Growing Fears in NZ Capital Markets

November 15, 2022

Good Morning,

There are growing fears climate-related disclosures regime could further strangle NZ's capital markets, Maori households are getting poorer despite increased Government funds, investors have started pulling funds from Singapore-based Crypto.com after it emerged that its management team may have mis-handled $400 million (USD) of customer funds, and United States President Joe Biden seeks to prevent US-China ties from deteriorating further in a meeting with Chinese leader Xi Jinping.

Let's jump in.

Before The Bell

Markets

  • China's policy shift around COVID-19 and the Chinese property sector earned a bullish vote of confidence from commodity prices and producers on Monday in a positive signal for global growth. (AFR)

  • The Fonterra Shareholder's Fund, which gives investors access to the dairy company's dividends, has lost $93 million NZD in value over the past year. (Stuff)

  • ASX falls 0.2%, closing at session lows despite a strong showing by mining stocks on the back of higher commodity prices. (AFR)

  • Champion Iron surged 12.9 per cent to $6.03 AUD, while Fortescue Metals added 10.2 per cent to $19.55 AUD. (AFR)

  • While major cryptocurrencies turned higher on Monday, the gains did little to lift broader market sentiment in the U.S. damped by comments from Federal Reserve Governor Christopher Waller that policymakers had "a ways to go" with interest-rate hikes. (BBG)

Earnings

  • The Fonterra Shareholders' Fund, which gives investors access to the dairy company's dividends, has lost $93m NZD in value over the past year and should have been bought out as a part of its capital restructure, outgoing chairperson John Shewan told the fund's annual meeting. (Stuff)

  • Transport company Move Logistics held its annual meeting in Auckland today after a difficult year in which it reported a financial loss of $4.2 million NZD. (NBR)

News Summary

  • A bigger than expected drop in inflation in the United States is raising hopes that central banks, including New Zealand's Reserve Bank, may not need to raise interest rates as high as feared. (Stuff)

  • Millions of Australians are yet to cash in on billions of dollars in junk insurance refunds owed to them. The Australia Securities and Investments Commission reports that $5.6 billion AUD has already been paid out to seven million consumers, but there is still $1.6 billion AUD owing to 2.7 million people. (9 News)

  • U.S. stock futures declined while contracts for Europe climbed. Asian equities erased earlier gains, dragged down by Japanese shares. (BBG)

  • Investors will keep a wary eye on the G20 summit in Indonesia, as U.S. President Joe Biden is set to meet Chinese leader Xi Jinping in person for the first time since taking office, with U.S. concerns over Taiwan, Russia's war in Ukraine and North Korea's nuclear ambitions on top of his agenda. (RT)

  • Goldman Sachs sees significant decline in U.S. inflation next year, reflecting softening supply chain problems, a peak in shelter inflation and slower wage growth. (BBG)

Deal Flow

Investments/ M&A

  • German military equipment manufacturer Rheinmetall said it has agreed a deal to acquire Spanish explosives and ammunition maker Expal Systems for an enterprise value of 1.2 billion euros. (RT)

  • Frasers Group is said to be in advanced talks to buy the 251-year-old firm Gieves & Hawkes, a historic Savile Row tailor. Gieves & Hawks, which has its HQ at 1 Savile Row in London - one of the world's most famous fashion addresses - is one of the oldest bespoke tailoring companies. (BBC)

VC & Fundraising

  • New Zealand Growth Capital Partners, a Crown entity tasked with stimulating investment in New Zealand's early-stage investment market, is seeking about $400 million NZD extra from the Government to have a second vintage of its Elevate fund of funds and set up a new seed fund of funds under a similar model. (NBR)

  • Property investor Dexus is headed to capital markets with a convertible notes deal for the first time in three and a half years. The company has hired BoA to underwrite and lead the $500 million AUD raising, which is slated to launch to institutional investors as early as Monday night. (AFR)

Equity Raises

  • Kiwifruit post-harvest co-op EastPack is seeking $30 million from an issue of five-year unsecured loan notes offering interest at 8.5%. EastPack handles about 26% of New Zealand's kiwifruit production and stated the money raised would help to take advantage of projected growth in volumes of SunGold kiwifruit. (NBR)

  • Drone engine supplier Orbital Corporation is seeking a $5 million AUD equity injection at 20¢ AUD per share. The deal is at an 18.4 per cent discount to the last close via Evolution Capital. Placement shares had a free attaching option on a one-for-two basis, exercisable at 35¢ within three years. (AFR)

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