Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that the New Zealand dollar has been the worst performing currency in the world overnight.
The kiwi dollar fell a full cent overnight to 73.9 USc and also fell through a 10 year low to below 75 Australian cents. It has fallen more than 2 cents against the US dollar this week.
The US dollar has been strong overnight as US interest rates continue to rise amd as fears about more problems in Europe drove demand for safe haven assets in US dollars.
The US 10 Year Treasury yield rose to a 7 month high of 3.5%, making the US dollar look more attractive.
Bond investors are worried that the US government's failure to fix its massive budget deficit will stress America's ability to service its debts in the future, and there are signs the US economy is bubbling back to life, boosting inflationary pressures.
US industrial output grew 0.4% in November, which was more than expected, although US consumer price inflation of 0.1% in November was weaker than expected.
News that Moody's has threatened to downgrade Spain's credit rating refocused concerns about the European debt crisis, although Portugal managed to complete an auction of new government debt, albeit with heavy European Central Bank support.
The New Zealand dollar often tends to fall or rise in line with global appetites for risk outside of the US dollar. Vietnam's credit rating was downgraded overnight on fears of a currency crisis and a debt default at shipbuilder Vinashin.
Meanwhile, Fletcher Building has launched an unsolicited takeover bid worth almost NZ$1 billion for building materials maker and distributor Crane Group in Australia. This would mean more of Fletcher Building's revenues come from Australia than from New Zealand for the first time.
See more detail here in its presentation showing details of the deal, which is being funded by new shares and cash.
After the deal 45% of Fletcher's revenues will be in Australia, while 42% will be in New Zealand. Before the deal Fletcher had 49% in NZ and 34% in Australia.
The deal, if agreed, would add 12,000 Australian shareholders, bringing total shareholders in Fletcher Building to 35,000.
Will the largest stock on the NZX leave the NZX for Australia?
No chart with that title exists.
26 Comments
How long before the ratings agencies look at NZ....a downgrade looks a sure bet considering the glacial approach by the govt to cutting the state splurge...not good enough to claim they are taking the rough edges off the recession when doing so is only adding razor sharp edges elsewhere!
The ocr will not save those in massive debt from the onslaught from overseas...credit is rising in cost and there is no ceiling in sight.
This is a time to pay debt off and a time to run like hell from any bank mortgage fishing effort.
Wolly
What I find unbelieveable is that anyone takes these ratings agencies seriously anymore given their involvement (fraud?) with CDO's and this in itself is destabilizing, They are now throwing Nations to the wolves based on their 'expertise', These ratings are at best relative and we are all like rats clambering not to be the one at the bottom of the pile
Neven
The 3.125% noted for the BNZ raising in the Covered Boind market is a gross interest rate. It does not include the cost of swapping it into NZDL and covering the exchange rate risk. The net rate of landed funds will be conciderably more. So much so that the BNZ had not said what it's landed rate will be.
There won't be any considerable increase of interest rates in the foreseeable future, anything else is nonsense. If market rates are on the up, you can be sure government or central banks implement some way for banks to raise cheap capital on the back of the tax payers via deductions or tax schemes or the likes. Politicians want to stay in power, and so they please the people with what they want the most, cheap money. Easy as that.
In my country, house prices are at an all time high, bank lending is as frivolous as ever, economy is booming like never before (7% growth only last quarter), power prices through the roof, petrol at year high, basic food prices surging etc etc... But apparently, according to our central bank, inflation is below 2%, funny that... And better, the OCR is at 1.25%, and is projected to top at 3% or so in two years. Inflation will well and truly have run amok by that time. It's absolute insanity and nobody cares. That's why i'm confident interest rates will remain low until the destruction of our financial system, nobody gives a shit as long as they get their credit fix. Never mind the implications, leave that to our children.
Andrew Krukziener declared bankrupt - http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=106…
Feltcher Building have made further inroads into Oz with the take-over of Crane Gp. This is an excellent business , and a perfect bolt-on for Feltchers .
The formica coated question is , how does NZ ensure that FBU don't relocate their HQ to Austrailer ! Clearly they won't abandon their NZX listing . But the loss of head office would be another psychological blow to corporate NZ .
From their annual report , FBU employ 16000 people , 7700 of them in NZ . 3800 in Oz , 1300 in Europe , USA 1100 , 1100 in Asia too , and a further 1000 in the South Pacific .
This is a company we want to remain domiciled in NZ !
We'll have a arrange for another earthquake ............ unless the National government can keep business and fiscal conditions in NZ more conducive than they are in Oz . ............... hmmmmmmm , better get on with the shaking , methinks !
is that a done deal GBH..? go squiz this..http://www.theaustralian.com.au/business/fletcher-building-pins-740m-bid-on-shareholders/story-e6frg8zx-1225971751351
Crane Group's board has failed to add significant value to shareholders over the years . Always a good dividend in the pipeline , but little growth . So I reckon that many will take the munny and hop away with it , happily .
In Fletcher's Lingo , the 19 X earnings appear a tadge rich , but Crane has historically earnt fatter profits than it currently is .
Not sure if you saw it GBH, and it's a bit dated now, but I did do a Double Shot interview with Jonathan Ling a few months ago - http://www.interest.co.nz/news/fletcher-buildings-ling-says-deleveragin…
The ACCC has approved the Air NZ-Virgin Blue trans-Tasman alliance - http://www.nzx.com/markets/NZSX/AIR/announcements/4465495/ACCC-Gives-Go…
"Australia’s house prices may be overvalued by 5 per cent to 10 per cent, the International Monetary Fund says in a research report, but adds that any market correction is “likely to be orderly”.
Higher population growth compared with other advanced economies, rising exports and disposable incomes, and a scarcity of land for development have contributed to the surge in home prices, according to a paper by IMF staff Patrizia Tumbarello and Shengzu Wang."
http://www.theage.com.au/business/housing-market-collapse-unlikely-imf-20101216-18yns.html
Well you can't question the IMF can you...they wouldn't tell massive half truths or tip whitewash over a turd. 'Honest brokers'....right?
"... the United Kingdom and the United States could be the next victims of the sovereign debt crisis."
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