NZ OCR Rises +0.25%

May 25, 2023

Good Morning,

The Reserve Bank of New Zealand has lifted the official cash rate by 0.25% to 5.5%, dividends issued in the first quarter by the world’s largest listed companies hit a record this year, home loan rates in NZ are probably about as high as they are going to get, economists say, and Virgin Orbit is shutting down less than two months after the satellite launch start-up filed for Chapter 11 bankruptcy protection.

Let's jump in.

Before The Bell

Markets

  • The New Zealand dollar sank on Wednesday after the Reserve Bank of New Zealand wrong-footed markets for the second consecutive time following a policy meeting by indicating it was likely done raising the cash rate, citing a weaker property market and slowing consumer spending (AFR)

  • A fresh wave of selling saw European stocks notch their steepest one-day fall in two months on Wednesday as little progress in the U.S. debt ceiling negotiations, a jump in UK core inflation and more losses in heavyweight luxury names hit risk sentiment (RT)

  • Asian stocks fell on Wednesday as worries over the U.S. debt ceiling persisted and investors awaited cues from industrial sector surveys in Europe and the United States (RTT)

Earnings and Data

  • Dividends issued in the first quarter by the world’s largest listed companies hit a record this year, even as prominent investors and asset managers warn of a coming global economic slowdown. The world’s 1200 biggest public companies collectively issued $US326.7 billion ($496 billion) in dividends in January-March, a 12 per cent increase on the year-earlier period (AFR)

  • British consumer price inflation fell to 8.7 per cent in April from March’s 10.1 per cent, figures from the Office for National Statistics showed on Wednesday (AFR)

  • The Reserve Bank has lifted the official cash rate by 0.25% to 5.5%, sticking to what most economists believed was its original plan before the Government’s higher-spending Budget last week (Stuff)

  • Listed boutique retirement care and village operator Oceania Healthcare has delivered a 5% rise in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $80 million in the year ending March 31, 2023, despite challenging conditions (NBR)

  • Rakon will pay its first-ever dividend in August and anticipates being able to do so for the remaining two years of CEO Sinan Altug’s three-year growth strategy (NBR)

  • Eroad’s journey to its target of free cash flow (FCF) neutrality by FY25 hit another waypoint today as the company disclosed a reduction in its FCF outflow from $45.1 million last year to $29.9m in FY23 (NBR)

  • Cautious optimism about the year ahead got a battering at Napier Port in the last stretch of the half-year to the end of March 2023, with Cyclone Gabrielle damaging surrounding infrastructure and puncturing the company’s initially upbeat guidance (NBR)

  • British households have paid £7bn since Brexit to cover the extra cost of trade barriers on food imports from the EU, according to researchers at the London School of Economics (LSE) (Guardian)

News Summary

  • Veteran fund manager Phil King is probably the best-paid person at ASX-listed Regal Capital Partners. We say “probably” because we don’t ultimately know (AFR)

  • Australia’s lithium sector needs to take full advantage of the lack of pushback from environmental activists compared with the gas sector and “push forward as fast as we can”, Allkem chairman Peter Coleman says (AFR)

  • CommBank rolls out shiny new tech tools - here’s what to expect (AFR)

  • Rio Tinto chairman Dominic Barton says Foreign Minister Penny Wong’s “calmer, thoughtful” approach to diplomacy has improved Australia’s relationship with China even while Beijing’s ties with other major economies deteriorate (AFR)

  • The head of ABC has declared that “the time for dignified silence is over” as it wages war with News Corp over the organisation’s sustained criticism of the public broadcaster’s recent coronation coverage (AFR)

  • Andrew Forrest’s Fortescue Metals Group has hired investment bank Citi to run a strategic review of its entire power plant operations, Street Talk can reveal (AFR)

  • Richard Branson’s Virgin Orbit is shutting down less than two months after the satellite launch start-up filed for Chapter 11 bankruptcy protection, according to a Tuesday company announcement (Stuff)

  • Trade Me has apologised after wrongly sending out emails to “a couple of hundred” customers warning it would cancel their accounts and wipe their credit if they didn’t log on to Trade Me soon (Stuff)

