Chris Lee & Partners Ltd

TAKING STOCK 23 February 2017

CHAPMAN TRIPP, comfortably New Zealand’s most impressive national law firm, has expertise in lots of areas but its partner Roger Wallis is particularly skilled in assisting with the documentation of a company preparing to list on the NZX.

This process is hardly one on which Nobel prizes are decided but it is tedious.  Experience and knowledge are needed.

Wallis last week told a young New Zealand Herald reporter that he was concerned about the future of the NZX, worried that companies were moving their main listing to Australia, and worried about the low numbers of companies wanting to list their shares on the NZX.

He did not join the growing chorus that urges the NZX to merge with the ASX but his voice expresses real concern based on experience and knowledge.  He discussed just one relatively small problem, however.

It is true that hopes for NZX growth rest largely with the lengthening list of debt issues and with rising volumes in the NZX Smart Funds, boosted by its purchase of SuperLife, which allows accumulators of money to channel weekly savings into robotic index-based Smart Funds.

The NZX Smart Funds now have $300 million invested on behalf of small savers, making its funds under management equal to that of a boutique manager, such as Aspiring, in Christchurch.

The NZX is growing, but not in equities.

Indeed had it not been for the listing of the Crown-owned power generators, the council-owned Auckland Airport and various ports, and the Crown-owned Telecom/Spark/Chorus, our primary capital market operator would be completely irrelevant, on any international scale.

Wallis is right to worry about all of this, and to agitate for more listings.

But I have to point out that the NZX today is a light year away from that dreadful, toxic but much larger beast that blighted New Zealand in the 1980s and 90s.  It is today a better operation than it was just five years ago.  Growth, unfettered and allowed indiscriminately, is not a desirable objective.

It was in the 80s and 90s that international capital market professionals dubbed New Zealand ‘’the Wild West’’.  They were not being unfair.

Only in the past five years has the NZX lost its dysfunctional reputation, its chief executive Tim Bennett, retired a few weeks ago, having restored order to an organisation that regularly had made poor decisions and had sheltered inappropriate behaviour from some of its listings and broker members.

The country should salute Bennett for tackling a thankless task.

He did not need the job but did it stoically.

Tim Bennett’s replacement has yet to be confirmed but the acting chief executive Mark Peterson, should he be left in charge, would not undo Bennett’s repair job, and would be diligent.  He also has integrity and experience.

If the NZX wants someone else, the new name would have to be pretty impressive.

To assess how much progress has been made you need to look back to the 1980s, when our capital markets first made exponential surges and became a household talking point.

After decades of low growth, the NZ economy, despite being shackled by politically-inspired constraints, surged in the 80s at a time when the St Pats Silverstream old boy Michael Fay had combined with old Auckland money, the David Richwhite family, and was urging NZ to aspire to be the Switzerland of the Pacific, with FayRichwhite the cheerleader (in its mangled version of English).

The NZX grew without constraint.  By 1987 there were around 400 listed companies, dozens of sharebroking firms, a multitude of institutionalised fund managers, many hundreds of insurance and superannuation salesmen, and, after Labour deregulated in 1984-85, no constraints, no useful rules, little policing of what rules there were, and precious little evidence of morality.

Sharebrokers charged a set 2.5% per transaction, had very little capital, used their house accounts abusively and without moral consideration, and never applied the ‘’fit and proper person’’ constraint when agreeing to list snake oil companies.

People who had changed their names, been convicted of crimes, had no useful commercial expertise and no capital were allowed to list nonsensical companies.  We do not want that to happen again.

Market activity soared, television cameras often filmed the trading operation as though it were live theatre, chalkies and all, there was no policing of behaviour, no audit trail, no useful regulatory intervention, and virtually no referral of stealing to the judiciary, to rule on those dreadful practices.

Brokers played God, traders settled their accounts monthly, in the poorer firms, like Renouf Partners/Natpac Corporation, broker back offices were in disarray, and the quality of the people involved was often dreadful.  Research really meant inside information.

