Rate Rises Incoming

September 05, 2022

Good Morning,

Global equity funds saw large disposals, the global bond markets entered their first bear market in a generation, fixed mortgage rates may have peaked, Reliance will develop a new smartphone with Google, NZ government backtracks on proposed 'Kiwisaver tax', Finnish ECB policymaker Olli Rehn reckon the ECB will raise rates & Russia will keep the Nordstream Gas line 1 shut indefinitely.

Before The Bell

Markets

  • The US, UK, and Australian markets were down last week on the back of J Powell's speech about hawkish rate rises and economic data that supported further rate rises. (AFR)

  • Global equity funds saw large disposals of $10.48B (USD) in the last week. (RT)

  • Global bond markets entered their first bear market in a generation. (BBG)

  • On Tuesday, the Reserve Bank of Australia is meeting to discuss the cash rate. The expectation is for another 0.5 percentage point increase. The ECB is also meeting this week, where a 0.75 percentage point increase is the expected outcome. On Thursday, J Powell's speech will be analysed for clues on the Fed's position. (AFR)

Earnings

  • A2 Milk shares jumped 9.7% after announcing a $150m (NZD) share buyback, net profit growth and an increase in revenue of 20%. (NBR)

  • DGL reported an 88% increase in revenue and a 133% increase in underlying EBITDA. (NBR).

  • Fortescue dropped 4.93% despite better-than-expected results. Shareholders will receive a $1.21 (AUD) final divided. (AFR)

  • Harmony reduced its statutory net loss to $20.18m (NZD) from $29.3m (NZD). It also increased revenue by 15%. (Herald)

  • Harvey Norman reported a net profit of $812m (AUD), down from $841m (AUD) last year. They will pay a 17.5¢ final dividend. (AFR)

  • NZX-listed, Restaurant brands fell 4.8% after net profits after tax decreased by 56%. (NBR)

  • TVNZ's profits were down $51.3m (NZD) to $7.9m (NZD), but CEO says this represents an investment in content. (1 News)

  • ASX listed Woodside Energy beat analysts' forecasts and reported an underlying interim profit of $1.82B (USD) and revenue of 5.81B (USD). It also announced a $1.09 (USD) interim dividend, up on the 30¢ (USD) dividend last year. (AFR)

News Summary

Monday

  • Purex Manufacture Essity is threatening employees who are locked out with more than $500k (NZD) in damages. (Stuff)

  • Fixed mortgage rates may have peaked, according to Kiwibank. (Stuff)

  • Australian retail sales smashed expectations, with a record $34.7B (AUD) spent in July. (AFR)

  • Store closures are at the lowest level in 7 years in the UK. (BBC)

  • EU minister warns of 5-10 awful winters if gas prices can not be lowered. (BBC)

Tuesday

  • The NZ government announced it plans to charge GST on KiwiSaver management fees, which would bring in an additional $225m (NZD) a year and reduce total KiwiSaver savings by $103B (NZD) in 2070. (Stuff)

  • Australian building approvals fell 17.2% in July. (AFR)

  • LIV golf signed up world number two Cameron Smith & fellow Australian Marc Leishman. (Fox)

  • The Fed's quantitative tightening is set to ramp up with the cap on unwinding set to increase to $95B (USD) a month. (BBG)

  • US consumer sentiment increased, and near-term inflation expectations declined. (RT)

  • Honda & LG Energy plan to build a $4.4B EV battery factory in the US. (WSJ)

  • Indian company Reliance will develop a new smartphone with Google in a $25B (USD) 5g push. (RT)

Wednesday

  • Government backtracks on proposed 'Kiwisaver tax'. (NBR)

  • NZ business confidence data for July was up 9%. (Stuff)

  • Australia reduced the COVID-19 isolation period to 5 days if asymptomatic. (9 News)

  • According to Finnish ECB policymaker Olli Rehn, the ECB will raise rates next week and in the future. (RT)

  • Goldman warns that gas prices could push UK inflation to 22%. (AFR)

