Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
Kookmin Bank cut its floating rate from 6.20% to 6.00% today.
TODAY'S DEPOSIT RATE CHANGES
WBS cut TD rates for 6 mths but raised them for 9 mth and 1 year terms. NZCU Auckland cut all rates from 3 months to 3 years.
DOWN, UP, "FINELY BALANCED"
There were market swings in favour of renters in Christchurch, while in Wellington landlords are the winners with a sudden jump. In Auckland it is finely balanced, according to Trade Me Property.
HEARTLAND RENEWS HARMONEY DEAL, SEES ACQUISITION OPPORTUNITIES
Heartland Bank has posted a 9% rise in interim net profit after tax to $25.6 million, and reiterated its full-year forecast for profit of between $51 million and $55 million. The bank says it grew motor vehicle lending by $30 million and reverse mortgages by $9 million in NZ, and A$18 million in Australia. It lifted lending through Harmoney by just $1.7 million to $34.5 million while negotiations over its facility with the P2P lender took place. These have concluded and Heartland now has another $35 million of lending capacity with Harmoney. Meanwhile, the bank said its direct exposure to dairy farmers is 8% of its total lending with an average LVR of 59%, and current market conditions present "greater opportunity" for acquisitions.
TRUSTED ADVISER FACES THEFT CHARGES
Jonathan Graham West (60) appeared in the Tauranga District Court yesterday to face charges laid by the Serious Fraud Office. West faces five Crimes Act charges of theft by person in a special relationship for his conduct as a director of The Investment Centre Limited and Matrix Futures Limited, which he operated between 1994 and 2013. The alleged offending involves about $1.4 million. The SFO Director said, “Even though Mr West had been given some authority to invest on behalf of clients, our investigation alleges he stepped outside those parameters and that misuse of client money is the basis of the allegations in this case. Unfortunately, given his previous sound advice and results, we believe Mr West’s victims had very little reason not to trust him.”
MORE ECONOMIC GROWTH, LESS ENERGY
The partially floated SOE power companies are continuing to meet their listing guidance, which probably surprises many critics. It is interesting how the heat has gone right out of the 'SOE float' debate now that most voters realise these are still companies majority owned and therefore controlled by the Government. The latest to report is Mighty River Power and their report shows that electricity demand for the whole of the country is up +1.4%. Given real GDP is up about +3%, energy intensity (efficiency) continues to improve. Per capita, it is improving even faster.
STILL WATCHING, WAITING
We have been monitoring dairy farm listings weekly in the major dairy regions since mid-August, looking for signs of heightened sales activity. So far, not much to report. We don't have a full year's data yet so seasonality is still an issue for what we have. It is only in Northland that we saw any sharp run-up in 'for sales'. But even that has settled back to a more normal level since December however.
AUCKLAND ON TOP
Auckland has maintained its position as the world’s third most liveable city in the 2016 Mercer Quality of Living survey, and is the highest ranked city in the Asia-Pacific region. (Most Aucklanders know this.) Mercer ranks Auckland third again behind Vienna and Zurich. The highest ranking Asia-Pacific cities after Auckland are Sydney at 10, Wellington at 12, Melbourne at 15 and Perth at 21.
UPDATE: NEW PLYMOUTH SELLS TASMANIAN DAIRY FARMS
A private Chinese company, Moon Lake Investments has been given the green light by the Australian federal government to buy Australia’s biggest dairy farming business, Tasmania’s Van Diemen’s Land Company from the New Plymouth District Council for AU$280 mln.
WHOLESALE RATES INCH DOWN
NZ swap rates are lower today by just -1 bp all at the long end. That flattens the curve. The 90-day bank bill rate is back up to 2.60%, a +1 bp rise.
NZ DOLLAR RANGES
The Kiwi dollar gained a little last night but most of that has leaked away today and we are back in the range. It is now at 66.9 USc, and at 92.7 AUc although the TWI-5 is now at 71.5 on the back of a weaker euro. Check our real-time charts here.
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13 Comments
And then there is the curious case of the Stonewood Homes franchisor going into receivership;
http://www.stuff.co.nz/business/industries/77166933/stonewood-homes-fra…
More often than not, building firms crumble under the pressure of a construction boom, Registered Master Builders Association (RMBA) chief executive David Kelly said. "More companies get into trouble on an upwards spiral, than a downwards spiral." Building consents for homes and apartments hit a 11-year high in 2015. Figures from Statistics New Zealand show a total of 27,132 new dwellings were given the green light last year - up 9.8 per cent from 2014. The 2015 total was the highest since 2004, when 31,423 new dwellings were consented. While Kelly did not know the reason behind Stonewood Homes receivership, he said staying afloat during a construction boom was difficult. "What can happen when we get a construction boom is businesses take on more work, but they've got fixed prices with their clients, but costs keep going up... "All of a sudden they realise 'I've got a cash flow problem'." Increasing costs could involve sub-traders and building materials, he said. Kelly did not believe the master franchisor collapse would have too much of an effect on the regional branches. "From what we can tell, there is not going to be a big ripple effect."
