J Powell's Rate Hikes Won't Be Transitory

Good Morning,

I hope you all enjoyed your weekend.

Today's newsletter will be different from the normal daily updates provided on Tuesday to Saturday, as on Mondays, we will recap the action from last week.

Jerome Powell warned of higher rates for longer in his Jackson Hole Speech, Moderna is suing Pfizer and BioNTech for allegedly copying its mRNA technology, the Pumas have beaten the All Blacks 25:18 in Christchurch, Blackrock, UBS, 348 other funds and ten companies are banned from Texas due to their boycott of energy companies, Kiwibank predicted house prices could fall 13% before year-end, business activity in the US, Europe and Japan fell in August, Elon Musk subpoenaed Jack Dorsey ahead of the court battle, and Gaurav Sharma has been expelled from the Labour Party caucus.

Let's jump in!

Before The Bell

Markets

• The NZX and ASX were down slightly but expect a more significant drop today due to the fact Jerome Powell's Speech occurred after the close on Friday. (AFR)

• US markets dropped significantly on the back of J Powell's speech and were in the red for the second week in a row.

• Bitcoin continued its downward trend for the year, whilst 10-year bond yields and gold rose.

Earnings

Last week was a busy week for earnings. Here are the highlights.

• Air New Zealand dropped 1.5% after it posted its third straight annual loss, but in positive news for the company, it said demand for travel is exceeding its expectations. (NBR)

• Altium soared up 19.75% after reporting a 57% increase in net profit and increasing its dividend. (AFR)

• Ampol doubled its net profit and rose revenue by 83%. (NBR)

• Ansell rose 8.5% because investors believed they could still make solid profits in a more normal environment. This was despite a 36% drop in profit due to a reduction in demand for PPE. (AFR)

• City Chic didn't fear as well, dropping 19% after missing underlying earnings expectations. (AFR)

• Ebos rose 1.3% as it reported recorded revenue of over $10B (AUD) and a net profit after tax increase of 9.3%. (NBR)

• Meridian dropped 2.9% after profits remained flat, revenue decreased, and the expected capital costs of its Harapaki project increased. (NBR)

• Port of Tauranga recorded an 8.7% increase in net profit up to $111.3m (NZD). (NBR)

• Qantas announced better-than-expected results, which included a $400m (AUD) share buyback which resulted in the stock price climbing 7.1% to $4.86. (AFR)

• Ramsay Health Care's revenue is down 3% to $13.75B (AUD). (AFR)

• Spark gained 1.5% as it reported a 7.6% increase in profit. It also promised to return $350m (NZD) to investors via a share buyback and increased its dividend guidance for next year. (NBR)

• Summerset reported purchasing three new sites and a record underlying profit of $82.5m (NZD), up 9.2% on the previous first half. (NBR)

• Wesfarmers increased its final dividends despite group profits falling to $2.35B (AUD). (AFR)

• WiseTech Global surged 12.8% after it reported an 80% increase in net profit. (AFR)

News Summary

Monday

• Plexure Group will change its name to Task Group Holdings and move its primary listing to the ASX. (NBR)

Tuesday

• Gaurav Sharma has been expelled from the Labour Party caucus. (Stuff)

• Trevor Mallard officially retires as Speaker. (Stuff)

• Scott Morrison's secret ministries "fundamentally undermined" responsible government. (AFR)

• Citi warns of 18.8% UK inflation. (AFR)

• Elon Musk subpoenas Jack Dorsey ahead of his court battle with Twitter. (BBC)

• Playstation has been sued for £5B in the UK over "rip off" games. (BBC)

Wednesday

• Adrian Rurawhe is New Zealand's new Speaker and has received cross-party support. (Stuff)

• Australian unions push for sector-wide bargaining rights. (AFR)

• Tiger Management's founder Julian Robertson died at 90. (Herald)

• Global dividend payments hit record highs. (AFR)

• Business activity in the US, Europe and Japan fell in August. (WSJ)

Thursday

• Costco's MD hopes the Auckland store will be the first of many. (Stuff)

• Kiwibank predicted that the supply shortage in the NZ housing market has decreased to 23,000 homes and, as a result, predicted prices could fall 13% by year-end. (Stuff)

• Australian PM Anthony Albanese announced a royal commission inquiry into the robodebt compliance scheme. (9 News)

• California to ban the sale of new petrol cars from 2035. (Guardian)

• Tesla split its stock 3-1. (CNBC)

• Peru to sue oil firm Repsol for $4.5B (USD) over the oil spill that occurred off the coast of Lima in January. (BBC)

