A review of things you need to know before you go home Tuesday; deposit rate changes; building work completed; B&T sales results; new vehicle sales; commodity prices; Caixin services PMI; local rates and the NZD stable

A review of things you need to know before you go home Tuesday; deposit rate changes; building work completed; B&T sales results; new vehicle sales; commodity prices; Caixin services PMI; local rates and the NZD stable

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

No changes to report here today.

The Co-operative bank has reduced it 18 mnth, 3 yr and 4 yr rates to 3.65%, 4.00% and 4.15% respectively. SBS Bank has reduced its 8 mnth rate to 3.30% and increased the 9 mnth rate to 3.55%.

In the June 2017 quarter there was $5.2 bln worth of building work completed. $1.8 bln was non-residential buildings and $3.4 bln was residential, of which, $2.8 bln was for new dwellings. On a seasonally adjusted basis, building activity fell by -0.5% in the June quarter, where non-residential activity was down -0.7% and residential was down -0.4%, when compared with the March quarter. On an unadjusted basis, total building activity was up +4.9% compared to the June 2016 quarter. Auckland building activity was almost $2 bln, including $1.3 bln of residential buildings. Building work in Canterbury slipped under the $1 bln mark for the first time in three years.

Barfoot & Thompson sales data released today shows sales numbers down and prices remaining firm. 777 was the lowest number of sales recorded for an August since 2011. Average sales price of $918,926 and median price of $820,000, while higher than July, were lower than their averages for the last three months. On a year-on-year basis the average price was up +1.4% and median was down -3.5%. Barfoot & Thompson managing director Peter Thompson said there was a sense of realism among both buyers and sellers. While listings in August were higher than July, 1260 versus 1173, they were well below the 1706 listings received in August 2016.

While new passenger vehicle sales numbers were down for the second month running on a year-on-year basis, commercial vehicle sales numbers were still strong. This has resulted in over 100,000 new vehicles, passenger and commercial, being registered since the beginning of this year - a record for any calendar year. Compared to the calendar year to August 2009, at the height of the financial crisis, there was a 129% increase in the number of vehicles registered in the year up to August - 43,384 in 2009 to 103,923 this year. Toyota remains the market leader with 19% market share, Ford and Holden follow with 10% and 8% respectively.

The ANZ Commodity Price Index slipped 0.8% in August 2017 when compared to July 2017 but was up 16.3% compared to August 2016. The dip in the New Zealand dollar has buffered some of the losses in local currency. The index in NZD terms was up 0.2% m-o-m and up 16% y-o-y. In terms of sub-components, on a month-on-month basis, dairy traded sideways, meat had a tough month, seafood prices were unchanged, horticulture fell 1.7%, forestry was up 0.7% and aluminium was up 6.2%.

A change to the constitution of Crown Irrigation Investments Limited (CIIL) will allow it to fund water storage projects with direct environmental and economic impact, rather than just economic impact. This is an important change as it recognizes how important water storage and distribution projects are to the environment.

The Department of Internal Affairs (DIA) has issued a formal warning to Equity Trust International Ltd under the Anti-Money Laundering and Countering Financing of Terrorism Act. Equity Trust, which provides trust and company services to overseas-based customers, failed to establish, implement and maintain an adequate AML/CFT programme, failed to conduct customer due diligence, failed to adequately monitor accounts and transactions, and failed to keep adequate records, the DIA says. Equity Trust, which has featured in interest.co.nz stories, has been told to take immediate action to rectify these issues or face "further enforcement action."
Neither Ingenico Group nor Paymark's bank shareholders are saying much about a report that the French company has reached a deal to buy the New Zealand electronics payments processor. Australia's BusinessDay reports Ingenico appears set to buy Paymark for about NZ$150 million. Contacted by interest.co.nz, Ingenico's Asia-Pacific managing director John Tait declined to comment. A representative for Paymark's shareholders - ANZ, ASB, BNZ and Westpac - said no announcement was imminent.

Tower has launched its own cross appeal against the Commerce Commission's decision to decline Vero's application to acquire 100% of Tower. The Tower board fully supports Vero with its appeal.

The Caixin Services PMI rose from 51.5 to 52.7 showing expansion of overall business activity. Growth in new business accelerated in the services sector midway through the third quarter, with a number of companies linking growth to better market conditions and new marketing strategies. Stronger activity growth has resulted in the service sector expanding their payrolls in August.

Local swap rates are largely unchanged today with only the 10 yr rate moving up +1 bp. The 90 day bank bill rate is also unchanged at 1.95%.

The NZD has been relatively stable today at 71.7 USc. On the cross rates we are at 90.0 AUc and at 60.3 euro cents. The TWI-5 is at 73.9. The bitcoin price is down to US$4,181.

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Could this development further exacerbate US agitation in and around China's expanding zone of global economic influence?

China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.

The contract could become the most important Asia-based crude oil benchmark, given that China is the world's biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars.

China's move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong. Read more


The largest Russian bank Sberbank is planning to increase the supply of gold to China up to 10-15 tonnes in 2018, the head of Sberbank CIB, the bank's investment department, told Sputnik."

In July, our subsidiary bank in Switzerland started trading in gold in the Shanghai stock market. Under the pilot deal, we delivered 200 kilograms [440 pounds] of bars of gold to Chinese financial institutions. This year we are planning to additionally deliver about 3-5 tonnes of gold to China. Next year we expect the increase in deliveries to China of up to 10-15 tonnes. Perhaps we will even exceed this figure," Igor Bulantsev said ahead of the third Eastern Economic Forum (EEF) in Vladivostok. Read more

A possible new gold backed reserve currency certainly curbs USD debt demand to fund global oil based products purchases and the like.

True story .Overheard in bank, Remuera branch last week . She, early 30s,,migrated decade ago from Europe. High net worth manager, husband 30s builder/salaried. No children but wishing. Both full time. 5 years ago saving towards property Tauranga, now priced out, moving to Palmerston North.

Here's another true story; A friend of mine rang me this morning to tell me that they had just lost their job as yet another International IT has had to move out of Auckland since it is far too expensive to maintain a business here and the cost of living is far too high, therefore its not commercially viable in a global economy.
I felt really sorry for them. I know of several other companies are also at risk around Auckland.

This is why I can't stand RE's who continually try to push up house prices. Do they not realise the damage their doing! Do even Landlords not realize that soon there will be no one to pay the rent if real business can't function because it's just too expensive?

China is really cracking down on crypto-currencies which should be rather worrying for Bitcoin since most of the customers are from China. According to Bloomberg they comprised of 90%+ purchasers, since it was a favorite method of getting money out of mainland China.

BBC; China bans initial coin offerings calling them 'illegal fundraising'.

"As quantitative easing ends and rates go up, debt servicing will become increasingly tough and if growth is not forthcoming, all hell will break loose."

This from the India Times.

Sums it up really.