sign up log in
Want to go ad-free? Find out how, here.

A review of things you need to know before you go home on Monday; Kiwibank reverts, ANZ profits hit, Shanghai lower, infrastructure coordination, swaps higher & steeper, NZD down again

A review of things you need to know before you go home on Monday; Kiwibank reverts, ANZ profits hit, Shanghai lower, infrastructure coordination, swaps higher & steeper, NZD down again

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

MORTGAGE RATE CHANGES
Kiwibank has ended its 4.19% offer for two years fixed, reverting back to a 4.39% rate.

TERM DEPOSIT RATE CHANGES
No changes here today.

A BIG HIT, BUT NO STAGGERING I
In Australia, the "fee for no service" scandal and evidence of "customers receiving inappropriate advice" will carve AU$374 mln out of ANZ's full-year cash profit. Actually, Hayne Commission issues will cost the bank AU$491 mln but some of that relates to a division they sold earlier, so the ongoing impact will be less. In addition, they are having to speed up depreciation charges because some software costs were being recovered by divisions they have since sold. That will see another AU$206 mln charge. All up, ANZ Group took a writedown of almost AU$700 mln today (NZ$760 mln.) Given ANZ NZ will contribute about NZ$1.9 bln tax-paid to their Group result, this equivalent wiping out a bit more than a third of the Kiwi 'contribution' (all ANZ's profits in the Auckland region?). However, the impact of these additional charges on ANZ’s Common Equity Tier 1 capital position is expected to be less than -10 basis points. Still, ANZ's shares dropped about -2.5% on the news.

A BIG HIT, BUT NO STAGGERING II
The Shanghai stock exchange index opened today down -2%. Since then it has moved lower and now is down -3% halfway through their morning session. Hong Kong has opened down -0.8% after falling -4% last week. Shanghai circuit-breaker mechanisms, which used to cut in at -10%, are apparently suspended but authorities will be on high alert for negative trading. It might even offend Party rules. But perhaps the sudden and large relaxation of bank reserve ratios has helped stem the losses.

CHALLENGING THE STEREOTYPING
Researchers from the Australian National University compiled a new database on Chinese investment in Australia by crosschecking figures from sources such as the Foreign Investment Review Board and the Australian Bureau of Statistics. The details are revealed in the first comprehensive public database tracking the flow of Chinese foreign investment into Australia, which outlines who spent the money and what they spent it on. That shows Chinese investment in Australia dropped by -40% last year. It also showed that less than 20% of all foreign buyers of farmland were Chinese (and less than 1% of all farmland changed hands in 2017).

BETTER COORDINATION
Treasury is starting a public consultation for how our infrastructure is planned and delivered. It comes after concerns were raised that the existing process is ad hoc. Business groups have welcomed the potential of better coordination.

KEEPING IT CLEAN
Businesses that operate price comparison websites will be forced to clearly disclose any commissions or referral fees or kickbacks they receive, under a new package of consumer law reforms to be considered by the NSW State Parliament. (We operate one in New Zealand for interest rates, KiwiSaver, and rural prices. We charge a standard fee to include a logo on these pages; we have never taken referral fees or "kickbacks" of any kind.)

SWAP RATES HIGHER & STEEPER
Swap rates are up and steeper today. The two year is up +2 bps, the five year is up +3 bps and the ten year is up +4 bps. The UST 10yr is at 3.23% with the UST 2-10 curve pushing up to +34 bps. The Aussie Govt 10yr is at 2.78% (and up another strong +6 bps), the China Govt 10yr is at 3.65% (down -2 bps so far -  remembering these markets are five hours behind New Zealand), while the NZ Govt 10 yr is at 2.67%, and up +4 bps. The 90 day bank bill rate is down another -1 bp at 1.88%.

BITCOIN UNCHANGED
The bitcoin price is unchanged from this time on Friday at US$6,580. The 'fun' from volatility in bitcoin has disappeared.

NZD LOWER
The NZD is softer yet again, now at 64.3 USc. On the cross rates we are also lower at 91.2 AUc, and 55.8 euro cents. The TWI-5 is lower at 68.6 and its lowest since September 2015..

This chart is animated here. For previous users, the animation process has been updated and works better now.