That insider information was traded freely, and corrupt companies often rewarded rotten people with information that led to extreme wealth for some dozens of people.  Some fund managers enriched themselves with the help of corrupt corporate executives.

It still stings to recall these events, which for many came to a head in the late 1990s when a corrupt, greedy young man was fired from an institution for front-running, was not prosecuted, and was immediately employed at a senior level by a greedy broking firm.

Right through until Simon Power entered government in 2008, toxic, selfish behaviour existed in pockets, most obviously in the finance company space, but also in areas of advice dominated by insurance agents who had morphed most unsuccessfully into financial advisors.

The media played a shameful role in all of this, selling advertising space or radio time to greedy, unprincipled people, often with no knowledge, no experience and no virtue other than gift of the gab skills that in London might have been used to sell to tourists, mystery brown parcels that had ‘’fallen off the back of a truck’’.

Worse, the media fawned over anyone with a wallet-full of $100 notes and made folk heroes of grubby people who had made their riches by conning people with pro-forma invoices, or by awarding themselves ‘’management contracts’’ that allowed abuse of client money while enriching themselves.

Believe me, the growth of the NZX was facilitated by turning a blind eye to all this sort of corrupt behaviour.  We had 400 listed companies.  Today we have about 150.

I blame the ridiculous level of executive remuneration that one sees even in New Zealand, also on that era, when capital market operators set poor examples, and when the media portrayed extreme wealth as evidence of admirable qualities. (Trump?)

Ironically many of New Zealand’s truly great contributors, like Woolf Fisher and Jim Wattie, never seemed to catch the ‘’extreme wealth’’ pox.

If anyone wants to see New Zealand return to that toxic era, all one needs to do is abandon good standards, encourage conmen, forget the need to protect investors, and let extravagant growth be fertilised by naked ambition.

I am sure this is not what Wallis preaches.

He would be wanting more successful privately-owned companies, or co-operatives, to display their growth aspirations by raising capital from the public, the core role of the NZX.

He would need a few other events to occur before this sort of growth can be accommodated.

Most obviously, he would need to see upskilling of the NZX broking fraternity.

Currently we have one credible investment bank, First NZ Capital, which has real resource in research, national and international corporate connections, capital, access to funding (via its Swiss partner CSFB), good governance and a reputation and culture that is visible, and does not regard clients as ‘’flies’’.

Goldman Sachs had a few of the above qualities but has now left New Zealand, retaining only a handful of people, and no longer distributes product.

UBS has a small staff in Auckland but no distribution capacity, and no special focus on NZ company research.

Macquarie has a small wholesale team but has quit its link with wealth management, and relies on Australian-based research.

Craigs has, for the meantime, an international partner in the beleaguered Deutsche Bank, but is essentially a retail distributor, with a skilled but small investment banking commitment, and a huge amount of funds under management.

JBWere is a retail distributor, and has a useful connection with the BNZ, but no investment banking presence.

And the Dunedin-based retail broker Forsyth Barr is essentially a fund manager, selling its brands, and its retail advice.  It has no international partner, limited capital, and a tiny presence outside funds management and retail distribution.

FB may counter this with its ‘investment bank of the year award’ from an Asia publication.

But my hope for Forsyth Barr is that its reins are soon held by one of the sons of its founder, Eoin Edgar, who remains the biggest shareholder.

An upskilled Forsyth Barr, with new capital, a new culture, a modern board of directors, and perhaps an international partner (Macquarie?) would be a ray of hope for our capital markets, given its South Island presence, where old money resides and currently receives little useful support.

What I have described above does not offer much encouragement to those who want to see more rapid growth in the NZX.

To achieve growth we need international capital, we need KiwiSaver and the likes of our NZ Super Fund and ACC to invest more funds in New Zealand, and to do that they need more listings of excellent companies represented and researched by high quality investment banks.

The NZX must make the transition to public issuance a process that weeds out the sort of crooks that filled our listings in the 1980s, yet is not so expensive or daunting that it deters sincere applicants.

