Which New Zealand companies are facing the heat after US tariff war
Global markets have been facing the brutal aftermath of the newly implemented US tariffs, and the tremors are being keenly felt on the New Zealand bourse. While the direct financial hit on some Kiwi companies might not be a big deal for now, the broader impact on investor sentiment and global trade dynamics is casting a shadow over the share markets.
Market analysts have pinpointed several NZX-listed entities as being particularly sensitive to the unfolding trade tensions.
These include Fisher & Paykel Healthcare, which makes medical equipment; Mainfreight, a company that ships goods around the world; Infratil, which invests in power plants and airports; and Tourism Holdings, which rents out campervans.
The last named company has seen the biggest drop in its share price.
Tourism Holdings shares have fallen by over 20% in just a month after US President Donald Trump announced the new tariffs. The company says these new US taxes are making things tougher for them and making people less confident about spending money on travel.
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Jeremy Sullivan, of Hamilton Hindin Greene said that many people, especially those in Europe, are cancelling or not booking trips to the US because of this uncertainty and a feeling that the US is becoming less friendly. This isn't just about the extra cost; it's about people being unsure about travelling there at all.
Mainfreight has also seen its share price drop significantly, by almost 15%. Sullivan attributes this to people worrying that there will be less shipping happening around the world if countries start putting up more trade barriers.
However, Greg Smith, Head of Retail at Devon Funds, thinks that Mainfreight might not be as badly affected as some fear. He pointed out that the US only makes up a small part of Mainfreight's earnings (about 8%).
Most of their
business
comes from Australia and New Zealand (75%), with some from Europe (15%).
Fisher & Paykel Healthcare's share price has also gone down a bit (about 3.7%), but it's been going up and down. One reason why they might not be hit as hard is that they make a lot of their products in Mexico (around 60% of their sales).
Because of a special agreement between the US, Mexico, and Canada, these goods might not face the new tariffs. Smith thinks the company might even make more of their products in Mexico and also in New Zealand, which only has a smaller 10% tax.
Sullivan mentioned that about 45% of their production is in a city in Mexico called Tijuana. As long as their trade follows the rules of the North American free-trade agreement, they should be okay. Plus, they can also ship more from New Zealand if they need to.
Infratil's situation is a bit different. Their share price first went down but then came back up after they told investors what was happening. Sullivan thinks this might be linked to how people feel about things like Artificial Intelligence.
He warned that if the US trade changes hurt big tech companies, it could also affect other areas like data centres, which Infratil invests in. Also, Infratil has solar farms in the US that use parts from China, and these parts could face the new tariffs.
Sullivan says it's hard for companies to know exactly how much these changes will cost them because things are changing all the time. This uncertainty can make businesses delay making decisions, which can slow down the economy.
Greg Smith, says that the US only buys a small amount of goods from New Zealand (about $9 billion worth). So, New Zealand isn't as dependent on the US as it is on other countries, like China.
He thinks that the drop in share prices might be more about people feeling worried than about a real big financial hit. A 10% tax on $9 billion is $900 million, which he thinks is something New Zealand can handle.
What does this all mean?
Basically, when the US makes changes to who they trade with and how much tax they charge, it can create uncertainty around the world. This makes investors nervous, and the value of shares in companies, even in New Zealand, can go up and down.
While some New Zealand companies that sell things to or operate in the US might face some challenges, the overall impact on New Zealand might not be as severe as the initial reactions suggest.
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