Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

US-China trade war – what’s it mean for NZ?


Although he can identify no major New Zealand stocks experiencing direct damage as a result of the US-China trade war, Milford Asset Management Portfolio Manager Mark Riggall says there is collateral damage, including a weaker New Zealand dollar.

“I think you can point to some of the factors causing the weakness to the New Zealand dollar as being a direct result of the trade war. The trade war is causing lower global growth. That means, generally speaking, there is lower demand for our products that we’re exporting – or perceived lower demand. If you couple that with a slowing domestic growth profile anyway and lower interest rates on the domestic front and the ingredients are in place for the further weakening of the New Zealand dollar. The way things are going, I see the path for the New Zealand dollar continuing to trend lower.”

There are fears that the trade war is widening on a second front and morphing into a currency war. The Chinese yuan has depreciated and President Trump is putting pressure on the US Federal Reserve to drive the US dollar down. In a series of tit-for-tat devaluations, Mark Riggall says the New Zealand dollar would probably go up.

“In that scenario you would see the New Zealand dollar appreciate because we’d be fairly powerless to do anything to stop our currency from looking relatively more attractive. Added to that, we also have a better domestic growth situation than they’ve got overseas and probably relatively higher interest rates.”

Perversely, Kiwi agricultural exports could suffer more from a trade deal between the US and China than they would if the trade war escalates.

“It’s not necessarily an escalation of the trade war that might cause damage for our exporters. Let’s paint a scenario where there’s a trade deal that happens between China and the US. As part of that deal, China agrees to buy more meat products from the US. That could reduce demand for New Zealand meat exports and that would be more detrimental potentially than the escalation of the trade war.”

You can also view Mark’s interview discussing these and related issues if you click here.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Up 0.5% In June Quarter: Services Lead GDP Growth

“Service industries, which represent about two-thirds of the economy, were the main contributor to GDP growth in the quarter, rising 0.7 percent off the back of a subdued result in the March 2019 quarter.” More>>

ALSO:

Pickers: Letter To Immigration Minister From Early Harvesting Growers

A group of horticultural growers are frustrated by many months of inaction by the Minister who has failed to announce additional immigrant workers from overseas will be allowed into New Zealand to assist with harvesting early stage crops such as asparagus and strawberries. More>>

ALSO:

Non-Giant Fossil Disoveries: Scientists Discover One Of World’s Oldest Bird Species

At 62 million-years-old, the newly-discovered Protodontopteryx ruthae, is one of the oldest named bird species in the world. It lived in New Zealand soon after the dinosaurs died out. More>>

Rural Employers Keen, Migrants Iffy: Employment Visa Changes Announced

“We are committed to ensuring that businesses are able to get the workers they need to fill critical skills shortages, while encouraging employers and regions to work together on long term workforce planning including supporting New Zealanders with the training they need to fill the gaps,” says Iain Lees-Galloway. More>>

ALSO:

Marsden Pipeline Rupture: Report Calls For Supply Improvements, Backs Digger Blame

The report makes several recommendations on how the sector can better prevent, prepare for, respond to, and recover from an incident. In particular, we consider it essential that government and industry work together to put in place and regularly practise sector-wide response plans, to improve the response to any future incident… More>>

ALSO: