Market News 29 March 2021

Whilst I am ''in the hills'' looking down on the Waitaki River, reviewing options for the installation of the new power line, Kevin Gloag has kindly offered to offer comments to you on this very subject.

INVESTMENT OPINION

Kevin Writes:

The recent reporting season will have confirmed for many why the power companies have become a popular option for income investors.

The five large vertically integrated generator/retailers are generating strong levels of free cash flow and shareholders are being rewarded with seemingly reliable and predictable dividends.

As the world continues to electrify demand for electricity is set to increase significantly over the next few decades. This is likely to further advantage the five big generators in NZ who also control 86% of the retail electricity market.

Despite their obvious popularity the share price action in the electricity sector earlier this year, driven by indiscriminate index buying, certainly challenged traditional valuation fundamentals.

Large scale buying by global clean energy index funds saw Contact's share price briefly touch $11 and Meridian reach nearly $10, as the index managers bought up their quotas.

Some of these index funds are now under review with a plan to increase the number of constituents in each fund to reduce future liquidity and pricing risks.

Spreading the funds' exposures across more companies would obviously mean compulsory selling of portions of each existing constituent, possibly in the same indiscriminate manner used when buying.

Recent share price declines in the sector suggests that this readjustment may already be underway, although there might be more to come.

Windows of opportunity for essential services stocks normally close quite quickly,

Any exaggerated price weakness in the electricity sector should be welcomed by investors although some would perversely sense trouble and sell.

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It seems that extracting energy deals and government subsidies is a key component of the aluminium smelter business operating model.

Hot on the heels of Meridian Energy offering Rio Tinto a significant deal to keep the Tiwai smelter open for a few more years and protect around 1000 jobs Victoria's Portland aluminium smelter has received nearly $160m in state and federal government subsides to keep the plant operating and save hundreds of Australian jobs.

It is Australia's second rescue of the struggling aluminium smelter after $240m of previous taxpayer subsidies expired earlier this year.

In addition the US-based owner struck a five-year energy deal with three Aussie power giants.

Energy accounts for between 30 and 40 percent of the aluminium smelter's cost base.

Reading about Portland's plight reminds us of the importance of completing the upgrade to our own national grid so that when the Tiwai smelter eventually closes generation produced from hydro-catchments in the lower South Island can be used elsewhere.

The Clutha Upper Waitaki Line Project (CUWLP) involving rewiring the national grid from Roxburgh in Central Otago to Livingstone in the Waitaki district, is on-track to be completed mid-2022.

Basically, the upgrade involves moving from single to double wires which will increase capacity on Transpower lines between Clutha and Upper Waitaki and allow electricity generated at Manapouri to be fed into the national grid after the smelter closes.

The upgrade will also improve electricity supply to Southland during dry periods.

The Roxburgh Dam is a hub in the national grid between north and south and any electricity from Manapouri would flow through there.

With the project being completed by nearly 100 North Island based workers this venture has provided a significant boost to the Central Otago economy, particularly smaller towns like Alexandra and soon Ranfurly, my wife's hometown, as the project moves north.

Transpower had government approval to build a worker's village but decided against that option and decided instead to support existing local accommodation businesses.

Full marks to Transpower, as not only are they getting the grid update done ahead of time for the benefit of all stakeholders, including power company shareholders, they are also making a meaningful contribution to small local economies.

If the Tiwai Smelter does close in 2024 it will be a tough blow for Southland with the loss of 1000 jobs and another 1600 providing contract and support services to the smelter, although the 4-year extension allows the smelter to become more sustainable and the region to explore other opportunities.

And from an electricity sector perspective the extension has provided the window required to upgrade and future-proof the grid so generation from the hydro-catchments in the lower South Island can be transported to other parts of NZ.

The smelter uses 13% of NZ's electricity and a disorderly exit would have resulted in this energy being 'spilt', or wasted, for a few years.

The extension also gives Manapouri power station's owner, Meridian, time to explore new options for the surplus power but not at the hugely discounted rates it is currently supplying the smelter. (half wholesale or less?)

You would think that Meridian could offer attractive conversion incentives to the coal burners and still make a much better return than the smelter contract produces. Fonterra, schools and hospitals immediately spring to mind.

The transmission lines upgrade makes this all possible.

And if Rio Tinto decides to kick-on for a bit longer from 2024 maybe the next deal won't be quite as sweet.

In fact if Meridian and the other big generators spend their time wisely over the next few years the eventual closure of the smelter might be a win-win for the big power companies and their shareholders.

Mike Writes:

 

Impressive Progress– There was plenty of disappointing financial news during 2020, but good news is controlling more of the headlines now, which is a much more pleasant experience.

Whilst we digested falling interest rates last year (every year it seems – Ed) to below inflation Covid19 happened up on us and directors began to suspend, cancel and reduce dividends as they protected corporate liquidity and valuable capital.

Directors' reactions were entirely logical, and some had their hands forced by external forces, read: banks and lenders (especially US private placement lenders).

Z Energy might claim they had the worst possible year during 2020.

Regulators were stress testing their profit margins, oblivious it seems to the fact that natural competition was also doing this;

The government was jumping on the bully train, prodding ZEL, without being honest about the fact that more than half what we pay for fuel is tax to them;

Covid19 made us immobile by sending us all home, planes, trains and automobiles (and boats – Ed);

The world has 'suddenly' discovered electricity as an energy source. Seriously?!;

As sales volumes collapsed, and local storage of fuel was relatively full, Z Energy had to send back a tanker of fuel that we no longer required to a market that didn't want it (sales price near $0);

The temporary (months) drop in sales meant the banks and US Lenders stepped in and forced directors to raise new money from shareholders and to suspend dividends (the logical part);

The value of their major shareholding in NZ Refining was falling fast;

Sovereign investment funds were searching for investments in unethical or climate harming industries to sell from their portfolios; and

An important one from me, the Z Energy coffee was still no good!

It would have been hard to design a more difficult year for any company than that.

So, to the credit of all at Z Energy, they quickly recognised the truth of the changes occurring around them, the permanence of some, and set new strategies for what they thought their playing field would look like in the immediate future.

Aspects of the business were downsized. Costs were cut. Forward-looking developments introduced (Z Electric and dual fuel offering for vehicles).

ZEL remains a high cash flow business and sells an essential product, regardless of global debate. You can see how essential it is in the very high volumes of traffic back on our roads.

