New Zealand

Kiwis show world how to deliver sharp policy jolts

14 Jul 2021

New Zealand’s central bank is suddenly halting bond buying in a sign that it may soon raise interest rates. It’s a contrast to the long advance notice that Fed Chair Jay Powell or ECB boss Christine Lagarde need to give investors. The country’s relatively healthy finances help.

Green goals will milk more Kiwi-like finance fixes

6 Jul 2021

New Zealand needs 13% fewer cows to help hit emissions targets. That lends urgency to dairy giant Fonterra’s plan to restructure its cooperative as farms grapple with environmental crises. Suppliers and their balance sheets will be a key battle front in the war on climate change.

Workers get the whip hand in economic policymaking

19 May 2021

New Zealand will cut low-skilled migration, U.S. President Joe Biden is hiking the minimum wage for federal contractors, and rate-setters everywhere are giving labour markets time to tighten. Such measures will help push up pay. Expect profit margins to fall or prices to rise.

New Zealand blends specially bright shade of green

21 Apr 2021

The United States and China are vowing to work together on decarbonisation. JPMorgan and Citi raised their sustainable-finance goals. Investors are pushing harder, too. A Kiwi plan to force banks and money managers to come clean about climate risks neatly ties it all together.

New Zealand’s diluted punch bowl may tempt others

26 Mar 2021

Prime Minister Jacinda Ardern is combatting a hot housing market by stopping property investors from deducting mortgage interest. This mitigates side effects of low rates and allows the central bank to defer policy tightening. The approach might appeal to governments elsewhere.

Westpac may find New Zealand hard to leave

25 Mar 2021

Demerging its business across the Tasman Sea would bolster cash and capital for the Aussie bank. The concentrated Kiwi market makes a deal tricky, however, and the unit – potentially worth $8 bln – needs regulatory fixes first. Boss Peter King would do better to keep it.

Australian pension giant braves steep M&A curve

9 Dec 2020

New Zealand infrastructure investor Infratil snubbed a $3.8 bln takeover bid from AustralianSuper. Its first solo acquisition target enjoys a solid negotiating position and Goldman on defence. For this to be more than a learning experience, it will have to dig deeper.

Kiwis test limits of overburdened rate setters

26 Nov 2020

New Zealand Finance Minister Grant Robertson has suggested the central bank, which targets inflation and employment, might consider taking house prices into account when setting monetary policy. Interest rates are a blunt instrument that can’t hit too many goals at once.

Subpar Asian trade deal shines in splintered world

16 Nov 2020

Fifteen nations accounting for 30% of global GDP will slash tariffs and ease the movement of goods in the region. India’s absence is among the disappointments of the long-awaited pact. Even modest progress counts for a lot considering the sad state of U.S. and UK trade affairs.

New Zealand rebound depends on healthy contagion

18 Jun 2020

The $200 bln Kiwi economy suffered its worst quarterly contraction in 29 years. Prime Minister Jacinda Ardern’s lockdown worked, but her country will struggle with less tourism and immigration. It’s a prime example of how even successful virus control can have daunting costs.

New Zealand airline rescue puts taxpayers in first

24 Mar 2020

The national carrier has received a $514 mln state lifeline that ensures its survival. A high interest rate should ensure any loan is repaid quickly, while shareholders share the pain through suspended dividends. It’s a model for other countries considering bailouts to follow.

Boomeranging dairy CEO milks the past

10 Dec 2019

New Zealand’s $7 bln a2 Milk is following a well-worn corporate playbook. Companies from Apple to P&G have brought back former bosses, with mixed results. In this case, Geoffrey Babidge’s track record should reassure, even if succession and strategy concerns cloud his return.

Farmers will turn activists to mop spilt Kiwi milk

26 Sep 2019

New Zealand's Fonterra, reeling from writedowns and its worst ever annual loss, will cut back overseas. Battered investors can press for more from the world’s largest dairy exporter. That includes fixing the $3 bln giant’s contradictory structure by carving out consumer brands.

Irish central banker job glitch may be a blessing

11 Jun 2019

The government was thrilled to recruit a New Zealand Treasury official as its new governor. Now he faces an investigation about how he handled early accessing of budget information. If things go wrong, Ireland has a second chance to give Deputy Governor Sharon Donnery the job.

Uber steers around its Asian innovation conundrum

13 Feb 2019

After exits from China and Southeast Asia, the ride-hailing giant's eastern footprint hinges on India and promising spots, like Taiwan. Emerging market problems force a rapid pace of change. Safety buttons and a "lite" app are encouraging, but local rivals are moving faster.

Apax may have clicked on $1.8 bln Kiwi bargain

13 Dec 2018

The buyout group has won a rare New Zealand bid battle, buying Trade Me, a mix of Craigslist and eBay. That's fair, for a local champion with little debt and chunky margins. Apax has similar assets elsewhere, too. Only Amazon's looming spectre should unsettle.

Wesfarmers exposes its conglomerate discount

24 Apr 2018

By opting to spin off Coles Supermarkets, the $35 bln Australian group invites scrutiny of its coal-to-clothes hodgepodge. A Breakingviews analysis suggests a gap of 11 pct between its market value and the sum of its parts. It's enough to spur a fresh strategic review.

Kiwis test new formula in central bank petri dish

20 Oct 2017

New Zealand was the first nation to give independent rate-setters an inflation target. Now a new government wants to add employment as an objective. The less painful the switch, the more likely others will adopt goals that better suit today’s economic and political realities.

Australian media buyout might need an edit

8 May 2017

TPG and an Ontario pension fund want to buy and break up Fairfax Media for $2.1 bln, keeping the group's property portal and some big newspapers. Long-suffering investors are being offered a decent headline price. But a fiddly cash-and-stock structure makes for awkward reading.

Markets are wary of new blot on Japan Inc’s image

21 Apr 2017

Fujifilm has discovered dodgy accounting in its Kiwi unit. It is merely a $200 mln flub. But investor anxiety is understandable. What looked like a manageable accounting problem at Toshiba spiralled out of control. The photocopier-maker's mediocre governance is unhelpful too.