Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
SBS Bank and the Co-operative Bank have both lowered their fixed rate cards today. All rates are here.
TEST RATES MOVE DOWN
Banks are moving their test rates down. More here. And we have started a new table page tracking current home loan test rates as they are announced. Please help us keep this page accurate.
TERM DEPOSIT/SAVINGS RATE CHANGES
SBS Bank and the Co-operative Bank have both lowered their term deposit rates today, with changes effective tomorrow. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
A LEGAL TAX-DODGE FOR THE WELL-OFF
JP Morgan Asset Management has launched a Global Bond PIE for New Zealand investors. PIE investments insulate wealthy investors from income tax rates above 28%. They say more of these types of products will be released soon.
HIGHER COSTS TO BUILD
According to our analysis of building consent data, the build costs for stand alone houses are at a record high while construction costs of retirement village units and apartments have plummeted. The average construction cost of new homes is now just under $450,000 - excluding land.
NZX UPDATE
The NZX50 is recovering today, up +1.1% at 3pm from yesterday's close, but that still leaves it down -4.5% for the week. From a year ago it is up +6.3%. More details here. There are 64 gainers led by NZME, Omvestore, Vecgtor and Vulcan Steel. There are 26 declines led by Synlait, the Warehouse, F&P Healthcare, and Spark.
MERIDIAN TAKES A PROFIT HIT FOR THE TEAM
Gentailer Meridian Energy (MEL, #2) reported a net loss after tax (NLAT) of -$121 mln, for the six months ending December 31, 2024. This is down from a net profit of +$191 mln in last year's half-yearly results, a swing of more than $300 mln. Renewable energy generation hit by drought, with low winds along with gas shortages "made the operating environment for the first half of this financial year as tough as I can ever recall experiencing," the company said. “Meridian put this country’s security of supply first and, as NZ’s largest renewable electricity generator, our balance sheet tends to underwrite the mitigation of extended droughts," they added.
RESTRUCTURE
NZME reported its half year results today, booking a -$16 mln loss after writing down -$24 mln in brand value. They also announced they are effectively putting up OneRoof for sale.
DAIRY PRICES SLIP
The overnight dairy Pulse auction has seen milk powder prices fall. The big fall expected for WMP didn't happen but it was a retreat all the same. The small fall expected for SMP actually came in more pronounced than expected. Both shifts have ended the recent run up in these prices although they probably don't necessarily end the higher trending. Neither correction was enough to unstitch that at this event. But uncertainty is back all the same.
TRIPLE CROWN
The University of Auckland Business School is celebrating being in the top one percent in the business school world, receiving sought-after accreditation from three international organisations – the Association to Advance Collegiate Schools of Business (AACSB), the Association of MBAs (AMBA) and the European Quality Improvement System (EQUIS). They were the first in Australasia to attain this 'triple crown' in 2004, a recognition it has now maintained for two decades making it the longest-standing triple crown accredited school in the region.
PORTS OF AUCKLAND STEADIES THE SHIP
They reported underlying NPAT of $42.0 mln, an increase of $20.8 mln (+98%) compared to the prior year’s result, on revenue that increased to $195.4 mln, up 20% from $162.5 mln in the first half of FY24. They say they have made good progress on legacy H&S issues.
RETHINKING LOCAL GOVT CREDIT RATINGS
Ratings agency S&P says New Zealand's local government sector is heavily indebted due to councils' consistently increasing capital investments. "We believe the sector's revenue and expenditure balance and predictability of policy are weaker than previously. We have therefore lowered our institutional framework assessment to very predictable and well balanced from extremely predictable and supportive. We are considering the implications for our credit ratings on local councils and related entities."
CAPITAL OUTFLOW CONCERNS
Bloomberg is reporting that China is increasing scrutiny of outbound investments by domestic companies as well as their use of proceeds from Hong Kong share sales, people familiar with the matter said, after record capital outflows put pressure on the yuan.
SWAP RATES HOLD YET AGAIN
Wholesale swap rates are probably to be little-changed yet again, but keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was unchanged at 3.75% on Tuesday. The Australian 10 year bond yield is down -6 bps at 4.39%. The China 10 year bond rate is up +1 bp at 1.77%. The NZ Government 10 year bond rate is down -3 bps at 4.62% while today's RBNZ fix was at 4.55% and down -7 bps. The UST 10yr yield is now just on 4.32% and down another -6 bps from yesterday. Their 2yr is down -5 bps at 4.11%, so that positive curve is at +21 bps.