ZEL has been updating the market more frequently than required with its sales and financial performance and it has been tracking rather nicely for them. So nicely in fact that they opened negotiations with their bankers seeking permission to return to dividend payments sooner than defined in their 2020 agreement.

At that point ZEL agreed no dividends would be paid until after September 2021, one full financial year of stand down, however, the banks have agreed to amend the conditions and we expect a dividend to be declared and paid in May (estimated at 12-14 cents per share plus any imputation credits).

Clearly the company is in a stronger financial position than both they and their bankers anticipated. You cannot criticise either party for this inaccuracy; making any business predictions in the immediate aftermath of our first Covid19 lockdown was a fool's errand (witness the predictions of falling house prices!) so taking a conservative stance was entirely appropriate.

To not pay dividends is to store shareholders' money, which is a good behaviour either in the face of financial disruption (Covid19) or high-quality investment opportunities. Thereafter a director might consider paying dividends.

The additional capital raised from shareholders last year ($350m) settled the nerves of the banks (all lenders). They do not now need additional capital for the business, so paying a dividend is evidence that capital, sales and profit margins are all under good control by the company.

ZEL bondholders should also be pleased with the situation because the bond trustee exercised his/her discretion during the negotiations by demanding that the company set aside (hold with a bank) the $150 million required to repay the ZEL040 bond in November. They have done so.

Whichever way you look at this ZEL management deserve applause for their reactions to 2020's combination of negative pressures and their week-to-week business management that has delivered this early financial reward to shareholders.

Investors have experienced both how unexpected risks can emerge and negatively impact an investment's rewards and then the value of good governance and good management in setting a new path for success.

EVER THE OPTIMIST

More evidence that activity and confidence are rising, this time in Australia; Virgin Australia has re-opened its lounge at Canberra airport, meaning that all are now open across Australia.

Remember Virgin is the airline that fell into administration last year.

It may be a nod of thanks to the government for the temporary subsidies it offered on domestic travel, but it is also evidence that the airline industry is seeing sustainable growth in air travel again.

ETO III – Vaccinations

Vaccinations delivered – 535 million

Total (recorded) Corona Virus cases – 127 million

Active Cases – 22 million

Daily rate of new cases – 580,000

People in serious condition – 93,600

Daily Deaths – about 11,600

 

Investment Opportunities

Listening…. – Who shall be next to invite investors a new opportunity?

TRAVEL

Edward Lee will be in Nelson on 14 April (PM only) and in Blenheim on 15 April.

David Colman will be in Palmerston North on 21 April, Kerikeri on 6 May and Whangarei on 7 May.

Michael expects to be in Auckland during week one of May.

Kevin will be in Christchurch on 20 April and Timaru on 27 April.

Please contact our office for an appointment.

Thank you

Mike Warrington 


Market News 22 March 2021

Trying to beat up on retirement village operators seems misplaced to me.

To be fair to the expert minds involved in the review of the retirement village law in NZ I haven't read any more than the media summaries, but it does feel odd that one of our biggest housing supply business groups is under fire for the service they provide to residents who agree to live there, in the midst of a housing shortage crisis.

Is this a bit like Lion King versus harvest workers in terms of perspective?

Mind you, now that the vaccine is available in abundance my view is to open the borders and jab everyone who arrives to say thanks for coming.

INVESTMENT OPINION

Renewable– You can see the increase in regulatory pressure to deliver more renewable energy through the price being paid for Tilt Renewables (TLT) shares, subject to a takeover offer ($7.80 per share).

The takeover will proceed because the buyers have already gained acceptance by the two major shareholders (85.40%) and at least 4.60% of the professionals will accept, if they haven't done so already, taking ownership past 90% (compulsory takeover rights).

In 2018 Infratil (65.50%) and Mercury Energy (19.90%) agreed to pay $2.30 per share to takeover Tilt Renewables (born out of Trustpower), clearly holding the view that New Zealand needed more generation (Huntly to close, NZ population rising) and that in Australia the change from coal and gas to renewable electricity would accelerate.

Both views have been proved correct, albeit temporarily disrupted by the Tiwai aluminium smelter spat.

Prior to the Covid19 disruption for capital markets the share price for TLT was about $3.30 and it recovered to this level very quickly after the Covid19 share market dip.

From there the share price continued to rise off every new announcement about confirmed new generation build, or contract to supply and as our governments pressed ever harder toward renewable electricity generation only.

Think about the NZ government cancelling mining licence access and claiming 100% renewable generation as possible (it's not unless we dramatically over supply) and then think about Australia's promises to reduce it reliance on coal for electricity generation (might be a bit harder now that China is refusing to buy their coal – Ed)

As others caught up with the supply/demand imbalance and spotted that TLT is well underway with delivering new renewable generation buyers emerged for the business.

Infratil investors received another reminder of the skill of the IFT management, forecasting this investment need 24 months before others investing in the electricity generation sector (in Australia).

The journey from $2.30 to $7.80 (including some additional capital invested in the interim) has been impressive for Infratil. (Better if they'd stapled a retirement village to the transaction – Ed)

Mercury investors should be pleased that they too saw the merit in being a part owner of this business and have now successfully retained control of the NZ parts of the TLT business for MCY benefit; The Australian assets are heading to new owners Powering Australian Renewables (POWAR).

MCY say they have paid about $770m to retain the NZ parts of TLT. It's TLT shares were valued at about $585m so there was almost $200 million more to pay; coincidentally the amount MCY offered to borrow from investors via their bond offer last week (smile).

Viewers with a wide angled lens may be unsurprised that Vince Hawksworth sits fair square in the middle of this situation.

He was CEO at Trustpower (TPW) when they launched the efforts to build more renewable electricity generation. This enterprise then became so big it was isolated from other TPW generation assets and the retailing business.

From that point Infratil and Mercury became more interested in both the investment and the generation capacity.

Then, Mercury (MCY) Board of directors 'poached' Vince Hawksworth from TPW!

It is a small looking chess board and it seems unsurprising that the likes of IFT, TPW, MCY and Hawksworth feature heavily in controlling these chess pieces.

The other 15% of TLT shareholders who elected to reject the 2019 takeover advances have also done very well for themselves.

IFT investors will surely now be very interested to read more about two assets in particular:

Longroad Energy as it now sits within a Biden Presidency, which seems far more attuned to the need for increasing renewable electricity generation; and

CDC Data Centre in Australia, a dominant player is an industry that seems to be expanding at parabolic rates.

It's nice to be wanted, and its impressive that IFT positioned ''us'' well on the dance floor with a well sought-after dance card.

