Market News 27 August 2018

The Australian political leadership game, including five Prime Ministers in five years and 66 changes to political leadership at a state and federal level, is symptomatic of contemporary selfishness and a lack of respect for others.

It is a problem that we are seeing globally.

The political leadership aspirants clearly hold views that only their philosophies and opinions can be correct; a naïve belief as they hope to turn toward the millions that they hope to represent.

Leadership is about setting good standards and good objectives to inspire the many.

It requires honesty to inspire a following that is so vital when tackling very difficult problems.

It is not about displaying a weakness for undermining, criticising and developing an unwarranted fear of failure.

Australia was once described as ‘the lucky country’ but their citizens must feel anything but that right now given the weak political leadership being displayed over recent years.

Australia is not alone. It doesn’t take long to find weak political behaviour around the globe.

The Italians don’t believe they have a financial problem;

Cyril Ramaphosa declares that all is well in South Africa;

Putin… well you know his story, and that of Presidents Xi and Erdogan – the only ones who can get the job done they say;

Venezuela is just a temporary blip on a positive road;

And, yes, here in New Zealand we have MP’s undermining their leaders and Cabinet Ministers deciding they can operate outside the rules because they prefer it.

Inward, selfish, weak.

This collective of political weakness is, in my view, reason to be concerned about the world’s ability to effectively tackle serious financial problems.

‘We’ were forced to deal with crises, so we did, but ‘we’ seem incompetent when called upon to deliver unpleasant strategies required for slow long-term correction to weak financial positions.


Stretched - We were reminded this week by various US commentators that the current share market has become the ‘longest bull market in history’ at 3,453 days, rising in a wriggly line from the low point for the S&P500 of 666 on 9 March 2009 (that’s a spooking starting number – Ed).

There were some interesting variations across major indices; the Nasdaq (technology focus) hugely outperformed the US S&P500, which Japan tried to keep up with, but failed. Japan though outperformed Europe, which may be significant given the decades in the cold experienced by Japan.

Is it then an even more chilling thought that Europe outperformed China’s Shanghai index?

The NZX50 beat Japan, but not the US S&P500.

Plenty of commentary would have us believe that China will be the source of the next major financial problem, but we also cast a concerned eye in Europe’s direction with its constant stream of troubling financial risks, where Italy is the latest and the largest.

The US share market stories I read were a mix of Trump-like euphoria, expecting a continuation of the gravy train, or incredulity that the financial optimism has lasted so long.

It is irrelevant which camp you prefer; they both disclose limitations to the potential for optimistic market pricing to continue.

We are frequently asked to predict whether a share price, or market, will rise or fall, but the repetitive and appropriate answer is that we don’t know and there is little value in offering short term predictions.

However, what we do say (ask) is are your dollar value exposures and portfolio percentage weightings at a comfortable level to benefit from an ongoing increase in the market’s pricing or a significant decline in the market’s pricing?

The only way to answer this question confidently is to have a well-defined set of investment rules (policy settings). Having such investment rules makes investment decisions far easier to make.

Bullish investors who believe the share market will surge higher will be pleased to read the current round of profit results because the majority of businesses are delivering upon the rosy profit forecasts.

For example, in NZ, Air NZ delivered its second largest profit ever at $390 million (+2.1%), Spark’s earnings rose 2.2% and breached NZ$1 billion, Auckland Airport’s profit was up 6.20% to $263 million, Colonial Motors reported profits up 13% at $25 million and Ebos reported earnings at +10.3% ($272.4 million).

Even Fletcher Building reported in the upper half of its most recent forecasts after a very torrid year.

It seems like a constant stream of happy profit reports.

But wait, the share market responded to these announcements by drifting sideways, why?

In my opinion you’ll find that share prices haven’t broadly increased, following the profit results, because investors are relieved by these results, yes relieved, and not excited by the unexpectedly good financial performance of their companies. Some of the shares named saw their share prices fall after the results.

Financial markets, and investors within, are constantly looking forward, as far as they dare, to factor in probable and possible forecasts of financial performance.

As I have noted above, financial markets have already priced in a state of optimism, which means ‘we’ are already factoring in rising profit results and stable opportunity costs (interest rates), thus we are relieved, not surprised, when these companies deliver upon those optimistic financial hopes.

So what was the tone of the Chief Executives and Board Chairs’ as they presented such strong performance?

Well, I thought the Chair of Colonial Motors was the clearest within the many messages of warning being issued:

Chair Jim Gibbons was cautious about the year ahead saying the pace of growth has slowed. There are currently a myriad of mixed messages influencing the confidence of business and consumers that could influence the medium-term outlook for the economy and our industry (reported to Sharechat)

Clearly Jim shares a few of my anxious bones.

Regular readers will have figured out that I have more anxious investment bones than blind faith bones, but I happen to think that weighting is a wise mix for making financial decisions.

It is a credit to the strongly performing businesses that they have been able to harness the increased confidence of consumers, and the increased volume of consumers (immigration and tourism), and convert this into increased sales and increased profits.

However, I agree with Jim Gibbons, caution is warranted and should be applied to your investment strategies.

Trade–China has sent a delegation to the US to continue with trade negotiations.

Before anyone gets their hopes up too high, China has not flown to the US to bow and concede, then ask for President Trump to release the trade war tourniquet; they will likely leave under either a veil of silence or in a dramatic huff.

Either scenario will, in my view, only be very early stage foundation setting for a much longer-term negotiation.

Politicians can’t help themselves when it comes to appearances and perceptions, so China’s politicians will believe their best hope for negotiation gains will be when US elections are at hand, hoping for leverage based on the fears of other politicians.

Right now we are in the lead up to the midterm Senate elections (November 2018) and thereafter comes the 2020 Presidential election.

Given the repetitive and escalated stance taken by Donald Trump with the US trade war I think we can be sure that he will not retreat from his position during 2018, and quite possibly not during 2019.

US Fed Shrinks – The US Federal Reserve is underway with its balance sheet reduction and along with the progressive increase in the Fed Funds (overnight) rate these actions are presenting the strongest influence on global economies right now.

It was more than a year ago that Janet Yellen explained the Fed would begin to increase the Fed Funds rate (which they have been doing) and shrink the Fed’s balance sheet by ‘selling’ (sales, or accepting repayments) the bonds that it purchased post Global Financial Crisis, when it flooded the economy with financial support.

