Kiwi businesses taking on the world

19 November 2019

Sadly the ball didn’t quite land the right way for us in the Rugby World Cup with the All Blacks tumbling out of the comp in the Semis. But feel rest assured that rugby is not the only place where Kiwis are able to compete on the world stage. For investors, the growing number of Kiwi companies taking their business global is very encouraging. Companies like accounting software provider Xero, church payments business Pushpay and aerospace innovator Rocket Lab are great examples of global success stories that have come from Kiwi innovation.

 

Why go global?

With New Zealand being a pretty small set of islands, many of our businesses look to eye up expanding globally. This is great for the New Zealand economy as local businesses being able to grow leads to more job opportunities, higher levels of investment and developments in innovation, which benefits all of us.

Despite the growing list of Kiwi businesses succeeding on the world stage, the New Zealand share market is often considered as more focused on domestic and low-growth companies. This is due to the New Zealand share market having a lot of lower-risk companies such as utilities and service providers who are well-established but generally offer lower growth opportunities for investors.  Therefore, finding up-and-coming companies who are looking to expand globally is important as it helps to drive the growth of the New Zealand investments as well as helping Kiwi businesses to be able to compete and succeed on the world stage.

 

What does going global look like?Serkologo

Serko Ltd is a great example of a Kiwi company with growth potential that we added to the Booster KiwiSaver Scheme and investment portfolios earlier this year. Serko is a travel management software developer who help their customers with travel bookings, travel management process and reconciling company expenses.  Serko’s products and service has already proven to be popular with the company growing significantly beyond Australasia with customers now in over 35 countries.

SerkoimageWhile expanding outside of NZ and Aussie is still in the early stages, Serko have already started to ramp up their growth potential by signing agreements with large travel booking companies and secured additional funding from investors. These fundamental agreements and funding put Serko in a great position to continue their global expansion and take advantage of the opportunities ahead. The potential in this space is massive with global business travel spending estimated to be in the trillions.  While it remains to be seen just how successful they will be in their future endeavours, Serko have already proven themselves as another Kiwi company that punches above it’s weight.

 

 

What’s happening in the markets?

There were only small changes in value of our diversified KiwiSaver and Investment funds during October.

In global shares, our overseas investments provided another month of positive returns. U.S. shares performed well amongst other developed countries after benefiting from trade war tensions between the U.S. and China calming down a little. US markets also benefited from the US Federal bank lowering interest rates for the second time this year to promote growth and spending.

Back home, New Zealand shares dropped in value this month due to drops in value of electric generating companies. These share prices were impacted by the NZ Aluminium Smelter announcing a review of the Tiwai Point smelter near Bluff, one of the largest smelters in NZ, with the possibility of it closing down. This smelter consumes approximately 13% of NZ’s electricity so is likely to try and use their high consumption levels as leverage for a new deal with electricity providers.

Overall for October it was a fairly balanced month of returns across our funds. Global shares increased in value slightly over the month whilst local shares dropped in value slightly. With some of our more conservative investments providing stable returns, October evened out to be a month of little change.

 

“Booster KiwiSaver Scheme is managed and issued by Booster Investment Management Ltd. A copy of the Product Disclosure Statements are available at www.booster.co.nz

Daniel Haskell

By Daniel Haskell

Booster Adviser