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US loan growth slows; China M&A pullback; HNA troubles extend; China cuts import duties; Germany 'booms'; AU bank satisfaction high; UST 10yr yield at 2.34%; oil up, gold stable; NZ$1 = 68.8 US¢, TWI-5 = 71.4; bitcoin surges again

US loan growth slows; China M&A pullback; HNA troubles extend; China cuts import duties; Germany 'booms'; AU bank satisfaction high; UST 10yr yield at 2.34%; oil up, gold stable; NZ$1 = 68.8 US¢, TWI-5 = 71.4; bitcoin surges again

Here's my summary of the key events over the weekend that affect New Zealand with news that China has removed all import duties for infant formula.

But firstly in the US, retail sales are reportedly strong over the Thanksgiving weekend, especially so for online.

Not so strong however is bank loan growth; it slowed to just +3.5% pa in the September quarter according to official data out at the end of last week. That is the slowest growth since the March 2015 quarter.

In China, there are also signs of them pulling their horns in, with a sharp contraction in M&A activity in 2017. The number of agreements fell by -15% compared with a year earlier to 572 while the combined value of the deals dropped by nearly -40% to just NZ$140 bln; that's according to updated research by PwC. The drop follows a record spending spree in 2016 which saw an almost +300% surge in the value of transactions to well over NZ$300 bln for the full year.

And one of those previous high-flyers is HNA. The news about credit stress just seems to keep coming for the firm.

Meanwhile in Switzerland, their regulator, the Takeover Board, has accused HNA of supplying "partially untrue or incomplete" information during the takeover of Gategroup.

And another update, this time from global realtors Cushman & Wakefield shows spending by Chinese companies in overseas real estate markets fell to its lowest level in three and a half years in the September quarter. Investment plummeted -51% year on year to just NZ$3.5 bln.

China has removed the duty on infant formula, chopping it from 20% as part of a long list of other consumer health products (including some luxury goods) where import duty has been cut, or on the case of infant formula and diapers, cut to zero.

German business is anticipating a 'boom' in their economy. The latest business climate indicator beat analysts' expectations and climbed to a record 117.5 points in November from 116.8 the previous month, itself a record high.

In Australia, new research shows that satisfaction with banks remains high, although it dipped a minor -1% over 2017 to +81%. The bank in the crosshairs of the regulators, the media and the politicians, CBA, held on to its top spot among the majors. Satisfaction was lower for mortgage customers, higher for customers of other services. Generally, however, Aussies are not optimistic about what is in store for them in 2018. (Kiwis are much more positive.)

In New York, the UST 10yr yield has risen slightly to 2.34%.

The price of crude oil is again higher today, now just under US$59 / barrel, while the Brent benchmark is just under US$64. That's the highest it has been since May 2015 and together with our lower exchange rate signals that pump prices for petrol are about to shift higher and back to levels we last saw in 2014 (when U/L91 pump prices were over NZ$2.20/L). And on a tangential note, China as told the WTO that it will stop taking the world's 'recycling materials'. That will mean a collapse in prices for paper, cardboard and plastic that are recycled usually by street collection. It is a move that could put upward pressure on our local body rates.

The price of gold is unchanged at US$1,287 oz.

And the Kiwi dollar will start today little changed from where we left it on Friday. We are now at 68.8 US¢. And on the cross rates we are at 90.3 AU¢, and against the euro at 57.7 euro cents. That puts the TWI-5 index at 71.4. However, the bitcoin price has taken off higher, yet again, surging through US$9,000 and is now at US$9,337 (NZ$13,600). Remember, at the start of the month it was at US$6,750 (NZ$9,800) and at the start of October was at US$4,395 (NZ$6,100). It has more than doubled in 60 days.

And we have added bitcoin to our daily exchange rate chart below.

If you want to catch up with all the changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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9 Comments

When Shanghai Pengxin applied thru the OIO to purchase the Crafer farms , it supplied misleading, partially untrue and false information . Will the OIO review its application .Unlike New Zealand , Switzerland is not as dependent on China economically..

I don't think buying Crafar farms turned into the boom it was planned, for Pengxin or Landcorp, Landcorp has stopped it alliance with Pengxin. Also those light volcanic soils are going to interesting regards nutrient loss.
Now landcorp are getting into sheeps milk, nothing like chasing rainbows all over the place ,although I think sheeps milk is a great product.

Crafar farms were purchased at OTT prices as a "foot in the door" mechanism, of that I am certain. Had th Lochinver purchase proceeded, then they would have gone full noise on vertical integration, and NZ would be cut out of the process of dairying where they were concerned altogether. I remember seeing on their site how that was exactly the plan. Thank goodness the skids were put under it all. Last stupid move was allowing the Chinese government control of Silver Fern Farms.

Where we stand?

Hogan warned Britain may struggle to keep the 59 trade deals it now has through the EU on the same terms. “The UK would be running to stand still,” he said. “When it comes to trying to negotiate new FTAs with the rest of the world, Britain will be pushed around the way the EU – with currently more than eight times the UK population – will never be.

“The US have already started their attack on standards, so chlorine chicken and hormone beef for the British Sunday roast post-Brexit? India will insist on visas that the UK can never give. Australia and New Zealand are a long way away and of very limited economic interest. And any deal with China will be a one-way street in terms of costs and benefits for the UK.” [emphasis added] Read more

Does Russia view NZ more enthusiastically as a potential trade partner?

Russia’s Foreign Minister Sergey Lavrov discussed the pressing issues of bilateral and global agenda with New Zealand’s top diplomat Winston Peters on the sidelines of the APEC summit in Vietnam on Wednesday, the Foreign Ministry said. Read more

Barfoots has 255 properties listed for auction this week. With 2-3 weeks left before shop closing will vendors be celebrating or commiserating.

They should rent out their properties for a few years as New Zealand has a major shortage of rental stock. They would get a high rental return and tenant families would be housed.
Time in the market is key and in 10 years time a different government and a doubling in value is worth the wait.

Robert, it all depends in what you measure the value in.

In ten years time which ever parties are in power, we are unlikely to repeat the scenarios of the last few decades.

Ha-ha-ha... sure...