Initially the Fed found it difficult to sell many bonds as the over-sensitive market watched for the moment of change. Sometimes the Fed sold short term to an accepting market, but would buy longer term bonds to cloud the story a little, but also continue to show that it could provide long term support where required.

During 2017 there was little change to the scale of the Fed’s bond portfolio, which sat at US$4.48 trillion. However, over the quiet of New Year’s 2018 bond sales began in earnest and they have continued at a healthy pace with the bond portfolio now down to US$4.25 trillion.

A 5% decline may not seem significant, but it is when it is confirmation of the reversal from constantly cutting interest rates and buying more bonds to finance everybody.

The Fed is, as it intended, putting all US dollar borrowers, including emerging market borrowers, on notice that the cheap and plentiful finance policy is receding. If you owe money in USD, now is the time to retain profits or taxes and to reduce your debt obligations.

Failure to do so will harm the borrower (price of debt) or the country (currency weakness relative to USD).

You wouldn’t want to be Turkey right now, not only a rising debt user confronting the impacts of US Federal reserve policy but also in the midst of an unnecessary political row with the US President. Not clever.

Turkey’s Erdogan would do well to review the past five years of Venezuela’s economic performance. Nicolas Maduro has delivered havoc to the people of Venezuela.

Side story – in looking back at Venezuela’s leadership history I wondered if I had been a bit tough with my criticism above of Australia’s leadership. The common tenure of leadership in Venezuela was months, and sometimes only days!

Back to the US Federal Reserve.

They are the most influential financial organisation on the planet.

They are tightening monetary policy through interest rate increases and balance sheet decreases.

This is driving much of the strength in the US dollar.

The world’s biggest economy, now self sufficient in energy (especially oil), with a rising strength of currency is something other nations should be alert to, with respect to potential influence.

If they got their house in order with respect to debt ratios, they could again become a very significant political force (with Jim Henson’s latest Muppet at the wheel – Ed).

Further, don’t forget my scribbles above about the US share market still rising quite strongly, in the full knowledge of the tightening monetary policy of the US central bank.

The US tightening will continue, until the US Federal Reserve board members lose confidence in the current strategy, and that seems like a while away yet (2019?).

FX win–one benefit for NZ from the US Fed’s actions is the declining pricing of the NZ dollar, which delivers nice real economic gains to NZ’s exporters.

I’d suggest reading a few of the performance reports of any NZX listed companies if you’d like to gauge how useful the weaker currency is for them.

The most recent item that caught my attention was Fisher & Paykel Healthcare’s announcement that it is increasing its earnings forecast by $5 million following stronger sales butpredominantly the weaker NZ dollar.

FPH sells 99% of its equipment outside NZ.

Our central bank has spent years worrying about the strength of the NZ dollar, and the impact on it of our historically high real interest rates.

The actions of the US Federal Reserve may be upsetting too many developing nations but frankly they seem to be placing our economy into a desirable sweet spot from an export trading perspective.


UK surplus– Amidst the constant headlines of doom relating to Brexit, the UK government has delivered sequential fiscal surpluses.

It’s not all bad then for her majesty’s royal subjects.

Tegel – Those who have not returned their takeover offer responses will now be forced to sell TGH shares (at $1.23) because the takeover offer has exceeded 90% acceptance (at 94.50%).

Bounty Foods state that they wish to sell more chicken via their channels in South East Asia, which could be good news for chicken farming in NZ if Bounty is successful with increasing demand.

Dividends & Voting – You should have noticed plenty of companies reporting their results and inviting you to submit votes to Annual Meetings.

Please submit your votes, and if unsure how to vote, may I suggest that you deliver ‘open’ proxy votes to the NZ Shareholders Association who will happily act on your behalf at such meetings.

You may also have noticed that companies, and their registrars, are getting better with the presentation format of corporate results via email. They are becoming clearer for you and I to review and consider.

September is also a season of a larger flow of dividend payments; enjoy.

EVER THE OPTIMIST– The Port of Taranaki reported a 14% increase in profit over the past year and seems to be benefitting from the increased demand for logs from China and the scale of its energy customers, such as Methanex.

It’s nice to see such gains away from the major ports of Auckland and Tauranga.

ETO II–The NZ pip fruit industry reports 2018 as a record crop, up 5-6% on the previous year following good growing conditions.

It commented that the majority of the apple crop had been harvested and 90% has been exported, meaning that the growers will also enjoy the increased NZD value of the produce presented by the declining price of the NZ dollar.

ETO III – Delegat Group, the NZ wine exporting business that keeps on succeeding.

DGL set a new record profit of NZ$46.8 million (2.7 million case sales, expecting 3 million plus from late 2019.)

I still recall the time (2003) when financial markets were nervous about lending Jim and Rosemary Delegat $50 million for their ambitious, but clearly very successful, growth plans.


Z Energy bond – Z Energy successfully issued $125 million new 6-year bonds at 4.00% (ZEL060) last week.

In fact the demand was so strong that scaling was much heavier than usual.

I interpret this as a result of many financial advisers becoming anxious that their clients fixed interest portfolios have become far too short term on average as the financial advisers predicted (and hoped for) interest rates moving higher.

But, interest rates have started moving lower again!

We are pleased that our clients have maintained a very good mix of long term fixed interest investments and thus are very well positioned for this drift lower for interest rates and will not be unduly disrupted by small allocations in this recent bond offer.

Thank you to those who participated in this bond offer through Chris Lee & Partners.

We are told to expect more long term bond offers over coming weeks.

Turners Auctions – has announced an intention to issue a small subordinated bond with a three-year term and a 5.50% interest rate.

We have a contact list for this bond offer for those who wish to hear more about it once details are confirmed.

Spark – has announced an intention to shortly issue a new five and a half year bond (7 March 2024 maturity).

Given its strong credit rating (A-) this bond is likely to have a yield of around 3.50%.

We have a list for those investors wishing to invest in this new bond from Spark.

More bondsThe news that we should expect more local bond issues is yet another by-product of the US Federal Reserve’s tightening monetary policy, which has pushed US interest rates above NZ equivalents.

This in turn has increased the relative cost of issuing bonds into the US for a company, such as Spark, who can now gain financially by issuing such bonds in NZ.

The fastest way to hear about new investment offers is to join our ‘Investment Opportunities’ (New Issues) email group, which can be done via our website or by emailing a request to us to be added to this list.