Future Returns – are not a reflection of past returns, as the saying goes.

It is an undeniable truth, confirmed by the ongoing volatility of financial markets.

I think it is another near-term truth that returns over the decade ahead will be lower than the decade past. It's not credible to conclude otherwise.

Interest rates actually tell you what returns to expect from this asset class over coming years, assuming a flat earth society takes hold, which it won't.

We are learning that central banks are not comfortable with interest rates below 0.00% so our proximity to 0.00% leaves little room for capital gain from ongoing declines to interest rates.

If we are lucky interest rates will not increase significantly so returns could be 1-3% roughly (NZ context).

The prices for assets (property and shares) have been driven up by the slump in interest rates, but as above, this driver appears to be ending so future gains from this sector will be increasingly dependent again on actual revenue and profit (novel concept – Ed).

Profits are seldom rising at the same rate as share prices have, so, the forward-looking returns are lower (same profit divided by a higher purchase price).

Last week I touched on the useful data from Credit Suisse’s 2021 Global Investment Returns Yearbook, which connects to this paragraph, where I said I would expand on the subject.

My main purpose is to continue to encourage you to consign the very high returns we have been enjoying over the past decade (all asset types – capitalized gains on fixed interest investing, increased property prices and rising share prices).

I hope Credit Suisse will remember my past employment and forgive me for copying a few summary quotes for you (italics), which is better value than me trying to re-phrase it. They bundle Property and Shares into an ''Equities'' label.

Equities remain the best long-run financial investment ahead of bonds and bills. Over the last 120 years, global equities have provided an annualized real (i.e., after inflation) return of 5.2% versus 2.0% for bonds and 0.8% for bills.

The start point today will deliver different results, but inevitably Equities will continue to outperform interest rate investing over long periods. Your allocation to Fixed Interest investing is now primarily for stability, not real returns.

Logically - Over the 120 years since 1900, equities have outperformed bonds, bills and inflation in all 21 countries.

Over the last decade, global equities performed especially well with an annualized real return of 7.6% compared with a still robust real return of 3.6% from bonds.

These are the numbers that you should not expect to be repeated in the decade ahead.

Interest rates remain exceptionally low in both nominal and real terms. The Yearbook shows that when real rates are low, future real returns on all assets tend to be lower. The authors stress that investors should therefore take a realistic view of likely future asset returns. With real interest rates around zero, the expected return on stocks is just the equity risk premium.

Credit Suisse calculates the ''equity risk premium'' at 3.50% per annum. Some nations and specific businesses will outperform, but the declaration is not to expect the global tidal move to do so.

For thoroughness, the analysed universe is:

The countries included in the Yearbook represented 98% of the global equity market in 1900 and still represent over 91% of the investable universe at the start of 2020

Keep your forward-looking expectations real. For the most part do not make use of the rear-view mirror.

Interest Rates – I read in John Ryder's Global newsletter last week that globally governments borrowed US$16.3 trillion in 2020 (!!) in their desperate attempts to avoid economic collapse.

How likely do you think it is that those countries will allow sharp increases to interest rates?

In response to rising interest rates (market yields) The European Central Bank (ECB) says they'll buy more bonds to restrict (my word) interest rates changes, with the blunt quote:

ECB President Christine Lagarde spoke at a news conference in Frankfurt, saying that increases in market interest rates pose “a risk to wider financing conditions.”

Armed with the financial stability card who knows how much money they'll be willing to spend buying bonds at intolerably high interest rates (I wonder what this means – Ed)

Mind you, professional investment managers are saying the same thing, seeing value for buying bonds. One of the world's largest and prestigious leveraged investors (KKR) speaks with a forked tongue as they describe a fear for rising interest rates but with (nary ??) a comma or semicolon, they conclude that they'd line up to buy more bonds under such new conditions.

Given the tsunami of bond issuance (debt use) there should be plenty of bonds to go around if investors want them.

NZ Post – Holders of the NZP010 subordinated bond are to be repaid on 17 May 2021.

NZ Post surprised us in 2019 when they did not repay, or restructure/reissue, these bonds and agreed to the interest rate step-up to 4.23%.

Plenty had a laugh at the concept of interest rates ''stepping up'' but it was a better payout rate than many alternatives by late 2019.

The reason for our surprise was because NZ Post lost the ability to account for this funding as ''equity'', which it preferred for its credit rating whilst supplying capital to Kiwibank. It spoke to the importance of NZ Post keeping this funding, even at the more expensive (?? – Ed) interest rate.

The implication was that these bonds would not run until 2024 before repayment would occur, and that's exactly what has happened. NZ Post can now arrange funding at a lower cost so ''you'' are to be repaid.

Since 2019 NZ Post has sold shares in Kiwibank, raising some spare cash, and settled on a new distribution strategy and location in Auckland confirming they do not need to retain this additional funding.

This action returns $200 million to investors, which will keep the financial advice and broking communities active for a while.

For those curious about the technicalities of rights to repay:

On page 12 of the Investment Statement you'll discover the ''Optional Redemption'' terms, and Option (b) has been applied - all or some Notes on an Interest Payment Date if the Step-up Margin applies on that date.

NZP010 has been under the 'step-up' interest condition since 2019.

EVER THE OPTIMIST

Australia reports a record number of new equity capital raisings this year (149 YTD).

Given that we are well past the dire concerns of April 2020 (Covid19) this capital raising demand seems to disclose renewed confidence by directors to invest additional capital into the Australian economy.

This must be viewed as good news. It is good for NZ, with our heavy trade links, but it would be nice to see our local governance (political and corporate) establish strategies in NZ to drive the same level of confidence.

ETO II

The Air NZ and Sky City Casino share prices (rising) imply that risk takers think we are closer to a travel bubble with Australia than our government is willing to acknowledge.

ETO III

Kiwi Property Group has reminded us to be careful of over-extrapolating negative data and reported an increase in its earnings, linked to better performance than expected from the retail proportion of its property assets.

The revised guidance reflects stronger than anticipated trading conditions, with retailers performing ahead of expectations, despite COVID-19 related disruptions.

ETO IV

Not all employment data is exciting, and frustratingly NZ sits in the ''weak'' category, but I enjoyed reading a US anecdote, about employment in Wisconsin, state of ''The Fonz''.

Wisconsin endured a typical of US spike in unemployment post Covid19 to 15% but has followed a nice glide path back down to 3.80% unemployed in January 2021.

Let's call that full employment shall we.

The US unemployment track follows the same path but the national average unemployment is 6.20%.