EQUITIES VERY MIXED
The NZX50 is up +1.3% in late Wednesday trade. The ASX200 is down however and by -0.4% in afternoon trade. Tokyo is also down -1.1% in early Wednesday trade. Hong Kong is up +2.3%, and Shanghai is up +0.6% its open. Singapore has opened unchanged. Wall Street was down -0.5% on the S&P500 in Tuesday trade.
OIL DOWN
The oil price is down -US$2, now just on US$69/bbl in the US, and at US$73/bbl for the international Brent price.
CARBON PRICE STILL IN RANGE
The carbon price is still within its range, and today is down a marginal -10c at NZ$63/NZU. The next release of units at the official auction is on March 19, 2025. But that auction's floor price is $68/NZU, so it is heading for a failure. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD FALLS
In early Asian trade, gold is down -US$32 from this time yesterday, now at US$2917/oz.
NZD SOFTER AGAIN
The Kiwi dollar has fallen -10 bps from yesterday at this time, now at 57.2 USc. Against the Aussie we are also down -10 bps at 90.2 AUc. Against the euro we are down -30 bps at 54.4 euro cents. This all means the TWI-5 is just over 66.8 and down -20 bps from yesterday.
BITCOIN RETREATS FURTHER
The bitcoin price is down -3.6% from this time yesterday, now at US$88,706. Volatility of the past 24 hours has been high at just on +/- 3.5%.
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80 Comments
Announcement on Oneroof.
1. OneRoof value realisation
OneRoof continues to be a very strong performer, with significant future growth potential. To continue to accelerate its growth and realise its full potential in delivering value for shareholders, we have commenced an independent strategic review of OneRoof to evaluate opportunities including:
• The potential separation of OneRoof to enable raising external capital, either public or private, to surface its value;
• Potential pathways to value recognition and monetisation;
• Consolidation opportunities for OneRoof;
• Additional resourcing and extra capacity opportunities to accelerate OneRoof’s growth.
A progress update on this independent review will be provided at part of NZME’s half year results later in the year.
It’s really sad, I keep seeing homes listed that were bought at the peak. I scroll through the photos and you can see it’s a young family, and this is a forced sale. When this is all over in a few years, everybody will know someone who got caught up in the madness.
"A lot of money lost if you bought at the peak. Auckland median house has lost $350k!"
That is equivalent to -27% from the peak in nominal terms. An 80% LVR buyer would be in negative equity (i.e loss of initial equity of over 100%)
This is before the impact of inflation.
Illustration of opportunity cost. Here are some calculations that people may not see:
At Nov 2021, a person has NZ$1,300,000 to invest:
A) Buy own residential dwelling in Auckland for 3.25 years
1) Median REINZ House Price for Auckland Nov 2021: NZ$1,300,000
2) Median REINZ House Price for Auckland Jan 2025: NZ$ 949,000
https://www.interest.co.nz/charts/real-estate/median-price-reinz
Additional costs of rates, insurance, repairs and maintenance over 3.25 years: say NZ$4,000 per year totalling NZ$14,000
So net equity after 3.25 years of ownership costs of Auckland residential dwelling is NZ$935,000 (NZ$949,000 less ownership costs of NZ$14,000) - this is a return of NEGATIVE 28.1% over the whole 3.25 year period)
B) Invest in NZ listed USF and rent for 3.25 years
1) NZ$1,300,000 is invested elsewhere.
2) buy USF.NZ at NZ$12.85 is 101,167 shares
4) total dividend per share for 3.25 year period is NZ$0.56 (after allowing for 30% tax NZ$0.392 per share)
5) total dividends for 3.25 year period are NZ$39,657
6) current market value of 101,167 shares of USF is NZ$1,866,531 (share price of NZ$18.45)
7) total portfolio value is NZ$$1,906,189 (market value plus total dividends after tax)
8) this is a return of POSITIVE 47% over 3.25 years on the initial investment amount of NZ$1,300,000 and is higher than the NEGATIVE 28.1% return over the same 3.25 year period for the owner occupier residential dwelling owner above)
9) deduct NZ$101,400 for rent for 3.25 years (NZ$600 per week for 3.25 years)
10) net equity amount after rent paid for 3.25 years is NZ$1,899,813
In that single decision, the renter is better off by $964,813 than the buyer at the Peak
Summary of position at Jan 2025
A) owner of residential dwelling in Auckland: equity position of NZ$935,000
B) owner of shares in USF.NZ: equity position of NZ$1,899,813 AFTER RENT PAID FOR 3.25 years
So the person who invested in USF.NZ is better off by NZ$964,813 (or 103% higher than the owner occupier's equity amount of NZ$935,000 even after paying rent for 3.25 years
The renter can buy the house today at NZ$949,000 (median REINZ house price for Auckland), and still have NZ$964,813 in the bank earning interest.