Chris is in Christchurch on 28 and 29 August.

Edward is in Auckland (Albany) on 3 September and in Auckland (CBD) on 24 September, then in Nelson on 2 October.

Mike will be in Tauranga during early October.

Our future travel dates can also be found on this page of our website:


Any person is welcome to contact our office to arrange a free meeting.

Michael Warrington

Market News 20 August 2018

The Provincial Growth Fund is taking its label very seriously, committing $500 million (funds) to plant trees (growth) in the provinces.

This makes good sense from many angles, especially if government owned land is used for planting.

I hope Minister Jones is leveraging even more money from the councils of the regions to boost the effectiveness of his funding.


Interest rates–I think I commented recently about the changing interest rate strategies around the world…. Or maybe I thought it, which isn’t much use to you… but it is happening.

You will all be familiar with the US Federal Reserve’s rate hike actions and this ongoing mindset, with 2-4 more 0.25% rate increases being debated, lifting their Fed Funds Rate (overnight rate) from 0.25% to what might reach a level of 2.50% by 2019.

The UK has tried to signal its preference for lifting its overnight interest rate by taking its recent +0.25% step to 0.75%, but their tone for ongoing increases (‘gently rising pace’) is far from robust; understandably so in the face of Brexit.

A Bank of England economist, who sits on the Monetary Policy Committee (MPC), has been quoted as saying that interest rates are very likely to remain low for the next 20 years, which is almost an entire generation.

Europe and Japan would like us to believe that interest rate increases are their next move too, if only their economic conditions were strong enough for this to be logical, but they are not.

Meanwhile, down-under in Australia and New Zealand our central banks have made it crystal clear that they intend to continue to celebrate the remarkable inflation stability of our two nations by making no change at all to the Official Cash Rates locally.

Australia sits at 1.50% and New Zealand is at 1.75%. Both explain that they see no cause, at this point, to change the OCR and have extended the horizon by defining ‘prior to the year 2020’.

The extension of the forecast window for 1.75% in NZ, in the latest monetary policy review by Governor Orr, caught financial markets by surprise; something you can see in the dramatic price changes that occurred immediately after the announcement.

Most analysts had been forecasting increases to our OCR in 2019.

From the perspective of my career (1985 until now) this situation of no recent or foreseeable interest rate changes is quite remarkable.

However, it is beginning to appear that the remarkable era for interest rates during my career is not the current situation but was in fact the first two trimesters.

As I write this I am looking at the Australian official cash rate history because I wanted to remove the madness that the Reserve Bank of New Zealand adopted with its Monetary Policy Index in the early 1990’s*.

The massive volatility (a 14% interest rate range) in my first trimester (1986-1996) was followed by changeable interest rates over the next 10+ years (within a 2.50% range) before reaching the last trimester with its 1.50% range, including a 0.00% range over the final two years, and perhaps the next two years.

If the RBA and RBNZ governors are correct about no need for change for 2-3 more years we will reach a period of five years with no change to very low short-term interest rates.

Investors must take this central bank guidance onboard with their investment decisions.

As is often said in financial markets; never bet against the central bank.

The anchored stance presented by the RBA and the RBNZ relative to the strategy of interest rate increases in the US, and possibly the UK, then Europe and Japan, will continue to place downward pressure on the pricing of the New Zealand dollar.

Exporters and tourist industry businesses will relish this news.

From a broad economic perspective ‘we’ should relish it too.

I do hope that the large increases in the price of luxuries we import slows ‘our’ propensity for buying certain things that we don’t really need (back on that trade surplus band wagon again – Ed).

Oil isn’t a luxury, but its price increase will likely accelerate the demand for electric cars, which suits the NZ economy if their capital cost comes down further.

Meaningful weakness in the pricing of the NZ dollar and having short-term interest rates between 1.00%-2.00% are significant factors in decision making for all investors, across all age groups.

Short term fixed interest investments are required as part of an investors liquidity strategy, but no more than that amount, the penalties for having an excessiveproportion invested in short terms is too high (minus 2-3% p.a.).

Some of you may remember a statistic that I have quoted before: Greater than 90% of all money in our banks is deposited for terms of 12 months or less.

This is an awful waste of value for the people whose money it is.

The winners are the banks’ balance sheets.

I apologise if this message is a typical ‘rinse and repeat’ of things we have said previously, but just when so many investors, and financial advisers, were expecting (actually, hoping for) interest rate increases, it is not happening, and the very large volume of short term fixed interest investing is going to place a drag on portfolio returns.

Try to reach the point of belief that very low interest rates are here for a long stretch and hold that line of thought as you make each new investment decision for your portfolio over the coming 2-3 years, and quite possibly 20 years.

*In the mid 1990’s, under the Don Brash era, the Reserve Bank of NZ operated monetary policy based on an index, which was a combination of the cash rate and the currency pricing (Trade Weighted Index).

The volatility of our currency was thus transmitted into our interest rate markets causing unnecessary volatility for interest rates and business risks.

We financial markets traders loved it because high volatility creates additional opportunity for profit from high levels of customer activity, but it was not helpful to our economy.

The MCI method was removed in 1999 replaced by the current Official Cash Rate method for setting short term interest rates in NZ, which has been far more effective.

Long yields –Related to the story above about short term interest rates, I observe that long term US interest rates (10 years for this exercise) continue to find it difficult to rise even though that is the preference of the Federal Reserve Board.

Strong economic growth data, employment data and inflation data in recent weeks saw the yield on the 10-year US Treasuries rise quickly back up to 3.00% from 2.85%, until 7 days later the market developed an equally serious concern about economic contagion from the Turkish situation and the yield fell back down to 2.85%.

0.15% yield movement on a 10-year bond is a seriously large movement, especially over very short time frames.

There are fund managers and finance firms taking clear sides at present expressing their certainty about yields rising or falling. These louder levels of disagreement are healthy for the market place, compared to the boring state over recent years when all were in agreement.

I find it a challenging thought to invest for 10 years at a return of 2.85% (and declining at present) but as an investor the movement of this market pricing is another very important signal for ‘our’ other investment decisions.

Voting time – I see many company reports arriving in my email inbox and inviting me to vote, and thus I remind and encourage you all to submit votes when invited on your investments, or to appoint the NZ Shareholders Association as your proxy to do so.

Specifically, Heartland Bank would be very pleased to receive your votes given the significant proposal being presented at their next meeting, relating to their Australian expansion.


