Source : THE AGE NEWS
While politicians and pundits have hyperventilated over the impact of US President Donald Trump’s tariffs on Australia’s modest exports to the US, such as beef, Australian super funds and other professional investors have lost as much as $8 billion since January on Nvidia alone.
It gives a taste of just how much Wall Street’s train wreck performance overnight is where the real pain is for everyday Australians.
Nvidia founder Jensen Huang is among those taking a big hit from the US president’s tariff regime. Credit: Bloomberg
Our outsized wealth, and insatiable appetite for US stocks, means Australia’s most meaningful exposure is to this share rout, which is expected to continue if coming US economic indicators confirm the economic chaos being unleashed by Trump.
Nothing demonstrates this better than Nvidia’s 6.8 per cent plunge on Wall Street overnight.
While it was not the worst performer among the Magnificent Seven stocks – that bouquet belongs to Apple, which dropped more than 9 per cent – Nvidia attracted a lot of Aussie money on the way up.
James Packer is among the most high-profile backers. One of his private investment vehicles, Consolidated Press International Holdings, holds more than one million shares after buying up the stock last year.
Packer will have lost more than $US50 million ($80 million) since January alone, but it does not mean he has made a loss on his investment to date.
His bet on big tech is a fraction of the exposure of Australians to the market rout, with VanEck estimating that local super funds and fund managers owned as much as $28 billion worth of Nvidia stock in January.
“Australian institutional investors hold approximately $20 billion worth of Nvidia, as of last night’s valuation at $US102 per share. This is down from $28 billion at the start of the year, when it was trading at $US140 per share,” VanEck executive Jamie Hannah said.
Billionaire James Packer will have lost more than $US50 million since January alone on Nvidia.Credit: Getty Images
As of December, AusSuper’s high growth fund alone held 2.7 million Nvidia shares and reports state Australia’s biggest super fund may own as many as 7.8 million Nvidia shares, meaning its losses on the stock would have topped $US370 million since January.
AusSuper’s losses would be replicated across Australia’s superannuation system, with a significant share of the sector’s $4.1 trillion in assets now invested globally but concentrated in the United States as global investors bought into the story of US economic exceptionalism.
This means there would be a much wider cost to Australia’s investment exposure to the rest of the US market.
IFM Investors said in February super funds had $US400 billion ($635 billion) invested in the US, and it predicted this would pass $US1 trillion in a decade.
Last night alone, the Magnificent Seven tech stocks lost nearly $US1 trillion in one of the worst days of trading since the pandemic.
And there’s a good chance it will get worse.
“The level of new tariffs is just absolutely massive,” Luke Tilley, chief economist at US investor Wilmington Trust, told The Washington Post.
“There is still so much uncertainty, but if these tariffs stay on for three months, there’ll be a recession – and that will be one of the easier calls I’ve had to make in my 25 years of being an economist,” he said.
Australia has an insatiable appetite for US stocks.Credit: Oscar Colman
VanEck’s Asia Pacific chief executive, Arian Neiron, said there were opportunities for investors despite Trump’s new “Liberation Day” tariffs representing a seismic shift to global trade.
“In this environment, we think there are distinct opportunities for diversification into the under-owned, unloved corners of the capital markets.”
And one of those opportunities is in our own backyard, thanks to record gold prices.
“Gold should continue to thrive off the Trump administration’s policy-induced uncertainty, while gold producers could benefit from foreign currency depreciations triggered by the global tariffs – perhaps even resuming their traditional role as a leveraged play to gold,” Neiron said.
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