It is probably also true that the NZX must encourage growth in the numbers and capacity of the sharebroking members, while enforcing high standards, tackling the problems caused by dark room trading, and eliminating those whose greed and self-focus led to front-running or other forms of theft.

Currently the chasm between client-first culture and bucket shop operator behaviour is wide.

There is insufficient commitment to research, one firm dominant and as a result capturing 40% of sharemarket business, perhaps a reflection on weak opposition as much as a reflection of its merit.

The cost of entry to the sector seems too high, even for international companies, given the relatively small income available.

We have seen many big boys leave, including Merrill Lynch, Citigroup, Deutsche Bank and Credit Suisse, while others like Macquarie, JBWere, Goldman Sachs, ANZ and ASB have shrunk their activities in our capital markets.

The likes of BNZ may still see opportunities but it is very clear that Westpac has energy for Australia that does not translate to any commitment to our capital markets here.

And one last subject should be on Mr Wallis’ mind.

No one wants to see NZ investors be the mugs that buy back our assets from overseas entrepreneurs trying to re-sell a porcupine’s backside by adorning it with peacock feathers.

Any new offering that expands our number of listings should be raising capital to add momentum to a visibly successful growth plan, not to allow some hedge fund merchant to escape from problematical mezzanine debt. 

Our capital markets need more foreign investment, more high-quality banking firms, more client-focussed advisers, more skilled directors, more capital, a greater commitment to research, much lower intermediation fees (definitely NOT 1% p.a. fees, or more), higher recognition of the relative value of NZ investment, and stricter attitudes towards bucket shop behaviour.

Mr Wallis has opened up a huge topic.

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THE PERSON-to-person money lending broker, Harmoney, is taking a significant risk in allocating capital to become a lending facilitator in Australia.

But its strategy seems logical.

The risk is best viewed in the context of other forays into tier two or tier three lending in Australia by many other New Zealand lenders.

Think of the BNZ in the 1980s, or Strategic, St Laurence, Bridgecorp or Capital + Merchant Finance in the 2000s.

They were all taken to the cleaners, forced to lend to wild-eyed Ockers who had not satisfied the quality controllers at the Australian-based lending industry.

St Laurence was probably the most idiotic, appointing a goof with no banking skills to lend in Australia a pool of money created by New Zealanders.

This foray may have been the arsenic pill that poisoned off a weakened company that had managed to burn off real capital and some hundreds of millions of investors’ funds, while its founder was managing the money as if it were his mother’s money, as he promised in his advertising.  (Pity his mother.)

The Australian loan book repaid little more than 10c in the dollar, the losses cynically transferred to NZ investors, when the Australian regulators were becoming interested in St Laurence’s Australian lending book.

Those who had funded the Australian lending were repaid by those who thought they were funding NZ lending.

Grrr.  I hope a book will one day reveal all this chicanery.

Harmoney is hoping to break the pattern of NZ failures in Australia.

In my view it is correct to identify credit card lending as a target.

Banks mail out credit cards, pretty well indiscriminately, and assess how much of the credit card lending is never repaid.  The unrepaid amount is perhaps 8% of all lending.

So the banks then lend at, say 22%, claiming the nett return of 14% is a fair return, ignoring the truth that most people repay in full, and should not be penalised with excessive lending rates because of knaves who do not repay at all.

Harmoney hopes to identify the non-knaves and lend at rates that reflect the integrity of the borrower, perhaps at single digit rates to the best borrowers, and not at any rate indulging those who have a pattern of cheating.

For Harmoney the risk would be a letterbox full of borrowing applications from Ockers trying to exploit those little brothers across the Tasman.

The return might be from smart Kiwi processes, connecting borrowers of integrity with loans priced fairly.  Technology might help Harmoney.

The presence of Heartland Bank on Harmoney’s board of directors, hopefully will ensure no repeat of the sort of deceptions that were a feature of the final years of our finance company sector.