Daily exchange rates

Select chart tabs

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
End of day UTC
Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

17 Comments

The Australian-Chinese story is so interwoven it is hard to separate these days. It very much relates to our own narrative and so is a must see/watch. As Trump pulls the all the levers he can from the across the Pacific, both Australia and NZ Inc are caught in the cross-fires, whether we like it or not. How this all pans out nobody quite knows, but I will suggest this... not well.
I understand the Yanks calling their bluff, and I agree with it in many ways, but as the above article demonstrates we probably have more to lose than most, with our economies now pretty integrated, whether we like it or not. If the Chinese stop buying Aussie Ore, they're f......d. If they stop eating, we're in trouble.

Up
0

If they keep buying our food and we stop flogging them our houses, we might do alright. I know, pigs might fly, too....

Up
0

China can chose to stop buying ore but it would impact their manufacturing. And they could try to persuade their growing middle class to stop consuming dairy products. Hard to imagine either. What they certainly could do is stop buying from Australia and NZ but since neither ore nor our dairy is a processed product they would buy elsewhere on the world market and likewise that is were we would sell. Quite different from when Britain stopped buying French wine and substituted drinking Port (from Portugal) - that was designed to upset Napoleon.

Up
0

Bitcoin holders and Auckland property investors will want to go for the same strategy: HODL

That shows Chinese investment in Australia dropped by -40% last year. It also showed that less than 20% of all foreign buyers of farmland were Chinese (and less than 1% of all farmland changed hands in 2017).

Not sure why these numbers are being downplayed? That's very significant!

Up
0

The marginal buyer sets the prices on which all values are based...

Up
0

Seems about right. It's a bit cryptic for me on a monday evening though, can you elaborate on your wider point? What do you think marginal buyers will do for Auckland?

Up
0

Because if it's anything like New Zealand, 40% of 3% is around 1%.

Up
0

Jacinda's comments of petrol not what the most recent review said. Perhaps she meant Consumers are being fleeced by paying too much tax on fuel?

The weak dollar means higher fuel charges. It's what was very likely to happen after the Election.

We have to suffer pain before people will wake up.

Up
0

If you mean that the Fed was gouing to raise rates, and the RBNZ wasn't, they yes, that part of the petrol price rises were predictable.
As was the AC regional fuel tax, which should never have happened, but yet again the Auckland region voted (those that bothered) for lower rates thus penalising the poorest, instead of those that are benefiting from all these extra inner city Public transport initiatives.

Up
0

Although our weakening NZD is also considered a strengthening USD story – thus far today the NZD is weaker against all major currencies apart from the Yuan.

Only a snapshot obviously – but the NZD currently finds itself out of favour with nearly all suitors.

Up
0

Well we heard it all on interest first!. The ugly duckling gets left in the swamp when the currency beauty parade begins.

https://www.interest.co.nz/currencies/94748/global-investment-bank-gian…

Up
0

What Mr Orr is up against:

“Powell said the Fed no longer needs the policies that were in place that pulled the economy out of the financial crisis malaise. 'The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don't need those anymore. They're not appropriate anymore… Interest rates are still accommodative, but we're gradually moving to a place where they will be neutral… 'We may go past neutral, but we're a long way from neutral at this point, probably.'"”

No worries - we’ll counter with our 1.75% popgun.

Up
0

This story caught my interest.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

Raises a lot of questions. About Chorus, about the penalties, about how proactive we should be.

Up
0

Not rare, not occasional, not some but ""Nearly all Chorus broadband subcontractors breaching labour laws"". Maybe give knighthoods to the owners of honest NZ small subcontractor businesses?

BTW in my area of North Shore they did very poor work.

Questions belong at the door not of Chorus but of our Prime Minister and our Minister of Immigration - these workers were not New Zealand citizens (yet). One more story of very bad immigration policies leading to predicatable crimes. Admittedly previous govt swept it all under the carpet at least MBIE did investigate.

Up
0

Another debacle

Up
0

Is the Kiwi $ really down or is it US$ strength hammering all currencies ?

Up
0

"We charge a standard fee to include a logo on these pages;"

I now see why not all the logos appear on the interest rate tables. Good job monetizing the advert space David, the banks make so much money, make 'em pay.

Up
0