CEO Insights

NAOS Asset Management

As part of the NAOS investment process, we pay particular attention to the comments made by company CEO’s 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.

Commodities

“The met coal market is certainly starting to improve, so we're seeing a little bit more positivity in that market”

Paul Flynn, MD & CEO, Whitehaven Coal

“We did three weeks around the world talking to our major shareholders before that meeting and everyone had the view that gold was on a longer-term trend upwards”

William James Beament, MD, Northern Star (Gold)

“With the near 50-fold increase in share prices over the last 20 months, you might imagine that much of the gold sector is fully valued”

Robert Vassie, MD, St Barbara (Gold)

“The North American [oil & gas] market is turning… Today our customers are thinking about growing their business again rather than being focused on survival…And in almost every case, they're talking about adding rigs, buying assets, or doing something value accretive”

David Lesar, CEO, Halliburton

“Rig activity in both Brazil and Mexico is at a 20-year low, while Venezuela continues to experience significant political and economic turmoil. We saw increased activity in Kuwait and fairly consistent activity in Saudi Arabia. However, we also began to experience pricing pressure across the region, and activity levels declined in Iraq, Australia, and Indonesia”

Mark McCollum, CFO, Halliburton

“Latin America is expected to remain our most challenged region throughout the international down-cycle, and we do not expect to see a fundamental improvement this year”

Mark McCollum, CFO, Halliburton

“The Australian gold sector is in for a really interesting period in the coming couple of years, when people start reinvesting in the ground which hasn't been done for the past decade. So I think it's going to be really exciting times”

William James Beament, MD, Northern Star (Gold)

Global Economic Environment

“Looking forward, the environment remains challenging… hile the U.K. has a new leader, the U.S. is still in the midst of a unique presidential campaign, and such geopolitical and economic uncertainty doesn't create a clear picture for potential interest rate increases”

Michael Corbat, CEO, CitiGroup

“We're seeing the demand for our services increase as corporations seek to optimize their resources in a slow growth environment. At the same time, some of our peers are pulling back from global strategies”

John Gerspach, CFO, CitiGroup

"I think the Chinese economy is doing much better than most people think. There are lots and lots of challenges in China, particularly from a financial perspective. But I see those as manageable. China is one of the few bright spots in the global economy. People say it is growing slowly, I'm very happy with 6.7 per cent"

Michael Evans, Global President, Alibaba

“ is still an evolving subject. Perhaps the whole UK referendum could have a somewhat dampening effect on global GDP over the next several months, but it’s small”

John Gerspach, CFO, CitiGroup

“Clients and the broader marketplace continue to wrestle with the Brexit vote and related uncertainty”

Harvey Schwartz, CFO, Goldman Sachs

“Clearly the Brexit vote has created a potentially significant headwind. If the present circumstances prevail the could be up to $400m but it’s early days”

Chuck Stevens, CFO, General Motors

“Brexit will possibly constrain access to capital in Europe, and you’re seeing those tremors hitting the banks”

Stephen Schwarzman, CEO, Blackstone

“While growth concerns persist in many countries, the U.S. economy continues to steadily improve, albeit at a less than optimum pace”

Paul Donofrio, CFO, Bank of America

“We clearly remain concerned about the fallout from the UK referendum, and ongoing debt challenges in China and other important countries… But I would say that here in the US, from our perspective, the recovery is ongoing. Employment continues to improve and housing markets continue to recover”

Paul Donofrio, CFO, Bank of America

“We expect strong performance to continue in China…It’s a much more challenging environment, growth has slowed and is more volatile, but we continue to see growth in that market”

Chuck Stevens, CFO, General Motors

“On the macro environment, a lot was going on. Britain's decision to leave the European Union created uncertainty that is likely to persist for some time as the market grapples with the political and economic paths forward”

James Gorman, CEO, Morgan Stanley

“However, we continue to see macro uncertainty, and with it, periods of heightened volatility. Geopolitical events, including Brexit, have kept market participants on the sidelines as they wait for clearer trends to emerge”

Jonathan Pruzan, CFO, Morgan Stanley

Mergers & Acquisitions

“If you look at global M&A, the intra-Asia M&A is at a much higher level than at any point in history”

David Friedlander, Australian Head of M&A, King & Wood Mallesons

Financial Markets

“The cadence of boards is too much dominated by quarterly earnings guidance. In some cases the short-term communication about the short-term progress of the business can work negatively for the health of the business. The key to thinking long term is to get off this crutch”

Jeff Ubben, CEO, ValueAct Capital

“The classic defensive strategy is to go overweight government bonds, especially long-term government bonds. But the big issue we are seeing at the moment is that isn’t likely to get a good defensive strategy given the current very low levels of bond yields”

Jim Lamborn, Investment Chief, JANA

Housing

“Buyers have held up their end of the market, spurred by very low mortgage rates. But the lack of new listings continues to crimp overall activity, meaning that there’d be more sales if there were more people selling”

Nela Richardson, Chief Economist, Redfin

“The only thing that can change is higher interest rates, unemployment or global shocks…If you’re waiting for a crash to get into the market, you’re going to be waiting for a long time”

Peter Kelaher, MD, PK Property Group

Article contributed by NAOS Asset Management: (VIEW LINK)


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