ETO V – Vaccinations (Global collective data)

Vaccinations delivered – 381 million (+xx million)

Total (recorded) Corona Virus cases – 120.7 million (+1m)

Active Cases – 20.6 million (-200k)

Daily rate of new cases – 300-400,000 (up)

People in serious condition – 88,000 (declining)

Daily Deaths – about 6-8,000 currently

Israel's first jab ratio – 57% of the population, so far. (42% double jabbed)

We might be back to the UK sooner than pessimists think. They are up to 37% vaccinated (1st jab) and the positive impact is strong.

Why not visit China with only 182 active cases and nobody in a serious condition?

We are all waiting to be able to freely visit our closest neighbour; who apparently have 1,997 active cases, presumably in MIQ.

 

Investment Opportunities

Mercury Energy Bond – Thank you to all who participated in the MCY040 bond offer last week.

Share IPO – I wonder who the next offer of shares will come from?

We’ve been told to expect several in 2021, but the disappointing start for My Food Bag will make some a little gun-shy.

TRAVEL

Edward Lee will be in Wellington on 24 March, Nelson on 14 April (PM only) and in Blenheim on 15 April.

David Colman will be in Palmerston North on 21 April, Kerikeri on 6 May and Whangarei on 7 May.

Kevin will be in Timaru on 27 April.

Michael expects to be in Auckland during week one of May.

Please contact our office for an appointment.

I'm off on a ''research trip'' of the Otago and Waitaki catchment areas for a week, back mid next week.

Thank you

Mike Warrington 


Market News 15 March 2021

It's been good to see some excitement added to the America's Cup via the tension of uncertainty.

Here's hoping Auckland businesses get the opportunity to come out ahead financially given all the risks they took in trying to be ready to serve.

INVESTMENT OPINION

Cash– How much do you need?

I remember when I first experienced interacting with a client who had millions of dollars in a call account and thought 'wow, how wealthy must you be if you don't have a current purpose for that amount of money?

I remember when I worked on a wholesale financial markets trading desk and single trades were tens of millions, then hundreds of millions and then it seemed standard for our largest clients to be managing positions in the billions of dollars; indeed some were larger than the net surplus/deficit of the NZ government.

All of these memories are rendered 'small time' by todays 'print it and supply it' government and central bank play books.

Last week, President Biden's government approved the additional payment of US $1.9 trillion to the public to help the nation to move out of Covid19 suppression.

Trillion, it takes a moment to think about how many zeros that is. I doubt the ancient Chinese ever expected they would need to add more rows to their original abacus.

So, on top of the US$600 cheques recently received from ''The Don'' (I have seen one, and it egotistically shows his name as the issuer, not US Treasury alone) people earning less than US$75,000 will now, hot on its heels, receive another cheque for US$1,400.

Side bar: It's bizarre that modern fiscal finance theory still uses historic payment methods (the cheque) to support the community.

Where is this US$2.7 trillion going to show up given that it is an abnormal, marginal increase, to the gross amount of money available across the economy?

The market fears inflation, witnessed by the rapid increase to long term interest rates, but I'm not so sure. I find myself agreeing with those (like Janet Yellen) who don't expect sustainable higher inflation outcomes.

I hope it makes its way in the ''acorn'' cupboard for most homes and is then apportioned over the year ahead as people find ways to return to full employment, but human behaviour says this is unlikely for most.

However, have some faith, a chart I saw on Bloomberg showed a sharp increase to personal savings rates (% of disposable income) since Covid19 risks were thrust into our consciousness. For years the US average was 3-5% saved but it has jumped up and bounces between 12%-30% with 15% a fair average representation.

The US government wants most of the US$2,000 each to very quickly be paid back into the fast-moving consumer channels, which seems likely, but these are controlled by the largest enterprises and thus it seems likely that the cash will very quickly migrate from the many (US taxpayers) to the few (they with the most equity who own such enterprises).

I know share markets can do the direct opposite from what seems logical, but it is very hard to be nervous about owning businesses when the price of money (interest rates) is below inflation (very close to nil) and the money supply is boosted beyond the rate at which the economy can easily absorb it.

If you supply a product or service in the US it looks likely that you'll find buyers.

Covid19 vaccines and the US Covid19 stimulus package are the greatest influence on economic outcomes for 2021, the rest of the influences are barely audible background noise.

Little old NZ – A Stuff article last week drew my attention to the release of the Credit Suisse Investment Returns Yearbook (assisted by London Business School and Cambridge University).

It presents investment performance of equities and interest rate investing since 1900 and to my surprise it declared New Zealand to be the fourth best performer over this very long period.

Australia was the best performer, so 'downunder' led the world for performance of investment across the asset classes, strange as that sounds.

Perhaps at this point I should highlight that there are only 23 countries with a full 121 years of data; more were added over time and today 90 countries are monitored so I'm sure there plenty of others running ahead of us with economic progress.

The report is both excellent and very long, so I'll read it properly and write about it in more detail next week.

For now, here are two important extracts to share with you:

The evolution of industry is the story of progress and societal trends and underscores the importance of looking ahead, living forward and identifying the key societal trends that will shape our world in the future. (bold emphasis mine)

The Yearbook shows that when real rates are low, future real returns on all assets tend to be lower. The authors stress that investors should therefore take a realistic view of likely future asset returns. (bold emphasis mine)

Electric Vehicles – I always wondered if major car manufacturers were happy to let Tesla take all the limelight and time consuming promotion of electric vehicles to try and change the community consumption patterns and then step in once the market demand justified the huge investment in development.

Tesla this, Tesla that, Tesla, Tesla, Tesla.

Then… with thanks to a note in Aspiring Asset Management's newsletter:

UBS expect VW's EV production to match Tesla by next year, and to have a near quarter of the global EV market share by 2025.

25% market share!

Whilst Toyota, of hybrid dominance, don't think the world generates sufficient (clean?) electricity for everyone to drive an EV, they too are being forced by Japanese government regulations to supply more EV's (proposed ban on combustion engine sales by 2035).

I doubt Elon Musk thought the Japanese government would be a threat to his business, but they are. Toyota unquestionably has the skill and resources to very quickly claim a large share of the EV market and whilst they think hybrid is more logical they already plan for 50% of car sales to be EV by 2025.

Toyota and the Volkswagen Group are the world's largest vehicle producers so it's a fair guess that Toyota can match VW's market share claims.

Maybe Tesla would have been smarter to buy a few shares in VW and Toyota than Bitcoin?