  • The Reserve Bank’s latest interest rates hike has been described both as a “kick in the guts”, but also a moment to breathe “a sigh of relief” (Stuff)

  • Home loan rates are probably about as high as they are going to get, economists say (Stuff)

  • The leader of Turkey’s ultranationalist Victory party has endorsed the opposition candidate Kemal Kılıçdaroğlu, breaking ranks with the party’s former presidential hopeful Sinan Oğan, who endorsed Recep Tayyip Erdoğan (Guardian)

  • Facebook owner Meta begins the final round of mass layoffs. Job cuts are part of a plan announced in March to eliminate 10,000 roles, bringing headcount to where it stood mid-2021 (Guardian)

  • Italy is courting sovereign wealth funds (SWFs) to invest in a new scheme to provide resources to firms operating in strategically important sectors, but past experience suggests it will be hard to get them on board (RT)

  • Todd Boehly is dialling back his involvement at Chelsea FC, people with knowledge of the matter said, as he refocuses on other ventures after a difficult first season in charge of the football club (BBG)

  • Xi Upends the Secretive World of $10,000-an-Hour China Experts (BBG)

Deal Flow

Investments / M&A

  • Washington H. Soul Pattison, the sprawling ASX-listed investments house, is going for a swim. It’s signed a deal to acquire the Sydney swimming lessons company founded by former Olympics swimming coach Forbes Carlile (AFR)

  • Fortitude Investment Partners has taken a majority stake in Queensland electricity equipment supplier The Energy Network as it gears up for more acquisitions in a sector it reckons will boom as new transmission is built and the existing network ages (AFR)

  • Holcim is buying Besblock Ltd, a British maker of precast building materials, the Swiss cement and concrete maker said on Wednesday (RT)

  • Global Net Lease Inc will acquire Necessity Retail REIT Inc in an all-stock deal that would value the combined entity at about $950 million, the companies said late on Tuesday (RT)

  • PacWest Bancorp has sold its property lending division to real estate financing firm Roc360 for an undisclosed amount, in a bid to bolster investor confidence amid concerns about the finances of U.S. regional lenders (RT)

  • One of Diversified Healthcare Trust's largest shareholders is opposing the real estate investment trust's merger with Office Properties Income Trust, saying the deal undervalues the REIT by 90% and there are better alternatives to an all-share deal (RT)

  • Tiger Global Management is in advanced talks to buy a stake in an Indian Premier League cricket team in a rare bet on a sports business, according to people familiar with the matter (BBG)

  • Billionaire Patrick Drahi increased his stake in BT Group Plc to 24.5%, giving him double the holding of the next-biggest investor and increasing his control over the UK telecommunications giant (BBG)

Equity Raises

  • Family-owned chemicals business Redox has called in extra troops to get its mooted billion-dollar-plus IPO off the ground (AFR)

  • International student services outfit Education Centre of Australia Group has Macquarie Capital and Bank of America teeing up investor meetings for a potential ASX listing, Street Talk can reveal (AFR)

  • Insider, a Turkish artificial intelligence-backed marketing platform, was valued at almost $2 billion in a funding round that raised about $105 million, highlighting how AI companies are defying the global tech slump (BBG)

Debt

  • Blackstone Inc. Chief Executive Officer Steve Schwarzman said he doesn’t expect the US to default on its debt, echoing comments by the International Monetary Fund’s managing director, as time runs short for negotiators to reach a deal (BBG)

Daily Picks

  • Paralysed man walks using device that reconnects brain with muscles (Guardian)

Job Board

New Zealand

  • ASB rural banking graduate - Apply here

  • Waterman Capital investment analyst - Apply here

Australia

  • Citadel Securities graduate and intern roles - Apply here

  • Goldman Sachs Investment Banking Intern - Apply here

  • IMC graduate and intern roles - Apply here

  • Jarden

    • Graduate role - Apply here

    • Summer internships - Apply here

  • Macquarie graduate roles - Apply here

  • Optiver

    • Graduate role - Apply here

    • Internships - Apply here

The Daily Deck is sponsored by Industrial Equity, LLC

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