A review of things you need to know before you sign off on Monday; surging exports & imports, lackluster property market, $60 mln carbon tax subsidy, food-for-fuel deal in force, swaps up, NZX on hold, NZD firms, & more

South Korea's KOSPI Index down 4% today. So down 30% in a month. Volatility is worse than in the GFC. SK hynix down 36% in a month, but still up 566% over past 12 months.

http://tradingview.com/chart/i8P2jvrM/?symbol=KRX%3AKOSPI

Imagine that happening in any of the Anglosphere markets. 

"Of note though is the -7% retreat in buying from the USA."

Great news. Why finance MAGA? It's like shooting yourself in the foot, using light arms bought from MAGAland by our MAGAlite government. Seems all the coalition butt kissing isn't going to prevent Trump tanking our lamb exports though. 

"United States’ move to initiate a safeguards investigation into lamb imports from New Zealand and Australia. 

US President Donald Trump’s Trade Representative, Jamieson Greer, formally asked for the investigation on Wednesday NZT."

"Any decision to restrict imports, which could include tariffs or quota limits, sits with the US president.  NZ lamb currently faces a 10% tariff in the US."

https://www.farmersweekly.co.nz/markets/sheep-and-beef-markets/us-light…

Every EU country now runs a trade deficit with China, and the bloc’s annual deficit exceeds €300 billion.

All the shrieks of protest are about China’s undervalued currency, subsidies and industrial overcapacity shifting the cost onto European industry.

The West is hypocritical. And at least the Orange Swan has been direct about it early, unlike the EU who want to "civilize" the Chinese (woke Green energy ideas when the Chinese are already more advanced in that space). I can't see how the West will impose some kind of Plaza Accord on China. Simply cannot happen.  

https://www.euractiv.com/news/eu-vows-to-maintain-anti-china-trade-tool…

The US advantage has suddenly shrunk

The momentum that has powered the AI trade for months has stalled, and the arrival of Kimi K3 now threatens to blow up the most crowded trade in the world.

To be clear, Moonshot AI concedes Kimi K3 still trails Anthropic’s Claude Fable 5 and OpenAI’s GPT-5.6 Sol models on overall performance. But that’s like saying an Olympic champion is still ahead of a come-from-nowhere teenage athlete.

Fable and GPT-5.6 are Anthropic and OpenAI’s bleeding edge, frontier models that were thought to be at least 12 months ahead of any Chinese competitors. But now the gap between the very best frontier models out there and some Chinese upstart might be a matter of months.

"Singapore guarantees to supply New Zealand with fuel, medicines, and chemicals. In return, New Zealand guarantees to supply Singapore with food."

Guarantees is a strong commitment. Does it mean Singapore gets first pick should our own production crash for any reason?

'June was a strong export month with values rising 24.8% from the same month a year ago. Unfortunately most of this was spent on imports, especially electric vehicles which drove imports up +27.6% from year-ago levels. That meant only a +$29 mln trade surplus in June, less than the +$158 mln a year ago, and the +577 mln two years ago...'

Google Gemini has a few words to write on the tradeoff...

To calculate how many years it will take to break even on the reduced fuel imports, we need to compare the national upfront cost of importing these vehicles against the annual fuel import savings they generate for New Zealand.

The exact payback period varies depending on whether we look strictly at pure electric vehicles (BEVs) or the broader category of reduced-emission vehicles (which includes plug-in and standard hybrids).

1. Pure Electric Vehicles (BEVs)

According to data from Stats NZ, New Zealand imported $810 million NZD worth of pure electric vehicles in the year ending June 2026.

• The Math: The average Kiwi driver saves roughly $2,000 to $2,500 per year on petrol by switching to an EV. However, from a national trade perspective, we only care about the imported cost of that fuel (excluding domestic fuel taxes, retail margins, and local electricity costs). The avoided import cost of fuel is roughly $1,000 to $1,300 per vehicle annually.

• The Break-Even: When looking at total upfront import costs against national fuel savings, pure EVs reach a macroeconomic break-even point in about 6 to 8 years.

2. The Broader "Reduced-Emission" Category

If we look at the entire subset of low-emission vehicles that drove up the import surge—totaling $2.9 billion NZD (comprising $810m pure EVs, $413m plug-in hybrids, and $1.69 billion standard hybrids):

• The Break-Even: Because standard hybrids carry a lower premium but yield smaller overall fuel reductions per vehicle compared to pure EVs, the aggregated break-even timeline for the entire $2.9 billion asset class stretches to roughly 8 to 11 years to completely offset their import value via reduced fossil fuel imports.

Summary

While these vehicle imports heavily constrained the June trade surplus down to just +$29 million, they function as a long-term macroeconomic trade-off. New Zealand accepts a temporary, sharp deficit in manufactured imports to permanently shave down its ongoing fossil fuel import bill, paying itself back in 6 to 11 years depending on the specific vehicle mix.

Cement production support. 

I reckon cement manufacturing is a strategically important capability to retain within NZ.

I note that between 2020 and 2024, NZ production of other strategically important compounds was lost with the closure of Marsden Point: bitumen dropped from 70% locally produced to 0%; and CO² dropped from 100% to less than 10%.

I suspect cost of carbon emissions in NZ, against countries from which these products are imported was a critical element in the closure of Marsden Point. 

Virtue signalling has very real $ costs to NZ and long term vulnerability to import supply risks.

But we have abundant hard gravel supplies building up in many of our rivers, increasing risk of flood protection systems failure. Perhaps our roading network should revert to gravel roads, meaningfully adding to flood risk mitigation and making rail more attractive in the process.

Last bit tongue in cheek.