  • Former Soviet leader Mikhail Gorbachev dies at age 91. (BBC)

  • Economists expect India's economy to grow at its fastest pace. (RT)

Thursday

  • Demand for personal loans in New Zealand is up. (NBR)

  • Zespri produces blocked a vote to increase overseas kiwifruit production. (NBR)

  • The Australian government commits to multi-employee bargaining. (Guardian)

  • US chip manufacturers hit by new china export rules. (BBC)

  • US mortgage demand decreased by 23% compared to last year. (CNBC)

  • Russian oil chief Maganov dies in mysterious circumstances. (BBC)

  • China may have committed crimes against humanity as the UN also accuses them of serious human rights abuse in Xinjiang province. (BBC)

Friday

  • NZ beer consumption peaks above pre-pandemic levels in the first half of the year, with 131.4m litres available for consumption. (NBR)

  • Australia has lifted their skilled migration cap to 195,000 from 160,000. (9 News)

  • Australia has announced a temporary policy that will allow pensions to work more hours without taking a pay cut in an attempt to help solve the current labour shortage. (9 News)

  • The Australian PM announced up to $575m (AUD) from the National Home Infrastructure Facility would be available for investment in affordable housing. (AFR)

  • The USD index hit a 20-year high. (RT)

  • EU's von der Lynn backs price cap on Russian pipeline gas. (RT)

  • There was a failed assassination attempt on the Argentina vice president. (BBC)

Weekend

  • New car registrations hit the strongest levels ever for August in New Zealand. (Stuff)

  • The All Blacks bounced back strongly to win 53-3 vs Argentina. (Stuff)

  • Hundreds of workers in the Qantas supply chain are expected to strike on Monday, the 12th of September. (9 News)

  • Serna Williams was knocked out of the US Open in what was probably her last tennis match. (Stuff)

  • Nasa's second attempted rocket launch to the moon has been called off. (BBC)

  • The G7 has agreed to impose a price cap on Russian oil. (BBC)

  • Russia will keep the Nordstream Gas line 1 shut indefinitely. (BBC)

  • Liz Truss is poised to become the next PM of the UK. (AFR)

  • UK economy slips down to the sixth biggest in the world. (BBG)

  • A bear market is expected to continue into the second half of 2023, according to BoA. (AFR)

Deal Flow

Investments/ M&A

  • Zendesk has rejected Light Street Capital Management's proposal as it was not superior to the $10.2B (USD) go-private deal it had received from Hellman & Friedman and Permira. (RT)

  • CVS nears an ~$8B (USD) deal for home-health and technology service provider Signify Health. (BBG)

  • Woodside, an Australian gas firm, is in talks to sell a $5.7B (USD) stake in its Scarborough gas field. (RT)

  • HAL, a Dutch investment firm, raised its offer for Dutch marine firm Dredger Boskalis to ~4.24B (USD). (BBG)

  • Exon and Shell have sold their joint-venture California oil assets for $4b (USD) to German asset manager Ixon. (RT)

  • Roper Technology is acquiring educational software provider Frontline Education in a $3.7B (USD) deal. (RT)

  • Rio Tinto will buy the balance of Turquoise Hill for $3.3B (USD). (BBG)

  • AMP has lost its $2.7B (AUD) property fund, which will reduce its expected earnings by up to $50m (AUD), potentially reducing its sale price ahead of its sale to Dexus. (AFR)

  • I Squared Capital is exploring the sale of its Latin American power producer Inka Energy. It could fetch a price of over $2B (USD). (BBG)

  • Hollysys, a US-listed automation and control system maker, is to be taken private in a $1.8B (USD) deal led by its management. (RT)

  • RedBird and the Yankees have joined to complete a $1.3B (USD) deal for the Italian football club AC Milian. (BBG)

  • Oakley Capital agreed to buy a minority stake in Phenna group, a British testing and inspection company, at a $1.2B+ (USD) valuation. (BBG)

  • Software firm Concentric and SPAC North Mountain terminated their $1.2B (USD) deal. (RT)