Capital Required – A little fun on the run kind of thinking about unusual capital management.

You've all heard about companies that use cash, or borrow additional money, to buyback company shares and try to boost the share price and the portions of profit reaching the smaller group of shareholders, even if the business is not making greater profits.

Some of you will also have read about SPAC's (Special Purpose Acquisition Company) being used to inexpensively list businesses on a stock exchange, rather than listing the usual way by explaining the merit of your business to the wider investment community.

After the GameStop story I was wondering if there is a new way to raise capital:

To short sell your own shares (to raise cash) when the share price is demonstrably in excess of all probable or ''moonshot'' future profits of the business and then try to buy them back ''when'' the share price declines.

Imagine GameStop knowing that they don't make money, and no business plan shows them making money in the 2-3 years ahead and maybe never will, yet the market delivers them the good fortune of driving the share price up to US$450 per share.

If GameStop short sold some of its own shares to raise cash, then asked a bank for a loan to help secure the loan of GameStop shares (the ones they deliver to the buyer) the company would feel odds on to profit from the position, which would at some point add equity to the balance sheet of the company.

This equity would be transferred to the company from people who ''got in'' (bought shares at a high price) but then ''got out'' (gave up once the share price declined).

The company (GameStop) is working hard to be in business but shouldn't have much trouble evidencing to the bank just how difficult it is to achieve, or sustain, a profit.

If GameStop profits ever rose to the point of justifying a share price of US$450 the bank could be assured debts would be well serviced by cash flow.

If the GameStop share price declined to say $200 the company could have an agreement with the bank that it would progressively exit the position as the share price migrated to within one or two standard deviations of a logical share price (relative to profits etc).

Under this scenario the share trading and profits would be roughly double the sum required to repay the bank loan, leaving new equity capital on the GameStop balance sheet.

Yes, I have spotted a self-inflicted problem in that by making this money from trading my own shares I have boosted the tangible asset value of the business, and thus the possible share price, but this doesn't justify (say) US$450 per share, it might only support US$20 but crucially it leaves behind some real cash for the business to use to support real business expansion initiatives.

Does this new strategy of raising capital for a business belong on Mars, out of sight of the new Rover?

Probably, but so too do the market strategies that have driven the likes of the GameStop share price up to US$450.

Maybe I should have apologised in advance for creating such a leftfield idea whilst staring at my keyboard?

Big Data – The Bank of International Settlements (BIS) has published a report on data gathering and use by central banks.

It will come as no surprise to you that the volume of data being gathered is rising more quickly than the price of Bitcoin.

80% of central banks are now gathering 'Big Data' (sounds a bit like a Dr Suess description – Ed) and 60% say it now plays an important role in policy setting.

I think this is a very good thing because central banks, or all regulators for that matter, should progressively be able to make better informed decisions (not necessarily better decisions! – Ed) if they are armed with far deeper, broader, pools of data to analyse.

When the Sars-Cov-3 pandemic arrives, we should be far better placed to function as a health system and economy.

Related to this story and reinforcing that data capture and analysis seems likely to continue its very steep incline, Fujitsu announced the latest in line for the 'fastest supercomputer ever' challenge.

I don't recognize the language; it is described as 100x faster than the K computer with a performance target of 1 exaFLOPS. Hardly an acronym to be proud of in the world of speed I'd have thought.

Nonetheless, it reminded me how pleased I am for Infratil's investment in the CDC data centre business.

Politicians – profit from Covid19, who'd have thought…

An elected member of the German government stood down after it was disclosed that his company profited from deals to procure face masks early in the Covid19 pandemic.

At least their leader has a spine and forced his resignation.

EVER THE OPTIMIST

Credit card data shows that people are continuing to reduce this form of debt.

I hope it is as a result of better 'acorn gathering' behaviour as people wish to be better prepared for financial stress than they were in 2020.

I hope it's not the result of huge success by the AfterPay and LayBuy consumer finance options.

ETO III – Vaccinations

Vaccinations delivered – 354 million (+60 million for the week!)

Total (recorded) Corona Virus cases – 120 million (+3m)

Active Cases – 20.8 million (-1m)

Daily rate of new cases – 400-500,000 (up)

People in serious condition – 89,200 (declining)

Daily Deaths – about 8-9,000 currently

Israel's first jab ratio – 56% of the population, so far. (42% double jabbed)

Here's a link to the chart of UK data, being a nation well into the vaccine rollout (check out the decline in daily New Cases):

https://www.worldometers.info/coronavirus/country/uk/

 

Investment Opportunities

Mercury Energy Bond (MCY040) – MCY now 'offers' $200 million of its new senior bond maturing 29 September 2026, meeting the conditions of their ''green'' bond programme.

The offer opens today and closes on Friday 19 March, which means clients interested in investing in this offer will need to have their FIRM requests with us by 5pm Thursday 18 March.

Based on current market conditions we expect the yield on this bond to be somewhere between 2.00%%-2.10% (interest paid semi-annually).

Note: This is a fast-moving transaction, booked by contract note with investors paying the brokerage costs.

Share IPO – I wonder who the next offer of shares will come from?

We've been told to expect several in 2021, but the disappointing start for My Food Bag will make some a little gun-shy.

TRAVEL

Edward Lee will be in Nelson on 14 April (PM only) and in Blenheim on 15 April.

David Colman will be in Palmerston North on 21 April.

Please contact our office for an appointment.

Thank you

Mike Warrington 


Market News 8 March 2021

Fees matter and should be even more in focus in the period ahead with such low returns on offer.

That lead in is to compliment Harbour Asset Management on their recent decision to evolve their fund management business away from active management and toward more passive methods, with lower fee structures.

They are responding well to customer preferences (which also display greater leanings to environmental and sustainable investing).

It can't be easy to acknowledge that active management isn't delivering the net returns intended but it is a sign of their quality that when the facts changed, so did they.

INVESTMENT OPINION

Interest Rates– As I toured around the country, meeting several of you, but not watching America's Cup sailing (!), Kevin Gloag kindly offered to describe for you his current view on the changes occurring with interest rates.

Kevin writes:

A recent spike in the US 10-year Treasury interest rate, regarded as the benchmark for global interest rates, has sent a few shock waves through equity markets and share prices have pulled back on the prospect of even higher interest rates.

(Mike observes – what the market now calls a ''spike'', being a move in interest rates of 0.15% - 0.25%, was once a typical buy/sell spread or regular daily change when he was a young participant in financial markets).

