China's GDP Impresses

April 19, 2023

Good Morning,

China’s economy grew 4.5% in the first quarter, the Australian government has hosed down demands for big new spending in welfare, is it time to hit the panic button on our $34 billion balance of payment deficit, Rishi Sunak is under investigation over allegations he failed to disclose shares his wife owns in a childcare business that stands to benefit from his government's budget, and business collapses hit a 3½-year high last month,

Let's jump in.

Before The Bell

Markets

  • Major U.S. stock indexes were little changed on Tuesday as disappointing quarterly reports from Johnson & Johnson and Goldman Sachs were countered by gains in some big technology stocks as first-quarter earnings season kicked into gear (RT)

  • uropean shares closed higher on Tuesday as travel and leisure stocks led the advance on positive earnings, while better-than-expected economic data from China boosted demand prospects and lifted shares of miners and luxury firms (RT)

  • China’s economy grew 4.5% in the first quarter, the fastest pace in a year (CNBC)

Earnings and Data

  • The Australian government has hosed down demands for big new spending in welfare as it revealed the aged care budget was on track to blow out by nearly $5 billion this year alone. Figures released by Treasurer Jim Chalmers ahead of the May 9 budget show the cost of delivering aged care will rise by 23 per cent, increasing from $24.8 billion to an estimated $29.6 billion – and that’s before the pay rise for aged care workers, which will cost $1.9 billion per year (AFR)

  • Business collapses hit a 3½-year high last month, to jump back above pre-pandemic trends for the first time, as rising interest rates and a cooling economy hurt corporate Australia (AFR)

  • The number of properties being sold by investors and multi-property owners has plummeted since the market downturn began, with the number sold during the first quarter of the year 83% lower than during the Covid-era peak. Opinions are split on whether investors are refusing to sell during the downturn, or whether they are unable to find buyers (Stuff)

  • Profit at broking and investment firm Craigs Investment Partners has nearly halved after brokerage fees fell by $23 million. Craigs, which sold its QuayStreet Asset Management unit to the NZX late last year, today reported operating revenue of $238.4m in the year ended December 31, 2022. That was down 5% on the previous year as brokerage fee revenue fell to $49.3m from $72.8m (NBR)

  • Goldman shares dropped 1.2% after the Wall Street firm's profit fell 19% as dealmaking and bond trading slumped (RT)

News Summary

  • Sky TV revealing Sky Box loyalty discounts today (Herald)

  • Goldman Sachs Group’s traders failed to capitalise on the fixed-income bonanza the rest of Wall Street generated last quarter, contributing to firm wide revenue that fell short of analysts’ estimates and sending the shares down as much as 4 per cent (AFR)

  • Dexus chief executive Darren Steinberg says the property group’s real estate experience can “supercharge” the returns that its funds get from infrastructure investments by developing industrial sites on new assets such as Melbourne Airport (AFR)

  • An unexpected glut in the global LNG market has added to the woes of Australia’s gas producers just as they are being hammered on all sides by price intervention, toughened requirements on emissions reductions and looming petroleum tax changes (AFR)

  • One of New Zealand’s biggest climate polluters, Glenbrook Steel Mill, can keep operating until 2056, after Environment Minister David Parker rejected advice to stop a high-emitting factory beating a law change (Stuff)

  • 'Definitely the front-runners': Crusaders keeping an eye on unbeaten Chiefs (Stuff)

  • Just one auction house in New Zealand has signed up to a scheme in which artists get paid for their copyrighted work being republished in an auction catalogue or online ahead of their work being resold (Stuff)

  • Time to hit the panic button on our $34 billion balance of payment deficit? (Stuff)

  • Forget being all about sneakers – Adidas considers itself almost a technology company because of how heavily involved it is in experimenting and deploying new and emerging technologies, its digital product leader, Alexandra Popova, says (Stuff)

  • UK Prime Minister Rishi Sunak is under investigation over allegations he failed to disclose shares his wife owns in a childcare business that stands to benefit from his government's budget, a parliamentary watchdog disclosed (Stuff)

  • Microsoft Corp (MSFT.O) is developing its own artificial intelligence chip code-named "Athena" that will power the technology behind AI chatbots like ChatGPT, the Information reported on Tuesday, citing two people familiar with the matter (RT)

  • Top shareholder of HSBC (HSBA.L) renewed its call for breaking up of the Asia-focused bank on Tuesday, saying the lender has failed to address key business model challenges which has resulted in deterioration in its operating performance (RT)

  • Credit Suisse (CSGN.S) will bring forward its first-quarter earnings by three days to April 24, it said on Tuesday, a move that could allow UBS (UBSG.S) to speak more freely at its earnings the following day (RT)