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THE DECISION of the former Labour government finance minister Michael Cullen to join as a director the new annuity provider Retirement Income Group, surprises me.

Like so many retired politicians, Cullen wants a final chapter for his career, and will be seen by the public as someone who should understand the need for transparency in governance and should have a useful network, particularly in Wellington.  Politicians love directorships.

Cullen joins a board comprising Diana Crossan, who is also well connected in Wellington but like Cullen, someone whose connection with capital markets is at best peripheral.

Other directors include the Forsyth Barr KiwiSaver director, one-time author and financial adviser Martin Hawes, lawyer John Strahl, founder and former AXA sales manager and later general manager Ralph Stewart, a British administration expert Rhys Gwilym, auditor Graeme Mitchell and actuary Tim Paris.

Cullen will not be providing the capital market funds management skill that the board might need but he is a public figure and will be wiser after his stint with NZ Post.  My surprise is that RIG has not sought fund management knowledge.

Someone like Steven Montgomery or Brian Gaynor would have been a better choice in my opinion.  Both have genuine investment knowledge and expertise.

The annuity provider that Stewart has created is in its infancy and will be seeking to build its tiny $8.5 million of capital, given its promises to deliver minimum annuities for 30 years, and onwards.

The credit rating agency used by RIG assesses the group with a credit rating of BB minus, well below investment grade, making RIG a difficult option to promote, especially for authorised advisers conscious of covering their tracks for when the next financial market downturn arrives.

The most simplistic but still effective safety route for advisers is the credit rating and BB minus is a long distance from a ‘’safe’’ defence.

As an example, Hanover Finance, months before its collapse, was rated BB plus by Fitchs, two grades higher than BB minus.

No doubt RIG will be wanting to multiply its capital by several times if it achieves momentum.  Advisers helping it to achieve growth will be taking a significant risk.

To date it has sold $35 million in two years translating to perhaps 200 people introduced by say 50 advisors, each of whom would have found two clients a year, if the number of salesmen is guessed correctly.

RIG promises a 5%-6% return for life, on capital invested, including the consuming of the capital.  It does have some unusual features which are more attractive than the plain ugly standard annuity that NZ rejected in the 1990s.

In Britain annuities are a standard option when pension planning but in NZ there has been almost zero appetite, partly because of the extreme fees (RIG charges around 2.3% per annum) partly because of the NZ preference to hand capital on to the next generation, upon demise, and partly because of the history of inept and opaque investment practices of the insurance companies which provided annuities.

If RIG can improve its credit rating, by consistent performance even in bad years, by substantial increase in capital, and by attracting capital market specialists, then its future is most likely, and somewhat ironically, through a sale to AMP.

This would be ironic for what cost Stewart his job in AXA, where he had been an energetic sales manager who morphed into general manager, was AMP’s takeover of AXA.  Stewart was never an investment manager.

If he could build the RIG story into a sustainable, credible and popular option for pensioners, then he might tempt AMP to buy it, giving it balance sheet grunt, marketing impetus, and access to some degree of capital market expertise.

Perhaps it is with this in mind that RIG has assembled the particular directors it now holds.

The first task, however should not be marketing the company around Wellington.

It should be attracting sales after demonstrating capital market expertise, and the sort of capital base that might see the company through its first 30 years.  Its void of capital market and fund management presence needs filling.

Disclosure:  (Our company does not offer insurance or annuity products).

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TRAVEL

I WILL be in Christchurch on February 28 and March 1, this time based at the motel beside Trevinos Café, at 22 Riccarton Road.  Sadly the Hilton Hotel’s rebranding of The Chateau on The Park has led to pricing practices that are offensive, necessitating a new venue for me.  I shall miss the COTP staff who were wonderful, for nearly two decades.

I will be in Auckland on March 20, flexible about where I can meet investors.

Kevin will be available in Christchurch on 3 March.

Michael will be in Auckland (North Shore) on 28 February and tentatively plans to make a trip through Hawke’s Bay and Tauranga during the school holidays in April.

