Morning Marcus: SOE floats; Obscene NZ$; Sealord

Bernard Hickey talks with Marcus Lush on Radio Live at 6.50 am about National's SOE float plans; Sealord vs Greenpeace; Huhtamaki job losses; Rakon's profit warning

31st Aug 11, 7:23pm by Bernard Hickey

<p> Bernard Hickey and Marcus Lush talk every weekday morning just after 6.50 am about business, economics, markets and personal finance.</p>

Every weekday morning just after 6.50 am I talk with Marcus Lush on Radio Live about the latest news in business, markets, economics and personal finance.

I usually send through suggestions the night before or earlier in the morning. Sometimes we veer off into other areas or pick up on things that happen overnight.

But here's my suggestions as of 7.30 pm the night before. I'll update later with a link to the audio.

Marcus,

1. National is saying it won't limit the amount of foreign ownership of the SOEs it will float, but only expects foreigners to own 10-15%. It also says it won't give Kiwi investors or small investors a discount in any float. Instead, the price will be set after checking with the foreign buyers. Here's more detail in Alex Tarrant's article.

2. NZIER says the RBNZ should until June next year to hike the OCR. This contrasts with the views of the bank economists, who think December is the right time. NZIER's Shamubeel Eaquab is worried about slowing global and Australian growth. See more here in Alex Tarrant's article.

3. Sealord is threatening legal action against Greenpeace over its 'Bad Tuna' advertising campaign. This is the new face of activism where companies are directly targeted using their own branding and using their own tactics -- media advertising. See more here at Stuff.

4. We drink buckets of coffee each day in those lovely little paper cups made by Finnish-based company Huhtamaki. It turns out many of those cups have been made here. But not for much longer. Huhtamaki has announced it will layoff 135 people and move the manufacturing to India, Thailand and Vietnam. This is just more fallout from our obscenely high NZ dollar. Yet no one seems to care about jobs. Just as long as we can buy cheap imports. No worries. We can borrow the money to buy the cheap imports. See more here at Reuters.

5. Rakon has warned of a 44% fall in profit this year because of the high New Zealand dollar. Yet no one cares. Certainly not the Prime Minister or the Finance Minister, who announced yesterday they will borrow more money offshore to pay for the Christchurch rebuild. This will boost the New Zealand dollar even more. See more here in this Scoop business article.

cheers

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(Updated with link to audio)

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16 Comments

by Bernard Hickey | 1st Sep 11, 7:27am 1314818853

ostrich

Many thanks for your comments. I'll ask Alex to chase it with the OIO. This is all very curious.

cheers

Bernard

by Wolly | 1st Sep 11, 7:50am 1314820221

Gosh he won't be getting a knighthood now, will he BH. Finding skeletons indeed.

by Plan B | 31st Aug 11, 10:07pm 1314785260

I think the coffee cups might be safe as they say they are keeping the food service part?

by Bernard Hickey | 1st Sep 11, 7:51am 1314820315

Not sure. The release via Reuters talks about closure of flexible packaging factory. I've asked Alex to dig deeper.

http://www.reuters.com/article/2011/08/30/idUS201229+30-Aug-2011+HUG201…

cheers

Bernard

by skudiv | 1st Sep 11, 7:17am 1314818263

Interestingly, no mention of minimum wages as the reason for laying off staff, it's the High $NZ. Would that be an option to create jobs in NZ, a lower NZ dollar?

by Bernard Hickey | 1st Sep 11, 7:53am 1314820390

Absolutely. But our government and Reserve Bank have a high dollar policy. Cheap imports for voters and inflation suppression to help keep interest rates low while helping the banks service the foreign banks.

cheers

Bernard

by steven | 1st Sep 11, 8:29am 1314822545

So lets look at what happens if the NZD drops,

We see fuel inflation....$2.50? a litre before the election....very bad news that, also low fuel costs help businesses?

Cheap imports...I cant say they strike me as becoming cheaper at the RRP anyway. For instance Ive seen some prices jump 10% in recent months....but I dont think much is being sold....discounts then come in....Im waitng to buy a few things....like a thicknesiser and a 12inch cross cut saw....Im not impatient....In the meantime the retail industry ike DSE is kept almost afloat....it allows them to haevily discount I guess.

Interest rates low....doesnt that help businesses?

Do they really care about the banks? though I suppose that helps the banks keep rates low...for consumers/voters.

Exporters breath a sigh of relief....

Hmm also English said our cheap wages were an advantage, this shoots that one down....

Kind of brings into question National's integrity to my mind.....they are promising growth and hence jobs.....

Hmm, also of course they are pushing oil exploration, if a lot is found (fat chance) our exporters are finished.....I dont know about black gold, more like black death....