Fonterra – What on earth is going on at Fonterra?

CEO Theo Spierings, who was already on the glide path to departure, has brought forward that departure to the end of August and inappropriately described the two-week window as ‘ensuring a smooth transition’.

What nonsense.

What a lack of commitment, and certainly it’s inconsistent with the enormous income he received personally.

The board stated that it has stopped its current search for a new CEO observing that they are now wondering what they need in a CEO.

Good grief, seriously?

It couldn’t get much worse for FSF investors. I almost have sympathy for the farmers too.

No Chairman, no CEO, dividends under constant attack and various poor investments hurting all, alongside biological threats to the herd.

All of these items are what financial advisers refer to when they discuss risks, often unidentifiable, with investors. Just because they are hard to see and define doesn’t mean that investment risks aren’t always present.

Tilt Renewables (TLT) – Infratil and Mercury are jointly having a ‘tilt’ at gaining 100% ownership of Tilt Renewables at a share price of $2.30.

TLT investors need not rush their decision; wait for the offer documents and independent view on value before making a decision.

TLT investors do however have the option of retaining some exposure to TLT future performance via an investment in Infratil shares (IFT) and Mercury shares, so the risk type is not lost to local investors.

Skellerup–Long-standing manufacturer SKL reported a pleasing result to its shareholders with profits up 23% and dividends increase to 11 cents per share (from 9.5cps).

With all due respect to the other divisions of the company I have no doubt the company benefited from NZ’s great summer and their cool idea to introduce ‘Red Bandals’ (jandals).

Oil – For the past couple of years the rising price of oil had indicated confidence in economic circumstances, but the oil price is now receding a little.

What’s it saying?

Is it listening to the same murmurings of concern being linked to the Turkish situation?

Turkey –The Turkish currency and interest rate movements should remind investors just how quickly markets can, and do, give up on previous beliefs. (having just told us how cemented low interest rates are – Ed).

Turkey’s decision making under ‘dictator’ Erdogan is undermining the international perspective of stability for that nation and financial markets are responding by sharply discounting pricing for assets (lower), interest rates (higher) and the currency (lower).

By ‘sharply’ I mean:

Share market (XU100) – index down to 90,000 from 120,000 level in January 2018;

Interest rates – Cash rate up to 17.75% from 8.00% and the 10-year government bond yield is up to 20.65% from 9-10% range last year and 6-8% in 2013; and

Currency –The pricing of the Turkish Lira (TRY) fell 33% last week from USD$1 buys TRY$5.25 to TRY$7.10, but if we widen the time window you can see a long term weakness for the TRY as follows: TRY$3.75 January 2018, TRY$3.50 January 2017, TRY$2.80 January 2016, TRY$2.35 January 2015, all the way back to TRY $1.60 in January 2009 (mid GFC).

The situation is getting worse for Turkey, not better.

Erdogan’s ego means that he is lashing out instead of silently getting to the negotiating table to identify the pressure points that have formed in the relationship with the US.

Turkey’s retention of the US pastor (Andrew Brunson) may seem like a modest deal to President Erdogan but US President Donald Trump has made the pastor the equivalent of Austria’s Archduke and I for one prefer that Turkey releases him and requests formal meetings with the US to settle the impasse.

Further, Turkey may have decided against joining the European Union but this doesn’t relieve the EU from concern because data points to European banks as being heavily exposed to the Turkish economy, especially Spanish banks.

The Bank of International Settlements reports that whilst a large percentage of Turkey’s debt is financed in other currencies, making it doubly expensive to repay when your currency value falls in half, they are not concerned because the amount is a modest US$265 billion.


It is $265 billion and rising, on a chart with a 30 degree upward slope over the past 20 years.

To be fair, this volume of debt is only 30% of Turkish GDP (like NZ levels) but I speculate that Turkish GDP may now decline and that debt defaults of this scale would seriously harm the balance sheets of fragile European lenders.

So, member of the EU or not, Turkey is adding concerns to the European Central Bank.

US influence – Here’s a tangible example of America’s financial power; following the imposition of the new US sanctions on Iran, Daimler (Mercedes) is backing away from its prior strategy of expanding into Iran’s vehicle market.

Daimler had not sold vehicles in Iran since 2010 but they had planned to return after the Obama administration eased the prior trade tensions.

Trump’s administration has resulted in a stop to such plans and the threat to Daimler from the US government is too great to confront.

TPW – continues to expand its business when presented with incremental opportunities, announcing the purchase of 1400 commercial electricity consumers from the small OpunakeHydro business.

This investment by TPW follows the recent purchase of 17,000 retail customers from King Country Energy.

I prefer this strategy for business growth to the headline grabbing, tidal shifting, mega-promise (and hope) approach of some other businesses.

Spark – Spark is also expanding its business, but its incremental strategy is adding service offerings to widen its client pool and hopefully increase client retention rates as a result.

The most recent announcement is the increase in scale of its sports video broadcast content having captured the English Premier League football rights in NZ.

Trustpower has proved the merit of multi-product service offerings, especially when those services are regular use items for most households.

It is thus unsurprising that a business with the scale of household touch points that Spark has is now expanding the products that it wishes to sell to those customers.

EROAD – ERD shareholders, who receive a financial advice service from us, are advised that Kevin Gloag has published a research item on the Private Page of our website.

Steel & Tube – Rights offer documents have been distributed.

If you receive your registry information by email there is a very convenient online application process (Chris Lee & Partners features in the Broker drop down menu, thank you).

Payment is then made by Direct Credit by you, prior to the 3 September cut off date.

Heartland Bank – announced its latest annual results, which were good.

Kevin has written a business update and investment opinion on HBL which can also be found on the Private Page of our website.

EVER THE OPTIMIST– Scientists have discovered a way to extract edible proteins from wool, thus working on another opportunity to add value to wool from the unloved end of the spectrum (coarse).

Gotta love those scientists.


Z Energy bond – With rather unusual timing, ZEL has announced a proposed offer of up to $150 million of a new six-year senior bond.

The minimum interest rate has been set at 4.00% p.a. and ZEL has agreed to pay the brokerage expenses, making the offer competitively priced in our opinion.

ZEL’s listing on the NZX means that a lot of information about this investment risk is already available to investors via the terms of their other bonds and continuous disclosure obligations.