But, but, but - I thought there was no inflation? How could their costs be rising so rapidly?
Nice one Kate!. Your inflation comment is bang on and only goes the highlight the fact that our RBNZ along with many other delusional economic experts blatantly 'cherry pick' their data.
Where does all the money come from to fund these projects? The very 'thin air' atmosphere of banks is where. The one greatest inflationary place of all!
Whats up (or down) in Oz??
http://www.domain.com.au/news/what-to-do-when-property-bubbles-burst-35…
Housing booms have seen many make their fortune, but getting it wrong can leave investors with homes worth millions of dollars less than they paid for them.
In 2012, then 24-year-old Kate Moloney and her 23-year-old husband, Matt, were crowned Investors of the Year in Your Investment Property magazine. Today, if the Moloneys sold all their properties, they would still owe $3.5 million to the banks.
“We started this journey when we were 21, we had half our home paid off. We were told to go and refinance our home and get finance to buy an investment property,” Ms Moloney said.
Suicide and depression is rampant, people are on anti-depressant tablets … you’re never shown this side of the story.
Kate Moloney, former Investor of the Year
They bought 16 properties in mining towns such as Queensland’s Moranbah, pocketing $570,000 a year in rental income. Now, they are considering all their options, including bankruptcy.
P.S.
http://m.smh.com.au/nsw/the-wolli-creek-apartment-block-so-close-you-ca…
The partially floated SOE power companies are continuing to meet their listing guidance, which probably surprises many critics.
What are MRP energy user bills paying for?
Our Board is pleased to be returning a total of $296 million to Mighty River Power’s owners for the year ended 30 June 2015, representing a 100% pay-out of Free Cash Flow for the 2015 financial year and a special dividend paid in December, which related to the 2014 financial year.
Net interest increased $15 million to $99 million, reflecting higher interest costs related to $300 million of capital bonds issued in July 2014 and $6 million of interest capitalised in
the prior financial year.
The Company holds 24 million treasury shares from a $50 million share buyback executed during FY2014 and up to 15 million share buyback programme is currently lodged with the NZX. Over the past two years, in light of lower demands for growth capital expenditure, the Company has made significant headway returning cash to shareholders while retaining balance sheet flexibility for future growth opportunities. Read more
Seems the government and the private minority shareholders are in the process of hollowing out MRP at the expense of it's customers.
You pretend surprise. They were always going to be brilliant cash generating businesses, with steady demand and oligopolistic pricing power. They should never have been sold/given away, given their irreplaceable hydro assets.
David, there's not much point beating on about very spilt milk, but any pretense that the sale deals were ever remotely a sound economic or financial idea, other than for the very often foreign investors, is surely long gone.
A lot of us could see the economic argument for the sales as daft but hey since they wanted to be stupid it was a golden opportunity to cash it which many of us took. What's the old saying a fool and his money are soon parted unfortunately NZ was parted with it due to a slick salesman
Rivers of Gold - Government Rat Runs
I first became aware of this a few years ago when the NSW government built the Cross City and Lane Cove Tunnels as Toll Roads, then closed off all the surrounding city surface streets other than those that forced cars to use the toll roads - they were called rat-runs
Then on Sunday Bernard Hickey gives us another example where the European Central Bank has just announced it is looking at withdrawing the 500 euro note from circulation. It wants to make it harder for people to avoid negative interest rates
http://www.interest.co.nz/opinion/80198/bernard-hickey-explains-why-fal…
When the NZ Government sold off 49% of the power companies it was within its means to use some of the proceeds to incentivise the installation of home Solar PV, and install Solar PV on every State House and school and government building
But it didn't
Now you know why - you are captive to the rat-run at exhorbitant prices to an outfit that has its fingers in your wallet with a noose around your neck - and there's not much you can do about it.
Eventually that's what will happen to Auckland's motorways, turned into toll roads with side roads blocked off, turned into no-exit avenues, and put traffic lights on every corner of every surface street
It's a Gold Mine waiting to be mined
It was always a mystery why NPDC, in the heart of a dairying district, decided to buy a low-productivity farm complex in a notoriously poor farming region when it could have used the money from the Powerco sale wisely.
However, all the snouts in the trough did manage to extract millions of dollars in management fees over the ownership period, and had plenty of trips across the ditch to check the grass growth and decide what additional funds were needed for development.
Anecdotally, the farmhouse was the most attractive and most expensive item on the farm.
So now the sorry saga is over, and the Chinese have acquired another bit of 'the empire'.
And we can rely on the 'idiots and saboteurs' at NPDC to loose the remainder of the community funds over the coming year or two.
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