Exporters are our life blood, yet they are doing diddly to keep them afloat and almost actively bagging them....got to wonder, business friendly? cant see it myself....

regards

by Tim | 1st Sep 11, 12:28pm 1314836881

So I don't follow the logic. How does a massive increase in govt debt result in a stronger currency?

by raf | 1st Sep 11, 8:25am 1314822303

Rakon will have no choice but to move and list overseas. The government has no interest in supporting the export sector and reducing the current account deficit.

Just keep sucking more debt into the country. It's amazing that people still have the perception that the current government is a good economic manager.

by steven | 1st Sep 11, 9:31am 1314826313

Making paper cups though? hardly high tech.......I sometimes wonder if such companies make political statements / excuses for moving when they were going to move anyway...

Of courseNational are not, but neither is Labour. The voter has clearly said no tax increases, so we are locked into more debt and the road to hell....ie our tax base/income only balances when we are growing significantly, which with Peak Oil we cannot do anymore....so we wont be able to pay back the debt easily....

Thanks Brash for the attempt of a huge tax bribe in 2005 is all I can say, you have really screwed up NZ. We have WFF boosted because of you and not only that got voters thinking their tax is too high...

Anyway we either balance our books now with increased tax or see a severe impact later....and as long as both party choices (actually I think all of them) lie to us I know which path we will take. You would think the memories of what Lange's Govn had to do would still be fairly fresh in ppls minds....obviously not.

regards

by meh | 1st Sep 11, 10:54am 1314831258

So it's Brash's fault now for WFF. That's just an idiotic statement. Put the blame where it belongs - Labour's tax and spend policies and a dumb arse population that got sucked in by the bribes. Who implemented the tax cuts in the end? If you think you're not paying enough tax then go ahead and make voluntary payments.

Labour overtaxed the middle class for years. The one thing they got right was debt reduction but their spending policies f$#ked all that up. National aren't doing any better by not addressing spending and instead increasing it over the past three years. It's a total mismanagement (by both Labour and National) of spending, intervening and regulating in areas where it's not needed and not intervening and regulating where it was needed. Govts. can't run an economy. An economy will run itself and govts. can only provide the checks and balances to ensure that consumers/workers aren't exploited and corporates/capitalists aren't exploiting.

Here's a reasoned article on Canada's performance over the past decade. Comparing it to New Zealand you can see where we got it wrong by only ever addressing one side of the ledger.

http://www.marketoracle.co.uk/Article30175.html

Disclaimer: ACT doesn't get my vote either.

by Gummy Bear Hero | 1st Sep 11, 11:23am 1314832998

Yes meh , it is ( as ever ) difficult to follow steven's reasoning .

How did Dr Brash's promise of lowering tax rates across the board cause Michael Cullen to introduce WFF ?

....... I too , am confused by this hare-brained thinking .

Brash wanted NZ to be fiscally re-balanced , towards productive endeavours , and away from consumption . And he wanted an end to the morass of Labour's of dumb-arse middle-class welfare programmes , such as WFF & interest-free-student loans .

Brash lost , Cullen won , eat that you " rich pricks " !

" .. the size of a country's problems is directly proportional to the size of it's government " , David Lee , Toronto , Canada .

by Tim | 1st Sep 11, 12:26pm 1314836778

Steven: "Making paper cups though? hardly high tech.......I sometimes wonder if such companies make political statements / excuses for moving when they were going to move anyway..."

So your comment was in reply to raf, who was commenting on Rakon.

FYI Rakon make high tech crystal oscillators from memory. This is exactly the sort of complany we need to stay in NZ.

by raf | 1st Sep 11, 4:02pm 1314849757

Yes Rakon are a quality hi-tech company with few competitors in what they do...though they have to compete against tag teaming Japanese companies who take turn to undercut each other!

They supply Apple and all the top tier mobile producers...they have growing businesses in China ($45m factory opened a few months ago), India and some interesting activity in France. They really are in the point end of the hi tech market and are a great company. Sadly it's difficult to operate when your currency (which impacts your selling price) is so hugely overvalued. (Disclaimer: I have shares in Rakon!).

NZ is so exposed to currency swings so you would expect the government to look at managing that. But no they are too "scared" of the market......so let's just destroy our whole export and manufactruing sector and all become baristas........why is youth unemployment so high? there aren't the jobs that used to be there.

That will continue until all our wealth has been transferred overseas.

And yes I agree National and labour are as useless as each other.

However, there is one party which is going to change this.

by meh | 1st Sep 11, 4:38pm 1314851933

"However, there is one party which is going to change this"

Unfortunately, one sensible policy doesn't make up for all the other policies I don't agree with.

by Bernard Hickey | 1st Sep 11, 11:05am 1314831900

Updated with link to this morning's audio.

http://www.radiolive.co.nz/Govt-asset-sales-plan-investigated/tabid/506…

cheers

Bernard