The offer has moved into its ‘fast moving’ status; anyone wishing to invest needs to make their decision prior to 5pm this Thursday (23 August).

Turners Auctions – has announced an intention to issue a small subordinated bond with a three year term and a 5.50% interest rate.

We have a contact list for this bond offer for those who wish to hear more about it once details are confirmed.

The fastest way to hear about new investment offers is to join our ‘Investment Opportunities’ (New Issues) email group, which can be done via our website or by emailing a request to us to be added to this list.


Chris is in Christchurch on 28 and 29 August.

Mike will be in Auckland on Monday 3 September (Remuera) and is planning to schedule a trip to Tauranga during late September, or early October.

David will be in Lower Hutt on 29 August.

Our future travel dates can also be found on this page of our website:


Any person is welcome to contact our office to arrange a free meeting.

Michael Warrington

Market News 13 August 2018

So many headlines profess newly disclosed disasters and irrationally extreme conclusions, often disrupting investors’ thoughts about real risks.

I like to see progress being made toward greater respect for our planet but not the extreme views from either end of the spectrum (business is nasty, or green washing products for acceptance).

It’s as if these speakers have never read The Lorax.

On that point, Mayor Goff’s recent behavior would see him banning Dr Seuss’s ‘current’ books (which might include a parody on the scale of today’s councils), as other critics tried to do during Seuss’s lifetime, even though Seuss books are now promoted from every channel.

As an investor, be sure to shift extremism, when seen, back to 7 on the pH scale, and test it for common sense and its potential for humour, before considering new investment decisions on the subject presented.



Certainty– With respect to investment, when offered the choice, go with certainty.

This guidance is a little unhelpful because with respect to investment there is no such thing as certainty; so take the closest thing to it within the risk tolerances that you allow for yourself.

The point of this paragraph is to express my view that uncertainty is rising and moving the ‘goal posts’ that investors previously had confidence in.

Increased uncertainty demands either a lower risk profile or higher rewards for the same risk profile.

China, our largest export market (near 20% of exports), alongside Australia, is suffering under the weight of debt and new accumulating US tariffs.

Australia, our other major trading partner (17% of exports) is confronting the same slowdown with China, its major trading partner at 30% of exports.

The downstream impacts of the US trade war with China are unavoidable for New Zealand.

Dramatic changes in trade behaviour will cause businesses to reduce the risks they are willing to take and this will have an impact on sales, employment and economic confidence more widely.

The ‘politics’ quote from the ‘Tale of Two Cities’ seems rather relevant again, 160 years on from when Dickens authored the book:

‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair’

Every perspective always exists but there is currently a lack of majority thought on many matters and that is leading to my opening opinion that uncertainty is rising.

PGG Wrightson – PGW shareholders may initially be confused about the company’s decision to sell one of its largest value add businesses, representing half of its earnings, but they should be impressed with the price achieved at 50% above book value.

I looked back at the previous annual report and to be blunt the summary in the ‘Seed and Grain’ section used more negative language than you’d expect from a Lions rugby supporter at Jade Stadium last week.

Maybe PGW management simply didn’t like the risks associated with owning the seed development and supply business? They certainly didn’t like it as much as the new Dutch buyer (DLF Seeds) that seeks diversity offered by a Southern hemisphere located business.

Did PGW miss a trick by selling rather than negotiating a supply lock-up?


Maybe not, because PGW has retained an agency role for the long-term distribution of seeds for DLF Seeds, who will continue to use the PGW Seeds brand. This new agency agreement seems consistent with the agency/broker approach that PGW takes for the balance of its business lines.

I take issue with the use of the recent terminology that lead to this sale.

PGW described themselves as participating in a ‘Strategic Review’ with the help of First NZ Capital, yet strategy wasn’t really the outcome, unless the strategy was ‘rush to sell’, because lo’ and behold from the strategic plan came…. ‘several expressions of interest to buy the seed business’.

When I ran a strategic review over my Sky TV shares, within my portfolio at the time of the review, I didn’t receive any calls from TVNZ, Foxtel or media focused hedge funds offering to buy my shares.

Strategic review seems to have become a metaphor for ‘silent auction’.

Nonetheless, subject to approvals the deal to sell the seeds business is done.

PGW has asked KordaMentha to review and provided a report to shareholders for consideration.

Regardless of the report, it feels safe to say that the offer to buy PGW Seeds is set at an attractive price (assuming last year’s business valuers were competent) and PGW is capitalising on the hard, and successful, work of recent years.

The board and senior management are to be congratulated for recent shareholder value added.

If PGW shareholders are happy with the strategy of being an agency business in future, with less balance sheet risk, then the sales decision for PGW Seeds should be easy.

If they are not happy with this significant change they should be putting firm questions to the board about exiting a business that has been performing well.

I could speculate that Chinese owner, Agria, will be very pleased to receive a large capital payout from PGW given the tensions Agria finds itself under elsewhere (delisted from NY Stock Exchange for manipulative behaviour) but that would be taunting them unnecessarily.


Mind bending – If I told you that one share increased by US$7,000 in a single day last week, would you instantly know who it was?

This information highlights the importance of relativity and recurring performance, which (next clue) this company also delivers.

Think Warren Buffett.

Good Form –I’d like to compliment Steel & Tube on their prompt actions to raise new equity capital and reduce debt before pushing ahead with their new strategy after a difficult and unsuccessful period.

I am not judging them on the recent failures and lost value, the share market has done that for them. Directors are clear on the messages.

What STU has not done, thank goodness, is issue new excuses every week about third party errors or unfair outcomes.

Further, with a weakened financial position (equity down, debt ratio up) they have not tip-toed along in a vain hope that they would cope financially until one day a miracle profit would restore their confidence and ability to actively pursue a logical business strategy.

No, STU has promptly approached its shareholders, and the market, with a placement and rights issue to raise $80.9 million for debt reduction and the freedom to get on with good business, for which they are to be applauded.

Acknowledge your mistakes, correct those mistakes, ask for forgiveness and then get on with the important job at hand.

STU shareholders will be approached very soon with an offer of rights to new shares at $1.05 per share.

Like Fletcher Building before them, as an NZX listed company with a diverse shareholder base, STU has this option of efficiently raising new capital and pushing on in business.

This is not a paragraph of financial advice, but I do compliment the company on the approach being taken after a difficult period.

Disclosure: I do own a few STU shares, valued at substantially less than their purchase price.