• Hedge funds suffered a $7.8B (USD) net outflow in Q2. (RT)

• Tiger Woods and Rory Mcllroy announced TGL, a new tech-infused golf tour which will tee off in 2024. (FOS)

Friday

• Adrian Orr says to prepare for anaemic economic growth speaking from the global central banking conference in Jackson Hole. (NBR)

• The UK faces an 80% spike in energy bills, the country's energy regulator announced. (Stuff)

• US and China are nearing an agreement to allow US regulators to travel to Hong Kong and inspect audit records of US-listed Chinese companies. (WSJ)

• Audi to join Formula 1 in 2026 (BBC)

• The European Central Bank accounts show that inflation concerns are intensifying. (RT)

• Blackrock, UBS, 348 other funds and ten companies are banned from Texas due to their boycott of energy companies. (AX)

Saturday and Sunday

• The Pumas have beaten the All Blacks 25:18 in Christchurch. (Stuff)

• SkyCity workers went on strike as they demanded better pay conditions. (Stuff)

• Australian earnings season is set to see a $102B (AUD) divided windfall. (AFR)

• The US has approved a $1.95B (USD) sale of Black Hawk helicopters to Australia. (BBG)

• Fed Chair Jerome Powell warned of higher rates for longer in his Jackson Hole Speech. (BBG)

• Lacklustre Iowa corn crop could spark increased food inflation. (BBG)

• US Justice Department says the files found at Trump's Florida residence had included intelligence material. (RT)

• Facebook agrees to settle data privacy lawsuit. (RT)

• US warships have transited the Taiwan strait for the first time since Pelosi's visit. (RT)

• The European Central Bank accounts show that inflation concerns are intensifying. (RT)

• ECB lacks consensus for the jumbo rate hikes some want. (BBG)

• UK inflation is driving the pound to a near 37-year low. (BBG)

• Coca-Cola's bottler is making 'Dobry Cola' in Russia. (RT)

• Moderna is suing Pfizer and BioNTech for allegedly copying its mRNA technology. (BBC)

Deal Flow

Investments/ M&A

• Novartis, a pharmaceutical giant, will spin off its ~$25B (USD) Sandoz unit to create the largest European generic and biosimilar drug company. (BBG)

• Healthcare company Ramsay rejected the KKR-led alternative bid to its original $14B (AUD) takeover offer. (AFR)

• Schneider, a french industrial conglomerate, is considering buying the remaining minority stake of 40% in software company AVEVA, which has a current market cap of $10.1B (USD). (RT)

• EQT, KKR, Gaw Capital, PAG and Stonepeak are among the bidders for data centre company Global Switch which has an expected valuation of ~$10B (USD). (BBG)

• Amazon, UnitedHealth and CVS are among the bidders for Signify Health, a home health services provider, in a deal that could be worth upwards of $8B (USD). (RT)

• Canada's Open Tech, a software company, has agreed to buy British enterprise software maker Micro Focus for a $6B (USD) valuation in an all-cash deal. (RT)

• The Indian Government is considering selling up to 51% of IDBI Bank, currently valued at $5.1B (USD). (BBG)

• Rio Tinto, a global mining giant, has made an improved $4.49B (AUD) bid for copper target Turquoise Hill Resources. (AFR)

• Indian state-owned refinery Chennai Petroleum formed a joint venture with parent company Indian Oil and others to build a ~$4B (USD) refinery. (RT)

• Adani Group, an Indian-based conglomerate, has received approval for its $3.9B (USD) bid for a 26% stake in cement makers Ambjua Cements and ACC. (BBG)

• Monumental Sports & Entertainment and Carlyle co-founder David Rubenstein are both weighing a bid for MLB team Washington Nationals (valued at $2.23B USD). They are also interested in acquiring Baltimore Orioles (valued at $1.63B USD). (BBG)

• Japan's Olympic Corp is close to selling its microscope unit to PE firm Bain Capital for $2.2B (USD). (RT)

• Los Angeles Angels owner Arte Moreno is considering selling the team. The team's current valuation is ~$2.2B (USD). (CNBC)

• Vodafone agreed to a $1.8B (USD) deal to sell its Hungarian business to 4iG and state-run Corvinus Zrt. (FT)

• Perpetual has acquired Australian funds manager Pendel for $2.5B (AUD). (BBG)

• Australian company Link Administrators approved Dye & Durham's revised offer, which values the company at $2.47B (AUD). (RT)

• Singapore Telecommunications will reduce its stake by 3.3% in Indian company Bharti Airtel to raise ~$1.6B(USD). (BBG)