Very low interest rates on borrowing and deposits have been a major factor in share markets reaching record levels in recent years so it should follow that higher rates would unwind some of this pricing.

Rising share prices are normally associated with revenue, profit or dividend growth or investors recognising growth potential but, in many cases, current share market pricing is being driven by near zero interest rates not better financial performance.

Just the mention of inflation, and therefore higher interest rates, has share markets in a spin.

Overnight in the US Federal Reserve Chairman Jerome Powell said that he expects some inflationary pressure as vaccines roll out and the US economy reopens.

He quickly went on to say that he expects the price pressures will only be temporary and the Fed will be patient and that raising interest rates would require the economy to get back to full employment and inflation to hit a sustainable level above 2%, things he didn't expect to happen any time soon.

He also stated, “that any price increases would be coming off a low base and wouldn't stay up to the point where they would move inflation expectations materially above 2%.”

I'm not sure how you read Powell's message but short of providing a money-back guarantee that interest rates are anchored for the foreseeable future I don't see how he could have offered much more comfort about interest rates going nowhere, in the near term at least.

Unsurprisingly this wasn't enough for equity markets which sold off sharply and its worrying to think that share valuations are so reliant on low interest rates.

(This is probably the main message from the past couple of weeks, investors need to re-focus on revenue and profits again, not just the interest rate story – Mike)

In January last year, prior to the impact of Covid, US 10-year Treasuries were trading around 1.85%. They then fell sharply as the pandemic struck reaching a low of 0.51% in August before starting a steady climb back to around 1.50% at time of writing.

Analysts and economists had expected the 10-year rate to reach 1.50% but not until the end of 2021.

The move from 1.00% to 1.50% has been particularly swift taking less than 30 days and this caught the market by surprise.

While central banks influence short term interest rates with settings of overnight rates (Official Cash Rate in NZ) financial markets dictate longer term yields based on expectations for growth, inflation and additional margins for higher default risks.

The large global financial institutions are continually placing bets on what they see evolving in the years ahead and will have started making investment decisions based on a post-Covid environment soon after the virus arrived last year.

There does seem to be general agreement that the proposed Biden stimulus package together with re-opening of the US economy, which is now underway, will create an economic growth spurt and some inflationary pressure but like Powell I think it will be short-lived.

Longer term yields have also increased slightly in NZ and there is also lot of chatter about rising interest rates, some of which I believe is another futile attempt to talk down the housing market.

The yield on NZ 10 year Government bonds has increased to 1.88% after starting last year at 1.66% and reaching a low of 0.44% in September.

As Mike explained last week the Reserve Bank has indicated it will hold the official cash rate at 0.25% for an extended period and is now lending directly to the banks which will lock down both bank deposit and borrowing rates for the foreseeable future.

I personally don't see a strong case for rising inflation and higher interest rates in NZ, or anywhere for that matter.

Some believe that current monetary policy in NZ plus the Government spending initiatives will be inflationary but the majority of money spent by the Government has been on welfare and protecting jobs not injected into the real economy or growth initiatives.

Those who observed efforts in the US, Europe and the UK, to name a few, following the GFC will remember how massive money printing programmes and even negative interest rates failed to generate either economic growth or inflation.

In fact, despite their meritorious efforts, deflation continued to be their biggest concern.

In NZ periods of high inflation have generally been accompanied by strong wage inflation and some of you will have been working in 1970s and 80s when wages doubled and tripled.

Wage inflation has been benign for two decades now and will remain so in my view.

And while the US might be gearing up for a post-Covid economic boom I think we've already had ours and I'm picking 2021 to be a very difficult year for many NZ businesses.

With overseas travel off the table and freedom of movement largely unaffected in NZ Kiwis have had a good look around their own backyard and spent money on big ticket items with much of the spending driven by the wealth effect of rising house prices and low debt servicing costs.

While this has been good for the economy, I think it might be 'hunker down' time for many businesses and households.

The Government initiatives, including the wage subsidy, the Business Finance Guarantee Scheme, for small and medium businesses, and the loan payment deferral scheme have all been very helpful but eventually businesses will need to stand on their own feet, and I think that day is fast approaching.

The construction sector should continue to fire on all cylinders, but tourism and service sector businesses face the prospect of no tourists this year and this is already starting to bite in certain regions and will affect our overall economic performance.

As I write the Reserve Bank Governor, is 'fretting' over soaring asset prices stating, “there are big question marks over house prices relative to household earnings.”

Measured against what we earn, and rental returns, the NZ housing market is one of the most expensive in the world funded by very high levels of household debt, equal to nearly 100% of our GDP.

Fret as he may, when you have mortgage rates around 2% and a major housing shortage it will be very difficult to bring house prices down.

Making it more difficult for property investors with higher deposit requirements scores a few political points but most have enough equity in other properties to walk around higher LVRs and we need investors to bring on new supply.

Also, NZ has been importing people for the past decade, one of the main reasons for economic growth during this period, and this has placed additional pressure on our housing supply.

Since Covid our borders have effectively been closed so the inflow of people has been down to a trickle, but this will surely reverse once we open the gate again so our property shortage is likely to worsen.

In my experience the only effective way to bring down house prices is to meaningfully increase interest rates but because of the damage this would inflict on household budgets, businesses, the financial system and the economy that simply isn't an option and won't be allowed to happen.

As members of the European Central Bank stated last week “increases to bond yields are very unwelcome and must be resisted.”

So, it's a 'rock and a hard place' scenario for our central bankers and monetary policy custodians.

Expect to hear plenty of talk about inflation and higher rates but not much action in my opinion.

If all the recent inflation talk has reduced prices for some of your favourite income stocks it may present a buying opportunity, depending of course which camp you are in with respect to rising rates (or not).

Bank deposits rates between zero and 1.50% and senior bond yields up to around 3.00% seem locked in for some time in my opinion.

EVER THE OPTIMIST

Milk pricing is increasing faster than interest rates!

Fonterra has conservatively increased its payout forecasts above $7.50 but farmers are beginning to pass around banter about the potential for an $8.00 price again.

Regardless of the actual setting the sharp increase in revenue is excellent news for the NZ economy.

I wonder if we are a show at a year-on-year trade surplus?

ETO II

Rocket Lab.

I just can't get enough of this NZ founded, global business success story.

The next plan is to list on the US Nasdaq stock exchange and set a course to billions in company value.

ETO III – Vaccinations

Progress is accelerating. Here's hoping the evolving data confirms a decline in the virus's impact on the population. It seems likely if you check the last data point below.