Trade Wars – The ‘negotiations by economic threat’ are settling in for the long haul, sadly.

I think you should interpret ‘long’ as years, not months.

President Trump is not adopting Roosevelt’s far wiser strategy of ‘speak softly and carry a big stick’, preferring to ‘Tweet loudly, and irrationally whilst simultaneously waving a stick in the air’.

The US needs a future Roosevelt.

China’s predictable response of additional tariffs on US products came with a commentary that implies they hope to now see off the Trump Presidency, concluding that they see no hope of a change in his irrational behavior.

The Chinese claim they can be more patient than the US, and they’re probably correct on that point.

Their autocratic method of governance means they will do as the minority wish, regardless of the financial outcomes for the public of China.

President Xi might well feel that ‘his’ population has enjoyed a two-decade long uplift in economic gains and a 2-6 years retreat is tolerable as a negotiating stance.

A slow down in Chinese and perhaps US consumption is not helpful to the world’s other nations and we’ll all do well if we manage to tip-toe around the perimeter of this economic scrap.

At present it is very hard to believe the optimistic economic forecasts issued by the likes of the IMF, World Bank or OECD.

Construction – I am in two minds about this development; taxpayers should be very unhappy, Fletcher Building shareholders will be happy, as might Steel & Tube shareholders.

Minister for Building & Construction (seriously, do we have one of these?) Jenny Salesa has promised to use taxpayer’s money to pay more to construction companies. (my words)

She described it as showing leadership in a business sector that has priced many of its contracts too aggressively; I call it a generous handout using other peoples’ money.

It’s not the taxpayers, or government minister’s, fault that private construction companies are making errors with risk assessment and contract pricing so it’s not a problem for the government to solve or taxpayers to finance.

I don’t think it was a coincidence that Fletcher Building’s share price lifted almost 20 cents following the minister’s charitable gesture.

Minister Salesa should focus her attention on any legislative gaps in the construction sector:

Are sufficient amounts of money continuously set aside (trust accounts) for settlement of rising contractor obligations to sub-contractors?;

Are the property developers obliged to set aside equity to engage back-up contractors to complete projects (incomplete projects are unacceptable on the landscape)?;

Are back-up contractors obliged to first offer continuation agreements to the sub-contractors previously working on the project?;

“Now though, Minister, if you are truly committed to your business friendly approach could you please lobby the Minister of Finance to underwrite payment of financial advice fees to make sure the public receives fair access to an imperative service; that would be great.

Let’s make NZ great again.

DTI – I think the banks are preparing for a central bank rollout of Debt To Income ratio macro-prudential regulations, a tool that I am keen to see added to the Reserve Bank’s tool kit.

Mortgage brokers are reporting a more forensic (non criminal!) approach by the banks to reviewing mortgage applications.

Banks have moved from generalised assumptions about spending ratios to specific requests for months of actual data to define spending patterns, and notably the use of a person’s discretionary funds (Also Known As: debt repayment funds).

The brokers described a discovery of Netflix on the bank statement as a risk to as much as $50,000 for the mortgage approval amount.

It matters not whether this process began during the Australian banking enquiry or after conversations with our central bank, it is good behaviour and the banks’ are to be applauded for it.

Governor Orr should press Minister Robertson for permission to immediately begin their proposed DTI macro-prudential regulation for NZ banking.

Knowing how the young mind works (through observation, not current knowledge – Ed) banks will next need to look out for the squeaky clean mortgage applicant with perfect financial management who signs up for Netflix, Spotify and YouTube Red the day after drawing down the mortgage.

The RBNZ could help the banks in this regard by allowing them to add penalty interest rate margins (say +0.50%) to client mortgages if Debt To (net) Income ratios are not sustained by the borrowers at agreed levels.

Interest Rate up – The Bank of England is trying to follow the US lead and has lifted its cash rate for the second time by +0.25% to 0.75%.

The British dropped their cash rate from 5.00% p.a. during the crisis in 2008 to 0.50% p.a. over only a few months. It has stayed there except for a short period down at 0.25% p.a. between 2016-2017 after Brexit was announced, but now the lift is underway.

Using the term ‘lift off’ is inappropriate because they only expect interest rates to increase back into a 2 to 3% ‘neutral’ range.

They are guessing this, like the rest of us, but debt default is more likely from the world’s very high indebtedness than higher interest rates from a supply/demand perspective.

Those who are comfortable with inflation predictions of ‘stable’ conclude that high debt levels and luke-warm GDP growth rates at best will not result in high interest rates; interest rates are driven by inflation data and debates about satisfactory real returns.

This is another reason that the Reserve Bank of NZ should strive to introduce more macro-prudential tools to keep our inflation and financial stability risks at bay and hold interest rates at low ‘real’ levels.

A low interest rate environment will help to hold the NZ dollar at lower pricing levels, which in turn assists our exporters (a good thing) and hinders our importers/consumers a little (also a good thing).

The NZ Official Cash Rate is currently at 1.75%, so the Bank of England has four more hikes to get anywhere near us, but an overlap seems credible to me.

If you are a kiwi traveler, this developing opinion implies one should be purchasing international currency as soon as one is committed totaking a trip (not financial advice!)

RBA decision – The Reserve Bank of Australia has left its cash rate unchanged at 1.50% in the recent review, but surprisingly has forecast a lower inflation level expected in the period ahead, down to 1.75%.

The market is now pricing for no change to Australia’s cash rate until 2020, a full three plus years since reaching the 1.50% level.

RBNZ decision – Governor Adrian Orr also decided to surprise markets by reporting inflation risks that appear so stable that he currently sees no need to adjust New Zealand’s Official Cash Rate from 1.75% until 2020, or beyond.

The sharp decline in the pricing of the NZ dollar discloses to you the unexpectedness of this new perspective.

Exporters will be very pleased with the scenario of a cheap cost of funds plus a lower currency setting.

EVER THE OPTIMIST– Rocket Lab’s launch delays have not slowed the progress of this company’s expansion, now having confirmed a 20-year lease on its Mahia launch site and explaining that it is looking for three more launch sites around the globe (US, one on the equator and probably one in Europe).

Rocket production continues, and storage is the immediate problem.

Peter Beck rightly points out that Kiwis should view the company’s move to be a US company as confirmation of its rapid global success and not a loss to NZ.

I still look forward to the day when the public are invited to watch launches at Mahia.