Links:
https://www.investing.com/currencies/nzd-usd-chart
https://finance.yahoo.com/quote/USF.NZ/
Might be interesting to see if they get angry, having joined some dots.
My local rag, for example (the ODT) has more pages of its Saturday issue covered in real estate, than it has news. That means that home-buyers have been subsidising newspaper wages/salaries (there's no other buck-stops-here contributor). And newspapers aren't the only parasites...
But I suspect ignorance will prevail, and the mob will just smash the nearest windows...
Christchurch prices are definitely sought after and not dropping at all.
Your contributions will not be greatly missed. No rational person could possibly make this statement
Next you will be trying to tell me that the S&P500 Mag 7 are not in a technical correction....
You're taking The Man3 too literally. What he means is that there is, and has always been, money to be made in Christchurch. I imagine he is a very astute buyer. I don't think he ever suggested to buy any old thing but choose wisely in Christchurch for the long term and you can't go wrong.
It reads as "Christchurch prices are not dropping at all". Implying all, not some select area or type of house. I live there and have been looking to buy for a couple of years. The market is dropping (look at the latest REINZ HPI). Also, heaps more properties were listed in January than sold. Just adding some balance to the misleading comments above.
"Chch median still near the peak"
FYI, Christchurch Central
1) Median at peak: $672,908
2) current median : $546,562
3) Price change: -18.8%
https://www.realestate.co.nz/insights/canterbury/christchurch-city/chri…
Looks like that's a pretty small part of chch central. In general, Christchurch and Canterbury in general have held up much better than the other big cities.
https://www.interest.co.nz/charts/real-estate/median-price-reinz
The University of Auckland Business School is celebrating being in the top one percent in the business school world, receiving sought-after accreditation from three international organisations – the Association to Advance Collegiate Schools of Business (AACSB), the Association of MBAs (AMBA) and the European Quality Improvement System (EQUIS)
Does it actually have any tangible meaning or is it just another Anglosphere creation to sell their brand to potential students? Was talking to admin / leadership people at the university responsible for a partnership with an Asia university that is focused on tech. I suggested that pushing the R (Ross Ihaka) story would be superb.
They had no idea what R was or its relevance. Sad state of affairs.
Luxo has a challenger in Trump who says in the next two weeks the US will be selling a "Gold Card". A $5M purchasable green card that will allow you to work in this country and have a route to citizenship. This would be replacing the EB-5 program. Gold Card recipients would be vetted. Instead of green card lotteries they want to help eliminate the deficit by letting people buy their way in. This attracts money, job creators, high level talent, and companies will have to spend money who want to invest in high level global talent.
There wont be any tax on income outside of the US and they'll pay full tax on income in the US. Trump anticipates they may be able to sell a million cards which would be $5T and if they hypothetically sold 10M cards that would be $50T which would eliminate the national debt. This is completely in compliance with the law and doesn't need Congressional approval because it's a green card, not full citizenship. Trump believes it could help eliminate the debt.
https://www.nytimes.com/2025/02/25/us/politics/trump-gold-card-immigrat…
NZ would probably be quite popular (Oz more so), anyone with $5M doesn't have to struggle to find a decent job or compete for affordable housing. Although I did see that Thiel appears to have lost interest after his struggles with the RMA over his new home https://www.nzherald.co.nz/business/us-billionaire-peter-thiel-winds-do…
However on past performance any NZ govt Left or Right would just waste the opportunity.
From experience of living & working in the USA, albeit some twenty years ago, the average NZr from a carpenter to an architect, is so far ahead of the USA counterpart in terms of ability, application and aptitude, to be planets apart. Cannot imagine that has improved in twenty years.
Increase population from 5m to 15m - most of that $50 trillion would be spent on schools, teachers, roads, houses, sewers, hospitals and doctors.
And still have enough to join the others on a bus tour of Aotearoa suburbs willing pay a king's ransom for a humble abode.
Many still holding on to that dream.
And at the same time, there is suggestion out there by CANZUK International that Canada, Australia, NZ, UK citizens should enjoy the same type of rights NZ-AUS enjoy in being able to live and work without need for a work visa across the four countries.
I like it. Wonderful idea.
I feel those of us who are descendants of soldiers who fought with the allied forces in the two WWs are particularly disappointed and offended by the US under Trump II - and that includes the Americans with this family history as well. But sadly, in the meantime I think it is important we not only turn our back on the US - but also be prepared to defend one another against it.
