IMF sees a 'turning point'??

February 01, 2023

Good Morning,

Chris Hipkins reveals his new cabinet as Labour seeks to eliminate lasting problems from the Ardern administration, a state of emergency has been declared in Northland as heavy rain is expected, Australia and France have agreed on a deal to jointly manufacture and supply thousands of artillery shells to the Ukrainian army, and the International Monetary Fund sees a “turning point” for the global economy as it raised its growth outlook for the first time in a year.

Let's jump in.

Before The Bell

Markets

  • The S&P/NZX 50 index fell 66.5 points, or 0.6%, to 11,967.72. Across the main board, 82 stocks fell, and 51 rose. Turnover was $154 million (GR)

  • The S&P/ASX 200 eased 0.1 per cent, or 5 points, on Tuesday to 7476.7, in a see-saw session that had it briefly touch a nine-month peak of 7516.8 before losing momentum. The index ended the month 6.2 per cent higher, having entirely recouped last’s year losses (AFR)

  • Stocks in Europe slipped as investors digested a flurry of corporate earnings and economic data while positioning for rate increases from the Federal Reserve and European Central Bank later this week (BBG)

  • London's main stock indexes slipped on Tuesday as investors braced for a series of interest rate hikes from major central banks this week. At the same time IMF's warning about the UK economy added to the downbeat sentiment. The blue-chip FTSE 100 index slipped 0.2% by 0812 GMT, with economically sensitive energy, banks and mining stocks leading losses. (RT)

Earnings and Data

  • Australian retail sales declined for the first time in 2022 in December, suggesting consumers are beginning to rein in spending in response to rapid inflation and rising interest rates. Sales tumbled by a larger-than-forecast 3.9%, the biggest fall since August 2020. The result came after November’s gain was revised higher to 1.7% as consumers brought forward Christmas spending to take advantage of Black Friday discounts (BBG)

  • China’s official manufacturing PMI reported a reading of 50.1, above the 50-point mark separating growth from contraction (CNBC)

  • Eurozone GDP grew 0.1% in Q4 2022, beating expectations of -0.1% (CNBC)

  • UBS reported a fourth quarter that beat analysts' expectations with a net income of $1.65B (USD) (BBG)

News Summary

  • The new faces on Labour’s front bench are new Education Minister Jan Tinetti, Justice Minister Kiri Allan, the new Minister for Auckland, Michael Wood, and Verrall, as health minister (Stuff)

  • MetService has warned that more heavy rain is on the way for a "vulnerable" Auckland. Yesterday, mayor Wayne Brown said today "could be more dangerous than Friday" due to backlogged stormwater systems across the region (Stuff)

  • Australia has partnered with France to supply Ukraine with 155-millimetre artillery shells. Defence Minister Richard Marles and his counterpart Sebastien Lecornu have announced (ABC)

  • Rio Tinto has apologised after losing a radioactive capsule that was being transported across Western Australia (BBC)

  • New Australian budget airline Bonza took off for the first time (9 News)

  • The UK economy is expected to be the only major economy to shrink in 2023 (BBC)

  • Green projects are boosting the UK's growth, according to a CBI report (BBC)

  • Joe Biden has ruled out sending F-16 fighter jets to Ukraine (BBC)

  • The US government has stopped approving licenses for American firms to export the majority of items to Chinese tech giant Huawei (BBC)

  • The International Monetary Fund sees a “turning point” for the global economy as it raised its growth outlook for the first time in a year, with resilient US spending and China’s reopening buttressing demand against a litany of risks (BBG)

  • Distraught relatives thronged hospitals in Pakistan's Peshawar on Tuesday to look for their kin a day after a suicide bombing ripped through a crowded mosque in a heavily fortified area of the city, killing more than 90 people, mostly policemen (RT)

Deal Flow

Investments / M&A

  • A large investor in Ritchie Bros Auctioneers is backing the Canadian company's proposed $6B (USD) takeover of IAA (BBG)

  • UBS announced plans to repurchase more than $5B (USD) of shares this year (BBG)

  • Cnooc, a Chinese oil giant, has paused plans to sell its UK North Sea portfolio, which could have been valued at as much as $3B (USD) due to a valuation gap (BBG)

