment, with the Australasian Growth Fund taking out the honours as top-performing fund for the month on 5.1%. The other strategies were all in the green or close to it. Despite cycling off the Covid lows, 12-month performance remains strong at Pie with the Dividend Growth Fund on 47.4%, and international funds still strong. Pie’s UK & Europe Fund’s unbroken run of month-on-month gains held again to now be 16 positive months in a row. We were worried mid-month that I had jinxed it. No doubt I have now, for sure!

Commodities fall

Interestingly as the media buzz still surrounds inflation, which is a lagging indicator, US Treasury and commodity prices all fell during the month of July. Commodities such as lumber, iron ore and coffee are now all well off their peaks. Lumber fell from a peak of $1,600 in May to around $500 this July. What this is telling us is the market is now less concerned with inflation and that the price rises we saw were likely “transitory”. Therefore, we can probably expect inflation to fall back into the 2-3% range within the next 12 months. Central Bankers can breathe a little easier now with the pressure coming off to hike rates in order to dampen inflation. Certainly the hyperinflation worries are overblown. Nothing like a bit of scaremongering to grab headlines!

Labour shortages continue

The New Zealand economy is likely to remain closed for a similar length of time as Australia, which earlier announced they will open to the world once they achieve a vaccination rate of 80%, hopefully early 2022. This means markets have priced a rate-hiking cycle starting within the next few months, due mainly to the tightening of the labour market. We are well beyond full employment now, with labour shortages all over the place. The caveat would be a Covid Delta strain outbreak and further lockdowns before year-end, which I believe would only delay the inevitable rate rises.

Farewell Doug

Senior Investment Analyst and Portfolio Manager Doug Jopling, who has been with Pie for three years, has decided to go back into a management role in Hawke’s Bay (Doug was previously a CFO before joining Pie). During his tenure, Doug has assisted the finance team and, of course, managed the Australasian Growth Fund. He was a popular team member, known for his dry sense of humour and ability to talk! He will be missed in the Hawke’s Bay office. Doug can feel proud of the return achieved by the Growth Fund in the three years he managed it, with 17.5% p.a. versus an index return of 7.9% over the same period. Thanks Doug, and we wish you all the best. Doug’s last day at Pie is the end of August. The Growth Fund will be managed in the interim by the three senior portfolio managers Mark Devcich, Chris Bainbridge and Mike Ross. We are in the midst of a recruitment process and aim to have a senior analyst/portfolio manager dedicated to Growth within the next three months.

As always, thank you for your support. If you have any questions please don’t hesitate to call me on
(09) 486 1701, or email me, mike@piefunds.co.nz.

Mike Taylor, Founder and CEO

Information is current as at 31 July 2021. Pie Funds Management Limited is the manager of the funds in the Pie Funds Management Scheme. Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Pie Funds Management Scheme investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary.

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