What happened Thursday

A review of things you need to know before you go home on Thursday; TSB Bank offers 4% for 2yrs, council income up strongly, China prices surprise, Aussie energy crisis, swaps jump, NZD falls

9th Mar 17, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes to report today.

DEPOSIT RATE CHANGES
TSB Bank has raised many other rates while it ended its 9 month 'special'. It also added a 4% rate for two years that is notable. UDC also targeted 2 years with a new higher rate of 3.85% rate, up +10 bps (or 3.90% if you have $100K or more).

HEALTHY REVENUE GROWTH
Statistics NZ released data today for local authorities for the December 2016 quarter, without comment. But the detail shows that rates and regulatory income are up +5.0% year-on-year to December. In turn that is marginally slower growth than for full 2016 over full 2015. (And on that basis, the Rates element grew +5.1% while the 'regulatory income' - fines and fees - grew +7.9%.)

BIG CHANGES IN THE MIDDLE KINGDOM
There has been quite a surprise from China today in the release of their consumer and producer price indexes. Firstly, their consumer inflation suddenly changed direction in February and the rising trend was reversed. March annual CPI is now up only +0.8%, a very sharp turnaround from February's +2.5%. It was a huge fall in food prices that drove this change. Kind of hard to believe, frankly, in an economy that size. And the data is even stranger for producer prices, even if it is in a consistent trend. Industrial producer prices are up +9.9% with input prices up +10.4% from the same month a year ago. That is a substantial rise, and a lot of it is being driven by the price of what they buy from Australia's mines. Surely it can't last, for either of them.

INSIDE TRADERS CAUGHT
The FMA has filed charges in the Auckland District Court alleging breaches of the insider trading prohibitions. The charges were filed in relation to trading in the listed shares of Eroad. The individuals charged are a current and a former Eroad employee.

EDUCATION, NOT CAPITAL GAINS
Some new research in Canada may also apply here. The top reason why foreign buyers from China want to get into the Canadian housing market is education, not investment, according to data from a popular global real estate listings website. Figures released Tuesday by the Chinese website Juwai.com in partnership with Sotheby’s International Realty Canada found that schooling was the primary motivation for potential Chinese homebuyers who viewed property listings in major Canadian cities in 2016.

FACING A TOUGH PROBLEM
The Australian prime minister has said his country has an energy crisis. The moves to 'close down coal and replace it with gas' have come unstuck because coal is being closed down, but the gas has been sold elesewhere, internationally. The official work on the issues sees the potential of backouts next year. Aussie power prices have doubled since they abandoned their carbon tax.

A 73% SURGE
If you listen to official Chinese reports, you are reassured that they have their housing market under control. Then some unoffical data comes to light; China’s land sales in 50 major cities surged +73% in the first two months of 2017 despite those many official measures rolled out to cool their red-hot property market. Fifty city governments received a total of NZ$95 bln from land auctions during January and February this year, up from NZ$55 bln in the same period of 2016, according to Centaline Property data. And then there is this.

WHOLESALE RATES RISE
Following the benchmark jump on Wall Street overnight, local wholesale rates are up +3 and +4 bps. This has taken the 2-10 curve to +125 bps and its highest since February 2014. The 1-5 curve is steepening to, now at +98 bps and a 35 month high. The 90 day bank bill rate is down however by -1 bp to 1.97%.

NZ DOLLAR SLIPS FURTHER
The NZD has continued to slide today and is now down to 69 USc. On the cross rates we are at 91.8 AUc, and at 65.5 euro cents. The TWI-5 index is now at 74.9 and that is near a six month low. Check our real-time charts here or see below.

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10 Comments

by RickStrauss | 9th Mar 17, 5:01pm 1489032081

>found that schooling was the primary motivation for potential Chinese homebuyers who viewed property listings in major Canadian cities in 2016

With the unfortunate side-effect they've since found in Vancouver of suburbs of mansions populated with people on poverty-level local incomes, enjoying free schooling and medical care while dad's overseas running his business.

by rastus1 | 9th Mar 17, 7:36pm 1489041390

......and while mum sits back here claiming the dpb and wff benefits.

by Cowpat | 9th Mar 17, 6:01pm 1489035674

Stats NZ , should send a small internal group , maybe 1000 or 2000 staff, to see how the Chinese gather information, so promptly and without the need for such wild revisions, as is common here. Each Stats NZ staff member should acquaint themselves with the abacus prior to attending , and take grains of salt to assist in counting.

by Fritz | 9th Mar 17, 6:35pm 1489037705

Spoke to a mate today who is senior at one of the big RE agencies. He reckons prices are down 10-12 %, apparently South Auckland is taking a battering in particular.
You heard it here first.

by Boatman | 9th Mar 17, 7:58pm 1489042734

Why has BHP lost 5% in early morning trade ?

It lost 2% on Wednesday

That's a fourth consecutive day of losses

It cannot be all due to the share going ex-div there must be something else going on

When a large cap multi-national like BHP loses 5% its a massive destruction of shareholder wealth.

by Zachary Smith | 10th Mar 17, 7:07am 1489082837

Interesting about the Chinese and good schools. The rise in property prices in China will have an on flow effect with cashed up buyers able to pay more if they can get their cash to another country. This is probably not just confined to China. With globalisation a property boom in one place will see some of that money transferring to other countries. As long as Western schools are seen as the best then cities with the good school areas will see property prices go up and stay up. Especially so for English speaking Western countries.

For those amused by TradeMe urgent sale notices I see these while looking for bargains this morning:

Owner Desperate Beyond Belief !
Owners bought, Need to Sell Urgently

It seems to me that there could be some good buys if you can find a seller who has to sell because they have bought another house. I'm wondering if house prices can oscillate. Go up 100K then go down 100K then go up 100K and so on for a long period. In this scenario an astute buyer could make money.

by BadRobot | 10th Mar 17, 7:31am 1489084300

Don't forget there are many private schools in New Zealand that offer boarding - so the house in New Zealand may not be necessary ( a guy I went to school with was from Thailand - his daughter is now attending a boarding school in New Zealand).

One thing I have noticed in Christchurch is how many houses for sale are empty.

by Zachary Smith | 10th Mar 17, 7:49am 1489085379

Yes, although many families want to be with their children. I would say there are fairly limited boarding places anyway. Many of the best private schools are in premium areas as well. Auckland DGZ for instance has many top private schools. It's amazing how many people in this zone send their kids to private schools.

by BadRobot | 10th Mar 17, 6:06pm 1489122404

There are home-stays as well. While I'm not convinced that New Zealand has the best education in the world it is most likely better than in most other country's.

by positivelywallstreet | 10th Mar 17, 6:19pm 1489123171

Even to a New Zealander buying a house to house your kids while they study seems a good idea, used to be done years ago. No suprise that overseas mums and dads think the same.
My other point is that while countries such as india and china have good secondary education systems they are very short of tertiary places and competition is fierce, you may need wealthy parents.
It all makes perfect sense.
Oh, and by the way, coming to NZ to learn english for business reasons is a good idea, they learn by immersion...