ETO II – Methven is expanding sales of shower and tapware technology into China via a Chinese building materials company.

I hope this leads to higher sales, as intended, and not to any abuse of intellectual property.


Z Energy – has been remarkably late in announcing its intentions to issue a new 6-year senior bond (next week).

Given the recent declines in market yields it is hard to imagine this bond yielding 4.00%, but let’s wait and see.

We expect it to be a fast-moving bond offer, booked by contract note with investors incurring brokerage costs (all to be confirmed next week).

We have a new list for investors wishing to participate in this new bond offer.

The fastest way to hear about new investment offers is to join our ‘Investment Opportunities’ (New Issues) email group, which can be done via our website or by emailing a request to us to be added to this list.


Mike will be in Auckland on Monday 3 September (Remuera) and is planning to schedule a trip to Tauranga during September.

David will be in Lower Hutt on 29 August.

Our future travel dates can also be found on this page of our website:


Any person is welcome to contact our office to arrange a free meeting.

Michael Warrington

Market News 6 August 2018

The Whitehouse Chief of Staff, General John Kelly, has indicated that he will stay on until 2020 but not beyond.

This would appear to leave the door open for New Zealander Chris Liddell to rise to the top Whitehouse job (not quite top job – Ed) between 2020-2024 and put yet another layer of impressive icing into his quite extraordinary CV.


Debt Repayment – Why are global and local debts not declining in this low interest rate environment, especially those related to personal consumption?

Lower interest rates should have enabled higher capital repayments from each dollar.

At its simplest the use of debt increased as a response to its lower cost (lower price -> higher demand), which made some sense for businesses with reasonably reliable revenue at higher levels than the cost of the debt.

However, for personal consumption, brought forward through the use of debt, the relentless rise in the nominal and relative scale of debt is a serious concern.

The Reserve Bank tried to counter the increase in relative use of debt by introducing its Loan to Value Ratio limits on bank lending, with modest success.

The ongoing rise in debt indicates a decision to defer repayment based on the flippant conclusion that ‘it’s cheap so I’ll deal with it later’, whereas it is the cheap price that should have encouraged faster repayment.

I am a fan of the RBNZ’s desire to introduce a Debt to Income Ratio macro-prudential tool to try and enforce better cash flow behaviour from borrowers (pay off more debt, don’t tack fancier consumer products onto your mortgage).

Whilst interest rates are 4.25%-4.75% (mortgage rate), instead of 6.75%, a borrower can, and should, repay an additional $2 per $100 of debt every year and shorten the repayment cycle by about 25% (my example 10 years relative to 13 years).

The rising level of nominal consumer debt tells us that this accelerated repayment is not happening.

In last week’s Taking Stock Chris touched on the recent UK data that showed that for the first time in 30 years UK households are again spending more than they earn.

It matters not whether it is poor financial decision-making or evidence of deeper financial stresses in the economy; both spell negative outcomes either for the individuals (drowning in debt) or the market place (distressed selling to repay unmanageable debts).

Very low interest rates are providing a snorkel to those in seriously deep debt but as interest rates increase the snorkels won’t be lengthened, borrowers will be forced to consume less (repay debt) or sell the asset under pressure to repay the debt (if able).

Yes, I am making various grouped generalisations here but the fact remains that New Zealanders private debt levels are high and if we didn’t have such a well-disciplined (fiscal) government then external agencies would be comparing us to some of the world’s financial cot cases.

Ironically I say this as the Bank of International Settlements reports that the global debt burden (as a percentage of GDP) declined by 1.2% last year, after rising 47% over the prior 15 years (from 172% to 219%)!

This average decline was aided by strategic change in the likes of Spain, Ireland, Belgium and the Netherlands and is all debt relative to GDP, and generally not via declines in actual debt.

I don’t have an investment conclusion for you other than to say that as good as many things look in NZ, ‘all is not well in the Shire’ so please avoid highly indebted scenarios when considering investment options.

Financial War – readers of world media may have seen updates of another example of the ‘financial war’ behaviour that I have referred to a couple of times.

In May, after the US pulled out of the multinational deal to lift sanctions on Iran, President Trump declared that the US would take financial measures (read – block US dollar settlement accounts) if companies continue to do business in Iran.

The deadline for new agreements with Iran is November 4, and recently Trump has declared his willingness to meet soon for those new talks.

In response, Iran is calling for domestic investors to help by taking over as many as 76,000 government projects.

It sounds like Iran could do with assistance from some of our Public Private Partnership experts, although as a guess I doubt the public savings rate in Iran is all that high for investing in such a shift of ownership.

One anecdote that my guess about a lack of savings is correct is that many of the US hating people of Iran are in fact calling for a change of leadership, at home. (giving them something in common with many US citizens – Ed)

Global businesses are beginning to withdraw because they simply cannot operate without the ability to settle in US dollars (reminder – the vast majority of foreign exchange trading is settled through US dollars).

Many nations may metaphorically stand alongside Iran in disliking the actions being taken by the US here, but it is a real example of the financial clout that can be wielded by the US government, and clearly will be under the Trump White House.

Hops and Fees – After watching the ever-impressive Country Calendar last week, this time presenting the McGlashan family expansion of their Nelson hop growing business, I got to work to find on my PC a promotion for a syndicated MyFarm investment in the hop growing sector.

The timing between the two was no coincidence and MyFarm has been linking readers back to the Country Calendar episode via TVNZ On Demand.

Initially I enjoyed reading the offer document that was presenting a different risk pathway for investors (Horticulture sub sector), plus describing some relatively high potential returns (albeit delayed), but, as always seems to be the case with these managed investments fees were excessive, in my view, and this poured the metaphorical bucket of iced water over my initial interest.

I ought to re-open the document and tally the fee impost accurately for this paragraph but to be honest there were so many different fees and commissions both to MyFarm and to the related party manager Hop Revolution that I’d have needed a spreadsheet to add them up and determine their combined impost on my asset value and potential rewards.

MyFarm is paid very well for its near risk-free involvement. Hop Revolution Ltd (and Hop Revolution 1 Ltd) is paid very well for its time, services and capital commitment (including 10% cost of capital, single source of plants, sole management rights, 12% commission on sales etc).

Oh, and MyFarm’s fees are inflation adjusted. Inflation adjusted returns using other people’s money; a nice gig if you can get it.

It is the investor who provides the capital and carries all the industry pricing risks and it is they who deserved a far greater proportion of the revenue from the investment.