  • British cinema chain operator Cineworld (CINE.L) said on Tuesday it has abandoned the planned sale of its businesses in Eastern Europe and Israel, saying the proposals it got did not meet the value needed by its lenders (RT)

  • Move over, Goldman Sachs Group Inc. Germany’s savings banks are emulating the titans of Wall Street to become an unconventional source of funding for private equity deals (BBG)

  • The US Supreme Court hinted at a narrow ruling in a case involving Salesforce Inc.’s Slack unit as the court considered restricting shareholder suits over company statements issued as part of a direct listing (BBG)

  • A strategic partnership has been announced to help accelerate the rollout of electric vehicle fast chargers around the country. Nasdaq-listed manufacturer Tritium has partnered with New Zealand-based Jump Charging to create an initial 20 charging hubs (NBR)

Deal Flow

Investments / M&A

  • Port of Tauranga modifies container expansion plan in recognition of Māori concerns, but keeps lid on cash offer (Herald)

  • The competition regulator has confirmed that it has delayed its decision by seven weeks on whether ANZ Bank should be allowed to take over Suncorp Bank, giving it more time to consider the risk of potential collusion, which is coming into sharper focus (AFR)

  • Soul Patts pours $200m into new Pengana global private credit offering (AFR)

  • It’s down to short strokes at solar and wind platform Spark Renewables, where sell-side adviser Lazard is taking a small group of bidders through a final round of due diligence in hopes of getting a deal done before June 30 (AFR)

  • KordaMentha, appointed to sell off Scott’s Refrigerated Logistics after the company’s private equity owners Anchorage Capital Partners called in administrators in February, is in the final throes of the sale of 1800-odd trucks and trailers which will recoup more than $100 million in proceeds (AFR)

  • French shipping group CMA CGM (CMACG.UL) is offering 5 billion euros ($5.48 billion) for the logistics unit of Bollore, the family-run conglomerate said on Tuesday (RT)

  • Britain's competition regulator said on Tuesday it has launched a "Phase 1" probe into Amazon.com Inc's (AMZN.O) planned $1.7 billion acquisition of iRobot Corp (IRBT.O), which makes the Roomba vacuum cleaner (RT)

  • Glencore executives have met or spoken with some 120 Teck Resources shareholders during a short visit to Toronto to try to win support for the company's takeover bid rather than an internal overhaul, a source familiar with the situation said (RT)

  • Merck & Co (MRK.N) expects a research-and-development charge of about $10.3 billion, or $4 per share, this year as the drugmaker accounts its deal for Prometheus Biosciences Inc (RXDX.O) as an asset acquisition, CFO Caroline Litchfield said (RT)

  • Life-sciences company Danaher Corp. has stopped pursuing Catalent Inc. after expressing interest in buying the contract manufacturer, according to people familiar with the matter (BBG)

  • Lululemon Athletica Inc. is exploring a sale of Mirror, the fitness-equipment maker it acquired for $500 million in 2020, according to people with knowledge of the matter (BBG)

VC & Fundraising

  • Rugby Australia – with investment bank Jefferies in tow – is looking to raise up to $250 million in outside capital, and has commenced dialogue with private equity firms including Silver Lake, CVC Capital Partners and Andrew Forrest’s Tattarang, among others, people familiar with the talks said (AFR)

  • Propeller has banked $US15 million ($22 million) from industry stalwarts Blackbird Ventures and long-time investors Costanoa Ventures, joined by Aware Super and the personal investments of Aconex founder Leigh Jasper and Canva founder Cliff Obrecht, drawn by the nine-year-old start-up’s explosive growth in the United States (AFR)

  • Pacific Equity Partners’ push into high-net-worth investor segment via a fund-of-funds offerings has the Sydney firm investing alongside larger private equity outfits Bain Capital, Brookfield and Carlyle – often through their “continuation funds” (AFR)

  • The value of VC deals fell 32.1% quarter-over-quarter to 11.8 billion euros ($12.90 billion), the industry analyst said in its Q1 2023, European Venture Report. The number of deals fell 19.2% (RT)

  • FTX’s potential plan to reboot its crypto exchange has attracted interest from Tribe Capital, a venture firm that invested in the platform before FTX collapsed and is now considering a fresh capital injection to jump-start the effort (BBG)

Equity Raises

  • Anta Sports Products Ltd., a Chinese developer of sportswear, declined the most in six months after raising about HK$11.8 billion ($1.5 billion) through a top-up placement in Hong Kong, completing the city’s largest additional share sale since October 2021 (BBG)

Daily Picks

  • Rupert Murdoch’s lawyers were reported to be in settlement talks hours before Dominion Voting was due to open its $US1.6 billion ($2.4 billion) defamation case against Fox News in Delaware Superior Court on Monday (Tuesday AEST), as Murdoch faced what would be the biggest threat to his empire since the 2011 hacking scandal (AFR)

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