Generate's Investment Specialist Greg Smith joined Mike Hosking on ZB again this morning to provide his views on the new Governor of the RBNZ, and the market reaction to the first foreign appointee since the 1930s. He also outlines why KMD Brands management are feeling optimistic, despite the Kathmandu owner seeing its full-year loss double. Also up for discussion is why markets were taken by surprise by the latest monthly inflation numbers in Australia.
Listen to the 25 September 2025 recording from The Mike Hosking Breakfast on Newstalk ZB here:
Or read the transcript below:
From Generate Greg Smith, a very ood morning to you.
Good morning to you Mike.
What do you make of the governor?
Yeah, you made some great points. Of course, it was obviously making history in terms of the first woman and, the seeking foreigner with her if you go back to the 1930s. But no surprise. Of course, external candidate that was chosen, lots of upheaval, lots of scandals this year and obviously questions around policy direction. So she's got a mandate to restore confidence. She's well qualified. Let's face it, Riksbank Bank, since 2019 in terms of a deputy governor, she's been a Swede bank, she's been the Swede ministry finance and the World Bank. And you suppose when you look at foreigners, it is quite rare, especially you had Mark Carney, the Bank of England. I mean he was Canadian, but it doesn't happen a lot. There will be a bit of getting up to speed, but you know, she has overseen an economy, well helped to oversee an economy more than double the size of ours. But yeah, it will be probably a case of getting around a bit as you say.
There are some similarities between Sweden, US, I mean their housing market, the GDP was hit hard and the higher rates, the recovery has been fragile. And it's fair to say, it would probably be kind, saying ours has been fragile. So I suppose the interesting point, she starts at December 1, the two meetings before then, the OCR could be at 2.25% by the time she takes over. So her first live meeting won't be till February, so with monetary policy moves settling down, you know, the focus may be more on revising bank capital requirements at least in the near term.
But you know, she has said she likes the RBMZ's laser focus on inflation targeting. But yeah, those rate cuts will have been done. You mentioned Christian Hawkesby, but no surprise he is going having wanted to secure the position permanently and having held the fort. So we've actually had another new appointee recently. So we're actually looking at a pretty fresh board by the time 2026 comes around. So a fresh way of thinking perhaps Mike and time will tell there. We probably need that. Any event, the Kiwi market rose. The Kiwi dollar was initially steady but since wilted. But that's probably due to other reasons.
Right. Talk to me about KMD, because I see the numbers and yet I hear the commentary. The commentary, they remain bullish, don't they? They think they've got a plan.
Yeah, they remain bullish, but you know, the share price has fallen around 85% in the last four years. So it gives you a bit of a hint as to what the company's been going through. But it has been tough in retail. The statutory loss the full year was 94 million. That was double last year. They've had to discount to get shoppers over the line. Sales are actually up one percent, 989 million, earnings underlying down 65 percent, 17.7. There's no dividend. But yeah, the top line growing. RIP Curl that was up 2.1 percent. Kathmandu, that was up just .2 percent and the boot maker Oboz was up 3.5 percent. But again, you see that comparison of Aussie versus New Zealand. So Aussie increased .2 percent year on year. New Zealand sales were down 2.3%. We had a tough economy. We know that it's been tough in retail. Management they’re talking up the green shoots if you like. So sales are starting to pick up.
So August 10.5 percent year on year, Kathmandu 22 percent higher in the first seven weeks, in the new year, the new financial year that is. So it's positive there. Obviously they got this transformation programme going as well. So they're trying to target 25 million in cost savings. But what's also interesting, Mike and perhaps also drove that share price rise yesterday is that Aussie billionaire retailer Brett Blundy is said to be looking at taking a meaningful stake. So you've already got the activist Alan Gray on the books. You've got Briscoe there as well. So, you know, is a turnaround in the offering? There’s been a huge share price fall but hey, you know, the cost of things being affected here and Aussie to a certain extent. But you know, rates are coming down. Are we seeing some green shoots? You know, quite possibly. You know, some are saying a dead cat bounce. But time will tell.
Right, so what happened in Australia yesterday? How come?
The inflation numbers, you know, they came in hot, still a bit mixed. So this is monthly and the RBA has said that it doesn't place as much weight on the monthly figures, which tend to be quite volatile as it does on the quarterly.
So all the cuts this year have been after the quarterly inflation figures. But nonetheless, the monthly figures were were hot. So CPI 3% in August, after 2.8% in the month before, above expectations, fastest pace in a year. Basically it looks like there's going to be potentially no more rate cut, certainly not next week anyway and even chance potentially still of one when they meet in November. But they have obviously been cutting the cash rate this year a little bit mixed actually Mike when you think about it, because the jobs market isn't flowing as much as some had expected. And then on the other side, if you look at the preferred measure of inflation that was running at 2.6 percent in August, that's actually down from 2.7 percent in July. Rents lowest annual gross in the 2022. So all a bit of a mixed picture. Where are we at? Probably no rate cut next week, but still a better than even chance for one on Melbourne Cup Day.
Numbers please.
The S&P 500 is softer a little bit by .4 percent, 6630. Dow down .4 percent, 46129. Nasdaq down half percent 22468. Footsie 100 up .3 percent, 9250. Nikkei out .3% as well. ASX200 down .9 percent. NZX 50 up .3% on the RBNZ Governor news, 13181. Gold market that was down 48 dollars, 3767. Oil that picked up, up a dollar 53, 64.94.
And the currencies here the Kiwis weaker across the board. Down .8 percent against , 58.1. 43.2 against Pound down .2 percent. Actually we were flat against the Yen, but we're down half a percent against the Australian dollar 88.3. I'll stop giving this news hopefully in next week or so, but we have got something to look forward to today and it's, you know, obviously going to be about the dairy sector with four-year results from Fonterra.
Look forward to them go well mate, appreciate it very much. Greg Smith is that at 8:30? I'm assuming it's 8:30. Greg's from Generate Wealth and Kiwi Saver specialists.