Interestingly MyFarm and Hop Revolution initiated some conflict by declaring they will not be using the NZ Hops co-operative in future, preferring to create their own marketing mystique and sales channels.

Country Calendar implied NZ Hops was an effective distributor, but there is no harm in some competition to test whether separated branding will add value in this market too.

MyFarm and Hop Revolution will need their go-it-alone strategy to work (higher price) if they are to meet some of their financial forecast returns.

This is such a sweet and sour story; diversity of investment opportunity weighed down by excessive fees.

It cost me very little to enjoy a craft beer as I watched the McGlashan hops story and expanded my knowledge on another NZ success story.


Strong – The US Federal Reserve has upgraded its economic outlook to ‘strong’ and reinforced its cycle of interest rate increases.

The market is increasingly taking sides again; ‘good job’ or ‘they’re mad’.

This is a healthy sign for the market place after almost 7-8 years of everybody expecting the same thing.

Volatility should increase based on the disagreements between the ‘good’ and the ‘mad’, (is Trump in the mad camp? – Ed) with both making errors along the way, and with volatility comes opportunity.

In my view this means investors should be rewarded for increased cash and fixed interest asset holdings as they wait to pounce on those opportunities.

Apolitical – It was nice to see the apolitical efforts of the Mexican Fire Service with its decision to send help ‘North of the Wall’ to help with the dreadful fires in California.

New Zealand is also sending help.

A cartoon with a fire hose filling Trump’s mouth with water at this point would be well received.

Look Ahead – In a reminder that financial markets, and investors, are always looking to the future when making the next decision, last week the US reported its strongest GDP growth in many years (+4.1% annualised for the 2nd quarter) but the share market and the USD both declined.

Often yesterday’s information assists when making tomorrow’s decision, but we always invest forward.

The US markets are saying (probably to Trump – Ed), ‘thanks for the tax booster but that’s yesterday’s news. Now we are concerned about trading wars and excessive debt’.

French Banking – This news is too late for those of us who once owned Credit Agricole’s subordinated notes in NZ to rejoice over, but French banks’ have enjoyed a significant victory over their European regulator (ECB) regarding bank capital.

The banks gained an exemption from needing to hold equity capital for deposits placed by the bank with a state owned fund, such as Caisse des Depots et Consignations (CDC).

This decision makes sense to me given the taxpayer funded nature of these state funds receiving the deposits; essentially the default risk is being described as zero.

So as long as these entities are indeed irrevocably guaranteed by the French government (unlike NZ’s historical attempts to disconnect the Crown from financial obligations to Housing NZ, Transpower, Health Boards, etc.) then there is no need to waste bank equity, more useful elsewhere in the economy.

Mind you, that transfer of equity back to the banks comes from the ‘pockets’ of the French taxpayer via his/her unavoidable commitment to the state funds, well managed or not.

This might prompt a few in NZ to recognise the merit of our Mixed Ownership Model, which completely transfers such implied risk off the taxpayer’s shoulders (which is not the case for the ‘not guaranteed’ Kiwibank).

Back to Europe.

This win over the European Central Bank in the courts will embolden banks in the EU to challenge more of the governance rules in place, at a very poor time for this fragile economic region.

Brexit currently gets all the headlines, but the European Union leadership has plenty of very big issues to contend with all pulling against its goal of central governance and harmony.

NZ Banking – Heartland Bank is expanding, notably in Australia, at a rate that appears to be causing inconvenience within the NZ regulatory framework.

Business expansion is not an inconvenience for HBL shareholders. All parents know that growing pains are a good thing.

HBL is about to contact its shareholders to request approval to split the NZ and Australian parts of the business into two operating subsidiaries.

Shareholders will still own a single Heartland Group entity (parent) which will own the two separated parts. The proposal is that one current HBL share will become one Heartland Group share.

Expansion is good.

Minimal regulatory footprint is good.

We look forward to receiving our voting papers. We strongly encourage HBL shareholders to participate in the vote, even if they appoint proxies to act on their behalf. A large turnout will likely be required for effective voting to occur.

Gold – Various nations continue to relocate gold away from US and UK security vaults, repatriated to homelands, alongside rising gold balances for many central banks.

It’s hard not to view this as a sign of declining trust between nations and I don’t see it as a Trump factor because everyone knows he’ll be gone in the relatively short time window (two or six years); there’s something deeper behind this development.

Russia’s gold stores have increased from 500 tons to 1,944 tons over the past decade. Even if you do wonder where Vladimir Putin is storing some of it (one for you, one for me – Ed) this is quite the strategic increase.

Various European nations have been moving gold back to homeland storage points.

Gold isn’t a great earner but it is clearly still a respected store of value and the behavior of ‘bringing it home’ is not a heartening thought with respect to the political playing field.

Construction – Fletcher’s new CEO was clearly correct to pull the pin on near term participation in the NZ construction sector; profit margins are demonstrably unsatisfactory for the risks being accepted.

Last week’s announcement that Ebert Construction was placed into receivership (15 work sites) followed hot on the heels of CANAM withdrawing from the Alexandra Park property development and more stories of failure are emerging.

Ironically the ‘sickness’ within the sector (unacceptable margins) was probably driven by Fletcher’s with its 2010 – 2016 approach to irrationally low pricing in the construction sector.

Pricing is certainly going to increase for future large-scale projects and property owners will be forced to retain more of the development risk and pay a higher price too.

The FBU share price didn’t react to the story but I suspect these developments are positive for the business because they still have the capacity to construct and the future for margins is looking better.

As a side story that may appeal to the NZX marketing department, FBU displayed the merit of being a listed entity with a wide shareholder register, which enabled them to easily call on their owners for $750 million of new capital to move on from their financial errors.

Smaller, or privately owned, construction businesses do not have this luxury and thus many are falling into receivership and quite probably liquidation.

EVER THE OPTIMIST– President Trump has approved the multi-use entry visas for NZ business people moving to and from the US during a two year period (for business).


More bonds – an unexpected silence.

The fastest way to hear about new investment offers is to join our ‘Investment Opportunities’ (New Issues) email group, which can be done via our website or by emailing a request to us to be added to this list.


Michael intends to be in Auckland late August or early September (details to come).

Our future travel dates can also be found on this page of our website:


Any person is welcome to contact our office to arrange a free meeting.

Michael Warrington

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