NEVER expected to be in this frame of mind. NEVER.
“the Trump gold card,” as he called it, would replace the EB-5 visa program, which similarly provides a pathway to citizenship for wealthy foreign investor types but has been an avenue for fraud."
Asked whether a Russian oligarch might be eligible for a gold card, Mr. Trump seemed amused. “Yeah,” he replied. “Possibly.”
I see no way this ends badly...
I wonder if it is purchased for $5mil or you just have to "invest" $5mil?
There wont be any tax on income outside of the US and they'll pay full tax on income in the US.
Sounds like opening the gates for the multimillionaires to get access to the US market, protections etc so they can siphon off as much profit from US companies via charges to shell corporations in tax havens to prevent paying any tax in the US. Seems foolish given Trump already does this and knows exactly that the rich will do it also. 5m in, but a loss of a lot of tax revenue from those setting up shop who can simply pay a decent accountant to minimise tax contributions. Time will tell, but once they have citizenship I doubt it would get revoked if this was discovered en mass.
Superb article from ZH on the relationship between the ol' rat poison and global liquidity.
Their rigorous analysis found that over 12-month periods, Bitcoin's price moves in the same direction as global liquidity a remarkable 83% of the time.
This is higher than any other major asset class, making Bitcoin a uniquely pure barometer for global liquidity trends.
https://www.zerohedge.com/crypto/unsurprisingly-bitcoin-price-follows-g…
About those low winds.
Recent Decline in Global Ocean Evaporation Due To Wind Stilling
Ocean evaporation (Eo) is the major source of atmospheric water vapor and precipitation. While it is widely recognized that Eo may increase in a warming climate, recent studies have reported a diminished increase in the global water vapor since ∼2000s, raising doubts about recent changes in Eo. Using satellite observations, here we show that while global Eo strongly increased from 1988 to 2017, the upward trend reversed in the late 2000s. Since then, two-thirds of the ocean have experienced weakened evaporation, leading to a slight decreasing trend in global-averaged Eo during 2008–2017. This suggests that even with saturated surface, a warmer climate does not always result in increased evaporation."
https://agupubs.onlinelibrary.wiley.com/doi/10.1029/2024GL114256
I'm sceptical of the causal link here however. There has always been been a gradual shifting in the magnetic north pole on earth, as well as many many reversals in the earths magnetic field which have no significant link to human activity. I'm not saying the average temperature of earth isn't increasing much faster than historically, but we as a species have developed very quickly in the last ~100years to be able to measure more and more data, leading to many assumptions and estimates. Can we trust the data for sea evaporation and is there strong enough evidence to make a direct causal link of statistical significance?
Empirical data rather than politicians and activist pontificating about their future guesses. Turns out that things that are "widely recognised" may not be so - even when it comes to basics like evaporation. But hey, lets send $30 billion to some corrupt third world shithole to change the weather.
"It's the most fundamental of processes—the evaporation of water from the surfaces of oceans and lakes, the burning off of fog in the morning sun, and the drying of briny ponds that leaves solid salt behind. Evaporation is all around us, and humans have been observing it and making use of it for as long as we have existed.
And yet, it turns out, we've been missing a major part of the picture all along."
https://phys.org/news/2024-04-vaporize.html#google_vignette
"The climate system is a coupled non-linear chaotic system, and therefore the long-term prediction of future climate states is not possible."
https://archive.ipcc.ch/ipccreports/tar/wg1/index.php%3Fidp%3D501&ved=2…
Yeah its going to be very ugly once Russian energy re-enters the market , every one will slurp it up and ignore nasty Mr Putins tribulations caused. You think Europe will not start consuming Russian energy as quickly as possible....?
The world is a bit screwed, there are more then a few who believe if central bankers try QE again (first mover advantage last time) will be the end of who tries it first.... their currency will plummet to gold.
I personally think we may see negative interest rates this time for sure, some QE but I think it needs to be constrained...
Before Spruikers get excited, Housing assets will suffer massive loses compared with GFC in NZ. China cannot rescue us this time
Globally, we peaked in 2018. We are 3% down on that, at present.
The Saudi's biggest field - Ghawar - peaked in 1980, and is an aging field.
https://www.gem.wiki/Ghawar_Oil_and_Gas_Project_(Saudi_Arabia)
see: production. Classic graph, happens all the time, hype aside.
I think most Russian oil made it to market anyway, one way or another. Opening up again will mean the end to those sweetheart deals with India and china, for example.
Gas flowing to Europe again, now that would have some impact. Prices are still well above prewar prices. Good news for German industry and UK households, for a start.
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