Edward is in our Wellington office (Level 15, ANZ Tower, 171 Featherston St) on Tuesdays, available to meet new and existing clients who prefer to meet in Wellington.

David is now planning his next trip to the Manawatu, Whanganui and Taranaki provinces.

Please contact us if you wish to make an appointment.

Chris Lee

Managing Director

Chris Lee & Partners Ltd

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TAKING STOCK 16 February 2017

Kevin Gloag writes

I READ the following quote recently which for me really sums up the challenge of accurately predicting the future path for global financial markets:

‘’When it comes to forecasting the future direction of global financial markets there are two groups of people; those who don’t know and those who don’t know that they don’t know.’’

This view is supported by a recent review of the predictions and forecasts made during 2016 by some of the world’s most knowledgeable financial market analysts and institutions.

The report revealed that on issues where the experts were certain of the outcome they were right about 50% of the time, the same result as a coin toss.

Needless to say on issues where they were less certain of the outcome, they did much worse.

The moral of the story is not to believe everything you read; the so-called experts have got little more idea of what happens next than you or me and 2017 is shaping up to be even more unpredictable than 2016.

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THE BIG question facing income investors today is how much higher might interest rates go and should they invest now or should they wait for a possible interest rate rise, even if it is only a small rise.

Over the past seven or eight years, waiting for higher rates has not been a good strategy for income investors with interest rates steadily declining during this period.

Some believe that the worm has turned, for longer term rates at least, with the wholesale rates for two years and longer lifting slightly in recent months.

Wellington Airport’s two recent bonds issues provide the most obvious example of this increase.

In August 2016, which now looks like the bottom of the current interest rate cycle, WIA issued an 8-year senior fixed rate bond paying 4.00% p.a. but had to increase the rate to 5.00% p.a. when they returned to the market in mid-December to offer an almost identical security.

The 5-year, 7-year and 10-year wholesale (swap) rates have all increased by between 1.00% - 1.20% since August 2016, following the rising trend in global bond markets and accelerated by Trump’s election.

As we have stated many times in our weekly articles, NZ interest rates for terms 2 years and longer take their lead from overseas bond markets, particularly the US bond market, where there is currently great anticipation about new fiscal spending and tax cuts, policies which are potentially inflationary and policies that will require massive amounts of new borrowing.

Inflation might be the catalyst for interest rates higher than the extremely lean rates investors have endured for nearly a decade.

Additional debt issuance on top of a pile that already looks like a festering bad debt wound might also normally demand a higher risk premium (higher real interest rate cost) although as Japan has demonstrated so expertly if you buy your own debt there is no need to offer a higher rate. The Bank of Japan now owns 40% of its government’s massive debt obligation and Japanese citizens and institutions own most of the rest.

Perhaps the Fed will adopt the same strategy in order to finance Trump’s deficit spending plans?

What we need to be aware of in New Zealand is that if longer term rates go up in the US, for any reason, longer term rates will go up here also, as we fight for funding in all capital markets.

If you want to observe this correlation for yourself you could track daily movements in the US 5 - 10 year Treasury rate and corresponding movements in our 5 - 10 year swap rates. You will see the relationship.

In fact as I write this article the UST 10-year rate has dropped 6 basis points overnight and on cue our 10-year swap rates have dropped 7 basis points this morning.

A RBNZ OCR announcement has also been made this morning but the drop in the longer term wholesale rates isn’t related to anything the RB govenor said, it’s what’s happening in the US.

By adjusting the Official Cash Rate the Reserve Bank Governor can influence short term interest rates in New Zealand, meaning rates from call to 2 years, but beyond these terms the central bank has much less control over the direction of our interest rates.  Long term rates are driven by quite different factors.

Short term rates are of course hugely significant for New Zealand investors because over 90% of total customer bank deposits are invested for terms of 12 months or less and currently the majority of mortgages are for terms of two years or less.

Because the majority of retail bank deposits are invested short term and aligned to a record low official cash rate most bank investors won’t have seen much benefit from the recent lift in global interest rates, although banks rates have increased modestly on the back of competition for funding to support continued strong lending growth.