Vaccinations delivered – 294 million (large increase)

Total (recorded) Corona Virus cases – 117 million (+3m)

Active Cases – 21.8 million (unchanged)

Daily rate of new cases – holding around 300-400,000

People in serious condition – 89,000 (declining)

Last week I wondered if Israel was discovering 50% was the acceptance rate of vaccines across a population.

However, I read a very interesting piece from a retired, senior, Pfizer scientist who reminded people that vaccines are for people whose immune systems cannot cope unaided (those at risk) and that it is 'nonsense' to think that 100% of a population is 'at risk'.

This speaks to the importance of prioritising vaccine delivery based on health risk measures, not simply the gross number of jabs in the arm (political preference).

It also says that the gross data in the table above that I have been enjoying would be improved if it reported age brackets of the recipients. I accept that it is too hard to sort the young with high-risk characteristics because this would lead to too many sub-categories.

2021 and 2022 will be filled with Covid19 data analysis. One that I'd like resolved is the current ratio displayed on worldometers that shows 2.7% infected have died, yet only 0.40% of those 'active infections' are in serious or critical health condition.

It seems safe to guess that the number of people infected by the Covid19 virus is far higher than the 117 million recorded.

An experienced person in this field once told me (many months ago) that he expected the ratio to be well below 1% and that was before we witnessed the speed of the scientists in delivering vaccines.

When I combine the declining mortality ratio, the quality of our scientists and healthcare workers and what we have all learned about behaviour changes in the event of pandemics I hope governments do not overplay their Covid19 hands and carry this method of governance on too long.

 

Investment Opportunities

Infratil Bond – The 5-year bond (maturing 15 March 2026) offer yielding 3.00% remains open to investors.

This bond offer will be closing this week (10 March).

Thank you to all who invested in this bond offer through Chris Lee & Partners.

Mercury Energy Bond – MCY has announced that it is (careful legal terms) ''considering'' offering a new senior bond with a 5.5 year term, meeting the conditions of their ''green'' bond programme.

The investor presentation is next week, 15 March, so it's a reasonable guess that the bond issue will happen next week (be announced formally) and be fast moving.

Based on current market conditions we'd expect the yield on this bond to be somewhere around 2.10-2.20% (lower if MCY pays brokerage costs).

Once we have a little more accuracy around interest rate and who is paying the brokerage costs, we will issue an email to those on our 'Investment Opportunities' email group (which you are welcome to join via this link https://www.chrislee.co.nz/newsletters).

Share IPO – I wonder who the next offer of shares will come from?

We've been told to expect several in 2021, but the disappointing start for My Food Bag will make some a little gun-shy.

TRAVEL

Edward Lee will be in Auckland (Remuera) on 11 March, in Auckland (CBD) on 12 March, in Nelson on 14 April (PM only) and in Blenheim on 15 April.

Johnny will be in Christchurch on 11 March.

David Colman will be in Palmerston North on 21 April.

Please contact our office for an appointment.

Thank you

Mike Warrington 


Market News 1 March 2021

From a distance one gains more perspective.

Through the lens of the new, awesome, Mars rover (Perseverance) I wonder what scientists (or Martians) think of what is happening back on earth.

After recently listening to one of the greatest guitar solos of all time (Comfortably Numb - Pink Floyd) I read a funny line ''that the repeated playing of this track was the sole reason that aliens had not invaded Earth''.

Now, those aliens probably view us as a great comedy show.

For a while they had the Trump show. Now they can ponder Bitcoin passing the $1 trillion market value level, making it the fifth most ''valuable'' entity (publicly traded) on the planet.

The aliens are surely amused at the collective price paid for shelter here on earth too.

They'll not be surprised by our Covid19 situation given how lowly we value health and food producing entities with none in the top 10 for listed businesses globally.

Funny old place, Earth.

INVESTMENT OPINION

SPAC's– Here's another anecdote for how people are playing fast and loose with their savings, or worse, with other people's money; they are paying $58 to buy shares in businesses where the only asset is $10 cash (per share).

SPAC – Special Purpose Acquisition Company

Market participants are setting up these shell companies, selling them at $10 per share and listing them on the stock exchange, before setting out to try and buy a target company.

What is the mental block to logical conclusions that sees investors willing to pay $58 to buy $10?

I doubt any New Zealanders are this foolish, but I'm willing to sell $10 notes every day at $58 if anybody feels the need to access such a service.

As a listed company a SPAC doesn't have some, as yet undisclosed pot of gold valued at $48 per share; material announcements must be made to the market.

Buyers of $10 shares at $58 must somehow believe that the management of the SPAC will easily find a discounted gem in the rough, that nobody else has seen.

That is an unrealistic long-shot, not a 5.8:1 odds on bet.

I am pleased we don't have this phenomenon here on the NZX because it would be tiring explaining the illogical to the parishioners of the churches of Tesla and Bitcoin, pondering if there was a new brighter religion in town.

It is doubly interesting that people are still willing to use money to chase such ideas when a simple increase to long term interest rates over the past fortnight has put the frighteners up investor opinions for businesses that actually make profits.

Funny old place, financial markets.

MPS – The enthusiastic among you will have now read the Monetary Policy Statement released by the central bank last week (you too need perspective – Ed).

In it the governor explained that he was not increasing the Official Cash Rate above its 0.25% level and their commentary, plus financial market analysis implies an expectation of little change prior to 2023.

Financial markets efforts to be concerned about inflation are trying to imply a very modest increase in the OCR during 2022, but not even as far as 0.50%.

Investors should not be expecting large increases to short term interest rates for years in my view.

For a little fun, and definitely for investor benefit, long term interest rates are rising at present. Not far, from your perspective, but it is a meaningful rise for those with their noses pressed against the financial markets windscreen (+1.00% during the past month).

Investor benefit refers to bond returns beginning to rise above inflation targets and thus a chance to again deliver positive real returns.

I do expect this change in market conditions to steepen the yield curve (higher longer term interest rates) so investors working to a good strategy, enabling longer term investment choices, will earn more than those holding excessive sums in short term deposits.

I remain convinced that short term deposit rates will be the poorest returns (reward for risk over time) for the balance of my career.

Most of you have noticed that returns on all bank deposits are very low now, essentially all below 1.00% regardless of term.

Some of this relates to the decline in nominal interest rates, part of which relates to the change in central bank strategy (1) and part to the current emergency funding settings (2) and I don’t think items 1 or 2 will be unwound for years, hence my view about returns on short term deposits.