  • Novo Nordisk, a Danish drugmaker, has acquired Forma Therapeutics in a deal valued at $1.1B (USD). (RT)

  • US PE firm Platinum is considering selling Canadian logistics firm Livingston International in a deal worth ~$1B (USD). (BBG)

  • BGC Group has stopped its $1B (AUD) sale due to market conditions. (AFR)

  • Blackstone and burrito maker Zambrero are closing in on exclusive talks. If a deal does take place, it is expected to be at a $500m + (AUD) valuation. (AFR)

  • PE firm Potentia has made a $1.58 (AUD) per share bid for Australian signing software company Nitro Software valuing it at ~400m (AUD). Nitro Software has readied its defence, believing this bid is too low. (AFR&AFR)

  • Private equity firm PAG Asia Capital is in talks to acquire Patties Foods in a deal worth ~$350-400m (AUD). (AFR)

  • Contract miner Thiess has increased its bid for MACA to $1.075 per share. Valuing MACA at $367.3m (AUD). (AFR)

  • Australia's biggest wind farm Stockyard Hill and its sister project White Rock Solar Farm, are up for auction as owner Goldwind looks to sell its 51% stake in Stockyard and its 100% stake in White Rock. (AFR)

VC and Fundraising

  • Swedish PE firm EQT raises $15B for new fund despite headwinds. (BBG)

  • Special situation credit investor Arbitrium Capital Partners is raising a new $300m (AUD) fund. (AFR)

  • Matt Berriman has raised a seed-focused $50m (AUD) fund called RealVC. (AFR)

  • Off-Piste Provisions, an NZ-based plant protein company, is attempting to raise $15m (NZD). (NBR)

  • Device, a Sydney cyber start-up, has raised $14m in series A funding from New York-based PE and VC firm Insight Partners. There is also participation from the Australian cybersecurity firm CyberCX. (AFR)

  • Botanix Pharmaceuticals is looking to raise $5m (AUD) to take its Sofpironium Bromide product into sales in the United States. (AFR)

  • Xero founder Rod Drury is back with a new tech venture called Atomic.io. It has just closed a $4.5m (AUD) series A funding round led by NZ VC Movac. (AFR)

Equity Raises

  • Mirvac chases investors for $600m (AUD) - $750m (AUD) to bankroll its build-to-rent portfolio and operating investors. (AFR)

  • Australian Pacific Coal to put a $100m (AUD) renounceable and underwritten rights issue to investors, of which $71m (AUD) would be earmarked for repaying debt and $29m (AUD) for Dartbrook Mine working capital. (AFR)

  • Dicker Data has announced a $50m (AUD) placement via Barronjoey. (AFR)

  • Pro-pac is considering a $50m (AUD) equity raise by the end of the week. (AFR)

  • Strike Energy is asking for $30m (AUD) in fresh funds at a 14.45% discount. (AFR)

  • Lender MoneyMe is in the market for a $20m (AUD) share placement at a 28% discount. (AFR)

  • Lotus, an Australian uranium explorer, is to raise $20m (AUD) at an 18.6% discount. (AFR)

  • Benz Mining Corp, a Quebec gold and critical minerals explorer, is raising $7m (AUD) at a 12.7% discount to the last close. (AFR)

  • Bod Australia, a cannabis drug company, is seeking to raise $4.1m (AUD) via a placement and rights offering. (AFR)

  • Alicanto Minerals, a base metal explorer with operations in Sweden, is raising $3m (AUD) via placement. (AFR)

  • Virgin Australia's IPO is on hold until financial markets stabilise. (AFR)

  • Hiro Brands, a home and personal care roll-up, has delayed its IPO for the third time. (AFR)

Debt Raises

  • Pepper Money, a non-bank lender, has raised $1.25B (AUD) from its residential mortgage-backed securities. (AFR)

Love our newsletter? Please share it with your friends, family, colleagues or anyone who needs to stay on top of the market.

Also, if you have any feedback or questions, don't hesitate to hit us up via email or Instagram.

Reply

or to participate.