Global Factory Activity Drops

August 02, 2023

Good Morning,

Australia’s central bank chooses to keep rates on hold for another month at 4.1%. Chinese demand for NZ’s dairy decreases, along with a drop in manufacturing productivity. Meanwhile, BNZ increases home loan rates and a student gets expelled from a central Auckland highschool after attacking two teachers - leaving one with a seriously injured face.

Let's jump in.

Before The Bell

Markets

  • There is no end in sight to the decline in new home consents, with issuance in the June quarter down 20% from the same period last year. (Stuff)

  • Chinese demand for New Zealand’s key dairy export, whole milk powder, is looking “bleak” for the rest of the year and may not start to recover until next year, according to analysts at HighGround Dairy. (Stuff)

  • Bank of New Zealand (BNZ) has increased the interest rates on three of its home loan terms, and one of the moves has prompted questions from economists. (Stuff)

  • The benchmark S&P/NZX 50 Index slid 0.6%, or 75.741 points, to 11,980.41 on Tuesday, having advanced 0.9% on Monday. On the broader market 56 stocks rose and 77 fell with $65 million shares traded. (Stuff)

  • Australia’s central bank has left its cash rate target on hold for the second consecutive month at 4.1%. (NBR)

  • British house prices fell by the most since 2009 in the 12 months to July, mortgage lender Nationwide said on Friday, as the drag from rising interest rates on the housing market intensified. (RT)

  • Japan's government bond market has turned into a cat-and-mouse arena for investors and the Bank of Japan, as the latter tries to slow a rise in yields towards its new policy ceiling and hungry investors go a step ahead and snap up the bonds. (RT)

  • Sterling's drop at the time of former Prime Minister Liz Truss's failed budget plans meant the British taxpayer stumped up tens of millions of pounds extra to fund Brexit divorce bill payments to the European Union, paid in euros, new figures show. (RT)

  • European stocks dropped on Tuesday as earnings season rolled on. UK shares outperformed, helped by gains in BP Plc and HSBC Holdings Plc. (BBG)

Earnings and Data

  • Marcus Blackmore, the major shareholder of vitamins group Blackmores, says he feels “bittersweet” as he receives $11.6 million from a special dividend being paid to all shareholders on Tuesday in the first step of Kirin Corp’s $1.9 billion buyout. (AFR)

  • British factory output contracted in July at the fastest pace in seven months, hit by higher interest rates and fewer new orders, despite weakening price pressures, a survey showed on Tuesday. (RT)

  • HSBC, which generates most of its income in Asia, will repurchase an additional $2 billion on top of a previous program announced just three months ago, according to a second-quarter earnings statement on Tuesday. HSBC also said it is now expecting net interest income for 2023 to be above $35 billion, up from more than $34 billion. (BBG)

News Summary

  • A student who attacked two teachers at Epsom Girls Grammar, seriously injuring one’s face, has been expelled. (Stuff)

  • One person has died after a serious crash in Woodside, Dunedin on Tuesday night. (Stuff)

  • An Auckland man was frustrated to see a product he had purchased from Countdown had gone up 66% in price in less than two weeks but was still labelled a “special”. (Stuff)

  • The Council of Trade Unions reckons the National Party has a $3 billion to $5b hole in its fiscal plan. (NBR)

  • Freezing orders have been made against a former sales agent of New Zealand-based SolarZero it has accused of fraud. (NBR)

  • New life has been breathed into the ongoing legal battle between Kiwi businessman Andrew Griffiths and the receivers of a failed company behind a luxury Fijian resort. (NBR)

  • The long-running intellectual property battle between amphibious boat rivals Sealegs and Orion Marine will go another round after the Appeal Court overturned a High Court ruling from February. (NBR)

  • Myanmar's ruling military pardoned on Tuesday jailed former leader Aung San Suu Kyi on five of the 19 offences for which she was convicted but she will remain under house arrest, state media and informed sources said. (RT)

  • Manufacturing activity across the euro zone contracted in July at the fastest pace since COVID-19 was cementing its grip on the world as demand slumped despite factories cutting their prices sharply, a survey showed on Tuesday. (RT)

  • Global factory activity took a further turn for the worse in July, private surveys showed on Tuesday, a sign slowing growth and weakness in China were taking a toll on the world economy. (RT)

  • With most of Ukraine's Black Sea Coast either occupied by Russian troops or in their line of fire, families seeking respite from life in a war zone are flocking to the inland shores of the Tylihul, a river that widens into a broad estuary bordered by grassland. (RT)

  • Hours after China's top legislature convened a special meeting last week to remove foreign minister Qin Gang, photos and mentions of the 57-year-old started disappearing from his former ministry's website. (RT)

  • India’s lower house of parliament is expected to debate and vote next week a rare no confidence motion against Prime Minister Narendra Modi’s government over the deadly violence in Manipur, a move that won’t impact the administration’s stability. (BBG)

  • Authorities in the southern Chinese city of Guangzhou canceled a TEDx event over what the organizers said was concern about foreign influence. (BBG)

Deal Flow

Investments / M&A

  • Kiwi Group Capital is investing $225 million into subsidiary Kiwibank to accelerate its growth following the $310m sale of fund management business Kiwi Wealth to Fisher Funds last year. (NBR)

  • Faced with an unshiftable problem – a $6.2 billion external financing load including bank debt, leases and handset receivables financing – and some hungry private capital types sniffing around, TPG is back at the negotiating table trying to deal its way out of a problem. (AFR)

  • Melbourne SPAC on the prowl again as $185m buyout deal falls over (AFR)

VC & Fundraising

  • Recommendations from the Government-appointed Startup Advisors Council made public today include introducing tax incentives to promote investment in startups and venture funds, as foreshadowed by NBR in late June. (NBR)

Equity Raises

  • The Overseas Investment Office has approved a $78.9 million land sale and leaseback deal by subsidiaries of egg farmer Indus Valley, allowing repayment of bank debts after a breach of covenants. (NBR)

Debt

  • Czech billionaire Daniel Kretinsky is in talks to buy Atos's loss-making legacy operations in a 2 billion-euro ($2.20 billion) deal that will refocus the struggling French company on its cybersecurity and cloud assets, and cut its debt. (RT)

Daily Picks

  • It is gone. A giant, glowing X no longer marks the spot on the San Francisco high-rise that is headquarters to Elon Musk's messaging company X, formerly known as Twitter. Read more here.

  • How the Nuclear Missile Threat from North Korea Keeps Growing - See this article for more.

  • The True Honey Co has launched what is believed to be the highest grade mānuka honey. Read more here.

Job Board

New Zealand

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Australia

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