(1) Central banks spent the past three decades trying to pre-empt inflation with sharp increases to short term interest rates whenever inflation signals appeared, no matter how small.   There has been a substantial change in this philosophy, especially in the US, which is the most influential central bank; they are all now conceding that full employment is a more important objective and monetary policy will tolerate inflation that ''averages'' the central target. Central banks will now set Official Cash Rates looking back in time, after they have evidence of inflation outcomes, monitoring the average relative to employment data. This is the biggest change in such a strategy since the very start of my career in the mid 1980's (when the fight against inflation was the be all and end all). As I see it, not only will short term fixed interest investments (deposits and bonds) be the least rewarding for risk now, but you'll be the last to receive additional reward even if all the markets signals are indicating that you should be paid more. Should you avoid short term fixed interest investment? No, it remains the least volatile asset type and is an important part of your personal strategy for financing your lifestyle, but don't overweight the sector.

(2) The emergency funding settings are the other reason that banks will offer you lower interest rates on deposits now. Evidence explained last week – A 5-year bank deposit offers about 0.90% p.a. but a bank issued 5-year bond (same default risk) offered 1.43% (this would be 1.50% today). Under the new emergency funding settings offered by our own central bank, banks' were offered another source of funding (Funding for Lending Programme - FLP), which means less funding required from depositors; and The Core Funding Ratio (CFR) was dropped from 75% to 50% of a bank's funding. The higher CFR meant the banks had to fight a little harder to convince you to place deposits to help fund the bank. This resulted in higher relative interest rates on deposits. Cutting the CFR target to 50% of their funding was a dramatic change to the obligation and investors felt it immediately in the interest rates offered on term deposits. Banks have far less incentive to 'pay up' on term deposits, and no incentive to do so on funds that can be withdrawn with less than 32 days notice from the depositor. I don't see these conditions changing for a long time; hence my view that returns on term deposits (especially short terms) will be low relative to most alternatives for a long time. Even if economic and employment conditions improve, think about the new funding mix; the RBNZ has more control over how banks can use the FLP by adjusting conditions of its use but changing the OCR is blunt and impacts even those borrowers who don't deserve to be penalised. You'll have observed that the government is trying to add 'monitoring house prices' to the central bank obligations. OCR changes will have less impact than conditions on FLP use by the banks.

Might the RBNZ increase the CFR target again?

Maybe, but the CFR setting was brought in out of concern for access to liquidity by the banks after the tension experienced during the Global Financial Crisis (GFC) and the new FLP (above) and the Large Scale Asset Purchase (LSAP) programme (central bank buying bonds from the market) solves this liquidity risk.

I don't yet foresee an increase to the CFR off the new 50% level.

I hope those explanatory dominoes fell in a helpful sequence for you, albeit leading you to the deflating conclusion that bank deposits will be unappealing (relative reward for risk) for many years ahead.

This does, however, unintentionally (?) steer you closer to our lair (office? – Ed) to receive financial advice on how to manage your investment portfolio on this evolving playing field.

It is hard to say without bias, but I quite like this outcome. Said, of course, with the best possible of intentions because we are continuously concerned about assisting you to position your investment portfolios well.

BOE Youngster – The statement that most caught my attention last week was one made by the youngest member of the Bank of England's monetary policy committee, Gertjan Vlieghe.

Vlieghe said in response to a question about interest rate settings that ''he did not expect British interest rates to return to levels common before the 2008 financial crisis during his lifetime''.

I am constantly challenging myself, and others, not to only rely on our training, or recent understanding, as we look forward and try to estimate what will happen next in financial markets.

It was nice to hear the perspective of a younger member of an important policy setting group.

US GDP - Whilst in NZ we seem to be experiencing the likelihood of negative GDP data (recessionary forces) the US Federal Reserve is conservatively forecasting a growth rate of +5.00% for their year and a variety of analysts are forecasting numbers more like +7.00%.

The BNZ kindly invited me to a presentation by the bank's head of Markets in the US. He is 'very, very' positive about the US prospects in the year ahead based on the combination of Covid19 bounce-back and the enormous sums of money being pushed into the economy by the federal government.

I described above the reasons that I don't expect NZ short term interest rates to rise, well the US Federal Reserve Chair (Jerome Powell) is even more adamant that they will not be increasing these interest rates, or applying more financial pressure, for years to come.

Powell wants full employment.

Back in the era of President Clinton a catch cry of ''It's the economy stupid'' was launched to confront political acceptance of recessions. Today the central bank no longer wants you to focus on inflation ''it's about full employment stupid''.

EVER THE OPTIMIST

S&P Global Ratings lifted New Zealand's credit ratings, back to AA+ for international (foreign currency) obligations and AAA for domestic NZD obligations.

It is interesting for this upgrade to happen now, when our financial capacity is clearly weaker (more debt, less sovereign income) than it was 1-2 years ago.

Nonetheless, we shall accept the applause.

ETO II – Vaccinations

More people have been touched by the needle than the virus.

Vaccinations delivered – 225 million

Total (recorded) Corona Virus cases – 113.5 million

Active Cases – 21.8 million

Daily rate of new cases – holding around 300,000

People in serious condition – 91,000

The BNZ presenter agrees that the Covid risk is declining fast; vaccine quality and rollout is putting 'us' back in control and that the US is likely to re-open for widespread business in offices from 1 September 2021 (allowing the population to enjoy summer from remote locations, holiday season etc).

Israel appears to now be providing evidence about when it gets hard to convince the population to accept the vaccination, being somewhere near 50% of the population. They have delivered the first dose to 51% and the second dose to 36%.

Second dose numbers are rising quickly, but first dose numbers have begun to slow down. The daily rate of 'jabs' is now falling behind that of many other nations of similar size.

I suspect the world will need some relatively strong incentives to increase the ''jab ratio'' beyond 50% of the population, incentives such as no border crossing without evidence of vaccination or high antibody levels.

Given the pressure placed on the health system (read cost) maybe governments should link good health behaviour to the pricing of all prescriptions?

Investment Opportunities

Infratil Bond – The 5-year bond (maturing 15 March 2026) offer yielding 3.00% remains open to investors.

This bond offer will be closing soon (10 March).

TRAVEL

Edward Lee will be in Auckland (Remuera) 11 March and Auckland (CBD) 12. March. Nelson (PM only) 14 April and Blenheim 15 April

Johnny will be in Christchurch 11 March

Please contact our office for an appointment or if you would like us to visit your area please let us know.

Thank you

Mike Warrington 


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