In this latest Meet the Manager profile, Money Management speaks with Wilson Asset Management portfolio manager Matthew Haupt.
Haupt is lead portfolio manager on the $1.7 billion WAM Leaders fund, a large-cap Australian equities listed investment company (LIC).
He began his investment career at Australian Executor Trustees, then IOOF before moving from Adelaide to Sydney to join Wilson Asset Management in 2011 as a small to mid-cap industrial analyst. He then moved into a portfolio management position in December 2015.
Over three years to 31 January, WAM Leaders has returned 14.3 per cent versus returns of 9.6 per cent by the ASX 200.
Read on as Haupt discusses the Australian equity markets, the US presidential election, and the reason why India is thriving.
Money Management (MM): Do you think Australian equities are in for a good run this year and what sets them apart from global ones?
Matthew Haupt (MH): You’ve seen the Aussie banks have an incredible run. I’d argue that’s an outcome of capital outflows out of China, and you’ve seen a lot of flow into the Aussie banks over the last three to six months. Banks have had a great run, miners are doing well, and China is trying to have very targeted stimulus in their economy. They’re not going to do a flood-like stimulus; it will be very targeted. So miners should do all right if you believe in the manufacturing cycle picking up because you’d argue we’ve been in manufacturing recession for a couple of years now, and despite that, commodity prices have held up pretty well.
If you go through the rest of the ASX composition, for the index to have a really good year, you need banks and resources to have a good year. So I think banks are probably pretty well done now, so miners and then probably healthcare are due for a bit of a rebound as well. But it’s hard to see a runaway year in Australia.”
MM: What is your prediction for the 2024 US presidential election?
MH: [Trump’s presidency] shaved a few years off my life, that’s for sure. You would think you’re in for a good day, and then at 8:30am, he’d tweet out something about some crazy idea and then the market would fall 2 per cent. And then back and forth with not only China, it was rest of the world and everyone. Already we’ve seen tweets about a 10 per cent tariff on every import and a huge trade war with China – it’s just not what we need at this period. Everyone’s saying, “Trump getting in will be really positive for equity markets again”, but I think we’re in a much different position than we were in 2016.
The only reason we rallied was tax cuts and the ability to spend money at a government level and not in a position to do that again. So the big levers he had are not there at the moment. So I’d be a little bit cautious about a Trump rally on equity markets this time because it was really predicated on those big levers he had to pull last time. So, yeah, it’s a scary thought as a fund manager for an investment.
MM: How does the collapse of property developer Evergrande affect Australia and any flow-on effects from that?
MH: The Chinese property market has been terrible for a long time. The five-year plan the government put in place means state-owned enterprises account for the development in China, and the government has taken out most of the private developers.
If you told me property would be down well over 10 per cent the year before, I would have thought China would be in a total mess, but the economy has actually done all right considering. They have navigated it pretty well, and the outcome is actually not too bad. We know the Chinese property market is bad, but the mix is better now, and the support will come through this year and stabilise prices, so I think the worst is well and truly behind us.
MM: Do you think India can take over China’s lead and be the place that asset managers are looking at?
MH: We’ve all been waiting for India, and it looks like it’s finally happening now. The government there really changed the landscape there around tax cuts and really pro-business governments. So it is finally happening, and the growth rates we are seeing now are huge; it feels like China 20 years ago, it really is the place to deploy capital now.
It’s quite hard to get direct involvement through our asset market, but you can get it through coal and iron ore. Coal is an interesting one, and they started to import some iron ore, which is interesting as they try and build their steel market.
To listen to the full interview with Matthew Haupt and a range of other experts, you may access the Relative Return podcast here.
