What happened Tuesday

A review of things you need to know before you go home Tuesday; NZCU Baywide trims some rates, Heartland adds new saver, population younger again, Geneva profit up, NZD out of favour, swaps stable, NZD down, bitcoin recovers

14th Nov 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 today.

DEPOSIT RATE CHANGES
NZCU Baywide trimmed a set of term deposit rates today from 9 months to 2 years. They also trimmed their online call account. They were minor downward changes.

NEW SAVER PRODUCT FROM HEARTLAND
Heartland Bank today launched a new saver product, Boost Saver. It pays 3.25% pa for four months, and then reverts to an at-call savings account paying currently 3.00%. Interest is paid monthly. A minimum of $1,000 is required.

NEW GOVT AIMING TO MANAGE TOURISM GROWTH
New Tourism Minister Kelvin Davis gave his first major speech today, to the Tourism Summit Aotearoa. Davis said the new government's priorities include managing growth in tourism, regional economic development, and Maori economic development. "I want to be a minister that listens to the people in the industry and finds out what needs to be done to make sure that we keep growing in a sustainable way. We will do everything we can to make sure that tourism continues to be the jewel in New Zealand’s crown," Davis said.

POPULATION GETTING YOUNGER
Population data out today showed that for the fifth year in a row, the median age has gotten younger. It is now 37.0 years, down from 37.6 years in 2013 which was its peak. The June 2017 level is now the same as for 2011. Males are now their youngest since 2003 at 35.6 years, while females are now their youngest since 2009 at 38.3 years. During the June 2017 year New Zealand's population grew by +100,400 (+2.1%). Natural increase (births minus deaths) was +28,100 and net migration gain (arrivals minus departures) was +72,300. At 30 June 2017, New Zealand's estimated resident population was 4.79 million. There were 2.36 million males and 2.43 million females, equivalent to 97 males for every 100 females. That is a ratio that has been closing over the past ten years.

FINDING PROFITS AGAIN
Geneva Finance, a survivor from the GFC, has reported a +34% rise in profits, following a +45% rise in 2016. Many shareholders ended up with their holding as part of a debt-for-equity swap during the finance company industry crash. The company operates in the car and personal loan segment and has been operating since 2002. (At one time it was majority owned by Peter Francis.)

TOUGH CONDITIONS
And speaking of personal finance, new data out in Australia shows that this is the only lending segment getting growth, such that it is. It was up a miserly +0.8% in the year to September. The data shows a -2.1% fall for housing, a -7.8% fall for commercial finance, and a -1.3% fall for lease finance.

NOBODY'S FAVOURITE PLAYTHING ANY MORE
And staying with the out-of-favour theme, data out today from the RBNZ shows that is the case for the Kiwi dollar. The volume of trades has been sinking over the past year and the October level is the lowest since May 2016. There has been a downward trend for over a decade now. And that has been driven by a two-thirds fall in the volume of currency swap trades. Speculation by currency traders is not using the Kiwi dollar.

BUBBLE PRICING
The newly opened Bunnings Warehouse in Grey Lynn, Auckland has been sold at a yield under 5%. Now another Auckland Bunnings facility has been bundled up with two Sydney and one Adelaide properties in a new deal and sold to CBRE Global Investors, and includes some sites which are still under construction. This new set was also priced at a 5% yield. CBRE's investors are unknown at this time.

WHOLESALE RATES RISE
The long end (three years plus) rose by another +1 bp today. No changes to . The 90 day bank bill rate is unchanged at 1.94%.

NZ DOLLAR DROPS, BITCOIN RECOVERS
The NZ dollar is down nearly ½c to 68.8 USc. On the cross rates we are softer as well at 90.2 AUc and at 59 euro cents. The TWI-5 is now at 72.1. The bitcoin price is at US$6,631, a +US$744 gain from this time yesterday and a +12.6% recovery.

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

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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7 Comments

by russellj | 14th Nov 17, 4:51pm 1510631506

So the estimated resident population is 4.79. How many on top of that??

by Stephen Hulme | 14th Nov 17, 6:08pm 1510636135

As investors fret over the recent sell-off in US Treasuries, a reminder that the world is still awash in low yields.

Nearly $11tn of sovereign and corporate bonds trade with a yield below zero, according to data from Bloomberg Barclays Indices. The $10.9tn figure includes notes and bonds in the benchmark global aggregate index as well as Bloomberg Barclays’ US, Euro, UK and Japanese short-Treasury indices at the end of October. Read more

by J.C. | 14th Nov 17, 6:44pm 1510638275

Freelancer.com CEO Matt Barrie slams the Australian economy to his professional network on Linkedin. Interesting place to publish his co-authored, dire outlook.

https://www.linkedin.com/pulse/australias-economy-house-cards-matt-barr…

by bw | 14th Nov 17, 7:36pm 1510641395

Outside of the OECD, Australia ranks just after the Democratic Republic of the Congo, Gambia and the Lao People’s Democratic Republic and just before the Central African Republic, Iran and Liberia.

And check out where New Zealand ranks! Not too far behind Australia....

(PS: That's one good article! Thx. It doesn't tell us anything we don't already know, but all added up? It's terrifying...)

by J.C. | 14th Nov 17, 9:23pm 1510647781

Glad you enjoyed it. The most telling point for me was how little the mining industry actually generates in profit. And this quote is telling:

“Five prime ministers in [seven] years have come and gone as standards of living fall in part owing to massive immigration inappropriate to economic circumstances and other property-friendly policies. The most recent national election boiled down to a virtual referendum on real estate taxation subsidies. The victor, the conservative Coalition party, betrayed every market principle it possesses by mounting an extreme fear campaign against the Labor party’s proposal to remove negative gearing. This tax policy allows more than one million Australians to engage in a negative carry into property in the hope of capital gains. In a nation of just 24 million, 1.3 million Australians lose an average of $9,000 per annum on this strategy thanks to the tax break.”

by Zachary Smith | 14th Nov 17, 8:39pm 1510645148

I don't get the point of these articles like Matt Barrie's. Is it a sort of horror story to scare the bejesus out of you? I suggest don't bother reading it as here is his own summary:

I've come to the conclusion that it's actually all too hard to fix.

So no real answers here except a vague, we have to become more technically innovative or something and not govern people so much. I often wonder if they are hinting that there should be some sort of epic, revolutionary, transformation of society but I don't see how that could be achieved.

by J.C. | 14th Nov 17, 9:13pm 1510647210

I don't get the point of these articles like Matt Barrie's

I get the point. It's an antidote to most of the self-serving nonsense most people lap up on a daily basis. Many of the economic distortions that Barrie identifies are why his business ventures exist.

But like I said, Barrie is not afraid to share his opinion and reputation among his professional network, who include the leading tech entrepreneurs on the planet.