• Mobile World, a Vietnamese retailer, is planning the sale of a 20% stake in its Bach Hoa Xanh grocery chain at a ~$1.5B (USD) valuation. (RT)

• The New Zealand Government has repurchased KiwiBank from the NZ Post, ACC & NZ Super in a deal worth $2.1B (NZD). (NBR)

• A consortium led by Palisade Investment Partners walks away from a $1.2B (AUD) deal to buy Ports of Geelong. (AFR)

• TPG-owned Greencross, an Australian pet care business, is considering selling its veterinary operation worth ~$1B + (AUD). (AFR)

• APA Group has put a ~$500m (AUD) bid in for Basslink. (AFR)

• ASX-listed EQT will acquire Insignia's trustee business for $135m (AUD). (AFR)

• Move Logistics, a New Zealand end-to-end logistics company, has purchased bulk transport provider Fluidex Transport for ~$15.2m (NZD). (NBR)

VC & Fundraising

• Celonis, a process mining software vendor, secured an additional $1B (USD) in a series D round at a $13B (USD) valuation. (TC)

• Australian family officers and institutions are ready to invest in a $1B (USD) funding round for Tract, a data centre's play. (AFR)

• Asset manager Palisade Impact raised $400m (AUD) for its impact fund. (AFR)

• Yonghui Fresh Food, a Chinese B2B grocery supply firm, is seeking ~$200m (USD) at a $1.5B (USD) valuation before its planned IPO in Hong Kong next year. (BBG)

• Andrew Forrest invests $150m (AUD) in rare earths developer Hastings Technology Metals. (AFR)

• Sir, a Sydney fashion label is plotting a ~$6m (AUD) capital raise to fund brick-and-mortar stores. (AFR)

• Hillfarrance made a $1.5m (NZD) investment in game studio Hashbane Interactive. (NBR)

Equity Raises

• Porsche has received pre-orders for its planned September IPO, which would give it a valuation between $60B (USD) and $85B (USD). (BBG)

• Zeekr, Geely's Premium EV brand, which is valued at ~$9B (USD), is exploring IPO options with a listing in the US or Hong Kong among the possibilities. (BBG)

• Kakao Piccoma, a south Korean digital comic company, will delay its Tokyo IPO until 2023. It is aiming for a valuation of $6B+ (USD). (BBG)

• Services company Servify is preparing to IPO at a $2.5B (USD) valuation before April 2024. (BBG)

• Fondul Proprietatea will be allowed to IPO ~15% stake in Romain state-owned hydropower produced Hidroelectrica by mid-2023 for an estimated $2.48B (USD). (RT)

• Shanghai United Imaging raised $1.6B (USD) in its IPO debut, and its stock jumped 75% on the day. (BBG)

• Chinese nickel trader Lygend plans a $1B (USD) IPO launch. (BBG)

• Heartland Group(NZX/ASX) announced a $200m (NZD) capital raise to pay off debt and fund future growth. (NBR)

• Third Harmonic Bio aims to raise $150m (USD) in a Nasdaq IPO. (BJ)

• Invictus Energy, an oil and gas explorer, launched a $20m (AUD) share placement. (AFR)

• EQT will raise $125m (AUD) to fund their acquisition. (AFR)

• ASX-listed Audio Pixels are asking for a $10m (AUD) cash injection. (AFR)

• Splitit asks investors to pour $8m (AUD) into the business. (AFR)

Debt Raises

• CommBank is offering to bankroll a ~$1B+ (AUD) two-headed debt staple package to fund chemicals company Ixom's buyout. (AFR)

• Bank of America will lead three other banks in bankrolling Perpetual's new debt package, believed to be worth ~$757m (AUD). (AFR)

• Queensland's State Investment Fund has committed $500m (AUD) to private debt via QIC. (AFR)

Financial Lingo Breakdown

Each Monday, we will break down a financial term this week, we focus on inflation.

Inflation measures the rate of rising prices over a given time. Inflation eats into your money as things cost more. You can see this in all types of goods and services. Just think how much the price of your coffee has increased over the year.

Editors' Note

• J Powell's speech made it clear the Fed is willing to cause pain to the markets and the US economy to fight inflation. Unlike the Fed's initial view on inflation, the rate hikes will not be transitory.

• It was a bad weekend for the All Blacks, and there is no doubt the question of whether Foster is the best person for the job will come up again. Bring in Razor, I say.

• It will be an interesting week for the markets as we see how they react to J Powell's speech.

• I hope you have enjoyed the recap and have a great Monday.

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