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A review of things you need to know before you go home on Friday; no retail rate changes, core funding slip, Abe to visit, wholesale rates rise, dairy price falls

A review of things you need to know before you go home on Friday; no retail rate changes, core funding slip, Abe to visit, wholesale rates rise, dairy price falls
4th Jul 14, 4:00pm by David Chaston
For Friday, July 4, 2014. <a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

Here are the key things you need to know before you leave work today.

TODAY'S RATE CHANGES
We had nothing from any institution today.

MORE DAIRY PRICE FALLS
Confirming the GDT auction results earlier in the week, the USDA Oceania monitoring of dairy prices reported more falls. WMP is now down to NZ$4,236/tonne, the lowest since February 2013 and +26% below the average for the past year. It is now -19.5% below the average over the past year for cheese.

CORE FUNDING SLIPPAGE
After reaching a record high in April of 86.2%, the Core Funding Ratio for all banks slipped sharply in May to just 84.5%, according to data out today from the RBNZ. It is not clear at this point which banks dragged it down, or why. Or whether this is the start of the industry trimming its settings now that it is comfortable with the regulatory metric. Each bank has an obligation to be above a 75% core funding ratio.

ABE TO VISIT NEXT WEEK
The Prime Minister of Japan Shinzo Abe will make an official visit to New Zealand next week, it was announced today. He has visited NZ twice before. Given its an election year, no doubt he will be targeted by the Greens and related groups over the whaling issue. Japan is the world's third largest economy, and New Zealand's fourth largest trading partner for both exports and imports.

ANOTHER IPO COMING
Cinema management company Vista Group is planning a $40 mln NZ IPO.

2014 ELECTION UPDATE
Bernard's daily election issues rundown can be found here with more on the Malaysian diplomatic case, and the launch of Labour's family violence strategy for which they will be allocating $60 mln.

WHOLESALE RATES
Wholesale swap rates moved up today reflecting the bond yield rises on Wall Street last night. The rises were generally +2 bps across the board. The 90 day bank bill rate fell back slightly however to 3.65%.

OUR CURRENCY
The NZ dollar moved sideways today essentially holding its own against a strengthened US dollar and is still at 87.5 USc. The weaker Aussie has held and we are still at 93.5 AUc. The TWI is now at 81.5. In any perspective, the NZ dollar is at great heights.

You can now see an animation of this chart. Click on it, or click here.

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9 Comments

by  Gummy Bear Hero  |  4th Jul 14, 5:26pm 1404451572

For those who don't know , Vista Group is an Auckland based software developer , which assists large and smaller cinema groups ( mostly offshore ) in their marketing and analytics ...

 

... it has won awards in the past for being a small Kiwi company with huge Y.O.Y. revenue growth ..

 

One to watch out for !

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by  Stephen Hulme  |  4th Jul 14, 6:51pm 1404456679

Let's hope it's not another hero to XRO pump and dump debacle you seemed so enamoured with a few months back.

 

Cautionary tales abound over the ditch for the unwary - I am not sure the environment is much better here - read more

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by  Gummy Bear Hero  |  4th Jul 14, 7:15pm 1404458126

... hitting below the belt again , Hulmey ...

 

I've said all along , the market is insanely pricing XERO to perfection and beyond .... the company itself is quietly getting on with business , and exceeding it's targets ...

 

I'm not a " pump & dumper " Stephen ... please getcha facts correct before you slag off at your fellow bloggers ...

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by  Stephen Hulme  |  4th Jul 14, 7:54pm 1404460458

Lol -  if I had to I would more than likely categorise you as a carnival barker than boiler room wolf.

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by  Gummy Bear Hero  |  4th Jul 14, 7:56pm 1404460561

... I can live with that ... Cheers !

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by  Henry_Tull  |  5th Jul 14, 10:43am 1404513838

the trick is to find a nice looking one...

The IPO market is about making hay while the sun shines, taking advantage of the ducks while they are running on greed rather than fear.

As any corporate financier will tell you, the smaller an IPO and the more rubbery the prospectus numbers the harder it is to get away. On that basis, in Australia, the hardest IPOs to get away are small resources; selling optimism without earnings is hard. But in 2007, the last recorded moment of market delusion, 65 per cent of the IPOs were in the resources sector despite the sector accounting for only 25 per cent of the market's capitalisation, 80 per cent of those issues were for less than $200 million and, I hate to tell you, 51 per cent of the IPOs in 2007 are down more than 90 per cent since.

You might remember some of the doozies, like RAMS Home Loans listing in July 2007 at $2.50 and hitting a record low of 4.6ยข within a year, and three brokers that listed in 2007, one dropped 81 per cent, another 94 per cent and the other 96 per cent. Don't ever let it be said that brokers don't know how to time the market.

Since 2000 there have been about 1420 IPOs that are still listed. Of those I am afraid to report that 29 per cent are down more than 90 per cent, 42 per cent are down over 80 per cent, 58 per cent are down more than 50 per cent and 73 per cent are down. That leaves 27 per cent of IPOS that are up, of which 16 per cent are up more than 50 per cent, 12 per cent are up more than 100 per cent and 1.7 per cent are up more than 1000 per cent - 10-baggers as they are known.

Read more: http://www.smh.com.au/business/ipos-pickup-a-healthy-sign-but-dont-get-carried-away-20140704-3bdsf.html#ixzz36XgTwNMP  
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by  cowboy  |  5th Jul 14, 11:01am 1404514915

that's one of the problems with Capitalism.  eventually everything is worth it's future value, which kills much of the investment value.   A good stag should hold up, but if it's that good, then the ipo is going to worth that much more... so in many ways a 10bag is a failure to properly evaluate future value of a company by the inital investors.

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by  Henry_Tull  |  5th Jul 14, 11:53am 1404518002

and with either the same group, or multiple x's vendors into the market (PE, looking to sell out, or retire debt from which they had earlier div recapped from), the weight of market force draws more of the future value out on day one.

If the one fund is driving several next IPO deals, the adviser becomes more a passenger. In some instances the fund group look to sharing advisory/placement fees

This is when the exchange listing rules (over and above companies law) come into effect in making sure markets are orderly, documents as they should be, market participant deviating behaviours dealt with and treat buying public & insto's fairly.

 

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