A review of things you need to know before you go home on Monday; no rate changes, service sector healthy, vegetable prices jump, a2 Milk targets Korea, strikes coming, FBU in play, swaps up, NZD stable

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

MORTGAGE RATE CHANGES
No more rate changes today

TERM DEPOSIT RATE CHANGES
Nothing to report today either.

A LIFT IN SERVICE
The latest view of the health of our large service sector is very positive. BNZ says: "Service sector activity hopped higher in March. The Performance of Services Index posted a decent lift to 58.8 from 55.3 in February, on a seasonally adjusted basis. Sales activity drove the strength, with this sub index rising to 64.1 – near its highest level since the survey started 11 years ago. PSI strength was widespread." But BNZ is also cautioning about reading too much into the positives. "Whether it's Easter timing, weather influences, or something else, the volatility counsels caution in interpreting current data. It’s definitely possible the March PSI result overstates the underlying trend."

VEGETABLE FLURRY
Tomato, lettuce, cauliflower, cabbage, and broccoli prices rose sharply in March 2018, boosting vegetable prices almost +10% in just one month (after adjusting for typically seasonal changes), Stats NZ said today. However, as dramatic as that may sound, that only pushed up overall food prices by just +1.4% compared to the same month a year ago. Nil growth in grocery prices in the year was the main restraint.

NEXT STOP, KOREA
The a2 Milk Company is to have its products distributed in South Korea by Yuhan Corporation. They are a leading pharmaceutical company with annual revenue of US$1.4 bln. Yuhan also has capabilities in consumer goods and has established relationships with leading international companies including Kimberley-Clark and Clorox. South Korea is an attractive market opportunity given high per capita dairy consumption, world-class retailers and a fast-growing e-Commerce channel.

KEEPING TRACK
After the high activity of the government’s 1st 100 days program, it might be tempting to think that we are now in something of a hiatus. But there is a lot of work going on among officials, through government appointed taskforces and working groups and through the legislative process which has the potential collectively to rewrite the regulatory context within which the economy functions. Chapman Tripp have set out a table of work streams which are most significant for business.

ACTIONING THE CHOKE POINTS
Bus drivers across eight Auckland depots are to take part in rolling strike action set for eight days between April 17 and 27 "in a push for fairer pay and work conditions" from Auckland Transport's contractor, NZ Bus. The union claims the company is trying to reduce overtime. Uber will be the winner, especially given that a large number of bus drivers also drive for the rise-sharing service between their morning and afternoon split bus shifts.

NIKKO GOES RETAIL
Nikko Asset Management in NZ has launched a KiwiSaver Scheme, allowing Kiwis to now invest directly with them. Their scheme offers eight separate funds, including specialist asset class funds focused on local and global shares, NZ cash and corporate bonds, as well as three multi-sector diversified funds, and the option fund. Nikko also has contracts to manage a range of other retail funds for other KiwiSaver schemes, and they rate highly in our independent analysis. There is no Default offer however.

PARTICIPATION, REVIEWED
Regular readers will know we have been running a series of articles about our labour force participation levels. Today, the RBNZ released a more scholarly, comprehensive review, here. It seems we have been able to avoid the corrosive reduction in hours worked far better than most other OECD countries.

FBU IN PLAY
Sydney based fund manager Ellerston Capital has acquired a +5% stake on behalf of a secret investor in Fletcher Building. They now have a 5.15% stake, tipping it over the threshold that requires disclosure.

POSITIVE SIGNAL
The dairy derivatives market is recovering today, signaling that Wednesday's dairy auction price for WMP may hold unchanged from its level two weeks ago.

DUMPED
Both the Hong Kong and Shanghai stock markets are suffering sharp declines in their indexes today, down more than -1.5% each. That weakness is not reflected elsewhere. Tokyo is up as is Sydney. New Zealand and Singapore are off only a minor amount. The reason for the two (three, including Shenzen) markets are so weak is due to currency fears and the impact of US tariffs.

BENCHMARK INTEREST RATES RISE
Local swap rates rose today. The two year is up +1 bp, and all longer durations are up +2 bps. The UST 10yr yield is now at 2.84%, up +2 bps. The Aussie Govt 10 yr is now at 2.75% (up +3 bps). The China 10 yr is down -3 bps to 3.75% and the NZ Govt 10 yr is up +1 bp at 2.86%. However the 90 day bank bill rate is unchanged at 2.03%.

BITCOIN DARTS UP, THEN DOWN
The bitcoin price rose to US$8,150 over the weekend, jumped to US$8,375 for the next 15 hours, and then suddenly dropped back to US$8,150 where it is now.

NZ DOLLAR HARDLY CHANGED
The NZD is unchanged at 73.6 USc. Ditto on the cross rates where we at 94.6 AUc again but slightly lower at 59.6 euro cents. That puts the TWI-5 at 74.7 and just slightly lower than this time on Friday.

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4 Comments

So Fletchers could become an Aussie Company

Like BNZ , ASB, Westpac, many of our insurers and other corporates

Eventually we might as well become the 7th state of Australia

At least 7 is a lucky number

Is a reduction in hours worked really a bad thing? Isn’t the goal to increase productivity per hour so as to reduce the number of hours we need to work?