  • Aesop, a high-end cosmetics brand, is attracting attention from LVMH and L'Oreal. A deal could value the company at more than $2B (USD) (BBG)

  • Owners of the Indian in-vitro fertilisation clinics business, Indira IVF, are considering selling in a deal that could value the company at more than $1B (USD) (BBG)

  • Repurpose It, a Melbourne-based resource recovery and waste treatment group, is looking to sell. It is expecting EBITDA for 2023 to be close to $40m (AUD) (AFR)

  • CleanPeak Energy has acquired Mugga Lane Solar Farm for around $30m - $40m (AUD) (AFR)

  • Carbon Revolution, the lightweight wheel maker which is attempting to merge with a United States group that would result in a likely listing on the Nasdaq exchange in New York, went into yet another trading halt on Tuesday as its December quarter update was delayed. With shares closed at 15.5¢ (AUD) on Monday compared with an issue price of $2.60 (AUD) in a public float in late 2019, they're looking for a push to secure up to $30 million (AUD) in bridge funding for the next few weeks (AFR)

  • Vedanta has shelved plans to sell its mega Indian Copper smelter (BBG)

  • Audi has acquired a minority stake in the F1 team Sauber Group (BBG)

  • GQC Funds Management returned 13.1% for the December half (AFR)

  • Sun Cable's sale process started after MA Molies were mandated (AFR)

  • Shareholders of Nasdaq-listed special purpose acquisition company AMCI Acquisition Corp II will vote this week on a merger with New Zealand-founded and US-based carbon recycling company LanzaTech – one of the last major hurdles in the deal proceeding (NBR)

VC & Fundraising

  • Stripe, a payments startup, is in talks of a possible funding round with VC firm Thrive Capital. Thrive Capital would invest $1B (USD) as part of a larger funding round that would value Stripe at between $55B - $60B (USD) (BBG)

  • PE firm Convergence Partners has raised a $296m (USD) African tech fund (BBG)

  • Hnry, a Kiwi firm that has created accounting software for sole traders, has raised $35m (AUD) series B fund led by AirTree Ventures, Athletic Ventures and New York-based fund LeftLane Capital (AFR)

  • CurveBeam AI, a bone fragility imaging tech company, has closed an oversubscribed funding round raising $25m (AUD). It included backing from Andrew Forrest's Tenmill and other top institutional investors (AFR)

Equity Raises

  • Adani Enterprise have completed its $2.5B (USD) equity sale (BBG)

  • The Hellenic Republic Asset Development Fund has chosen Bank of America Corp. and Morgan Stanley to lead work for an initial public offering of its 30% stake in Athens International Airport, which will likely take place in the second half of the year. HRADF expects its stake to be valued at €800 million ($872 million USD) to €1 billion depending on market conditions (BBG)

  • Zen Energy, a green electricity retailer and installation business, is preparing for a $200m - $300m (AUD) equity raise, which would allow it to start developing its own power generation and storage (AFR)

  • Australia's Flight Centre Travel Group Ltd is raising $180 million (AUD) in one of the country's first major capital raisings of 2023 to buy British travel business Scott Dunn for A$211 million. The company said on Tuesday it had agreed on a deal to buy the business, which specialises in tailor-made luxury travel, as it banks on a sustained rebound in global travel after the pandemic. The raise is underwritten by Macquarie Capital and UBS (RT)

  • Broken Hill Iron ore explore Hawsons Iron is rising $8.8m (AUD) via a share placement and share purchase plan (AFR)

  • ASX listed Canadian gold hopeful Auteco Minerals was raising $8m (AUD) with an additional $2m available if it is oversubscribed (AFR)

  • Acumentis, a listed valuation firm, will raise capital after reporting losses and Covenant breaches (AFR)

Debt

  • US hedge fund Davidson Kempner Capital Management bought $1.1 billion in bad debt from Abu Dhabi Commercial Bank PJSC as the lender cleans up a balance sheet battered by a series of corporate defaults (BBG)

Daily Picks

  • Do you think Prime Minister Hipkins' new cabinet has what it takes to bring Labour over the line in November? Recent polling suggests that Kiwis believe National is better suited to steer New Zealand through a recession (NR)

  • If you want to see Morgan Stanley's M&A hit list, check this article by the AFR out

  • Want to learn more about the outlook for VC and tech startup's in Australia, then check this article out

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