We continue to argue that our focus on short-term rates is costing our investors income.  Not every investment needs to be maturing this year!

Clients are beginning to report interest rates of 4.00% or better for terms of three years or longer.

The cap on short term rates courtesy of the central bank policy and the rise in long term rates largely courtesy of Trump’s proposed inflationary agenda is good news for bank net interest margins with their borrow-short/lend-long models, and share prices for bank stocks have lifted accordingly.

The $64,000 question is whether inflation is coming and how high could rates go?

Market chatter has certainly shifted from deflationary concerns to a hint of inflation and New Zealand’s inflationary expectations have increased slightly and with it moves the Reserve Bank’s projected track for interest rates.

In November 2016 the Reserve Bank cut the OCR to 1.75% and forecast that it would remain at this level until the end of 2019. This seems uncertain in my opinion; an earlier hike now seems a real possibility, if we see inflation rising in the US.

Footnote: A rising OCR lifts short term interest rates which would be good news for bank deposits and also annual reset securities which would be resetting on a rising one year swap rate. Unfortunately if the banks repay all of the existing annual reset securities by the end of 2018, as we expect, there will be limited options available for investors to purchases this type of security. 

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UNMANAGEABLE debt levels and higher interest rates are an ugly combination.

Total global debt has now passed $200 trillion which is more than 300% of the world’s gross domestic product.

Global debt has roughly doubled since the GFC (please re-read those eight words) with the borrowing binge stimulated by excessive liquidity, easy credit and low, zero and negative interest rates. Mathematically this might make sense but as a long term strategy it is bankrupt thinking (pun intended).

Sadly very little of this new borrowing has been invested into the real economy, and instead has been used to drive up asset prices and to finance share buybacks and other financial engineering that has returned no real benefits to the global economy; no jobs, not much taxable revenue growth.

Government debt accounts for about one third, or $70 trillion, of total global debt with the rest spread amongst the private sector.  The US has less than 5% of the world population but nearly 30% of the global debt (and 25% of the world’s prisoners!).

Gross debt as a percentage of GDP for some of the major economies include:  US at 107%, China 91.6%, Japan a whopping 220%, Germany 78%, France 99%, and the UK 88%.

Australia and New Zealand’s government debt, at 24% and 35% of GDP respectively, are amongst the lowest levels of sovereign debt in the world.

A reading above 100% of GDP has always been considered ‘unmanageable’ and ‘at risk of default’ and although many of the world’s major economies are either approaching or already above this danger level the low interest cost of the debt, courtesy of record low or negative rates, has enabled over-indebted countries to muddle through, until now anyway.

The global strategy is to keep rates very low.  The US debt servicing costs on $20 trillion is the same as it was when debt levels were $10 trillion.

In fact in the US, whose debt/GDP ratio has just crossed 100%, a figure last seen in the 1940s, declining interest rates have reduced the interest cost as a percentage of their GDP to the lowest level in 50 years, even though their total debt has ballooned to US$20 trillion, double that of eight years ago.

And while both New Zealand and Australia look very respectable on the above list with very low levels of Government debt the opposite is true when it comes to household debt.  Here,  Australia is 2nd only to Switzerland in recording the highest level of household debt in the developed world at 123% of their GDP and New Zealand 7th on the list at roughly 100% of our GDP.

Housing debt makes up the bulk of these claims in NZ (and Australia) and  exceeds the combined total of our business, agricultural and Government debt.

Housing debt in NZ has increased by around 30% in the past 5 years, although housing credit bubbles are nothing new in this country.

Many people will recall the housing debt boom of the 1970s, at a time of very high interest rates, but unlike that period we no longer have rampant inflation to inflate the debt ratios away.

Even with high rates in the 70s and 80s debt was manageable because of very high wage inflation, with wages increasing between 300% – 400% during that two decade period.

Over the past decade wage inflation has been very tepid at barely 3% p.a. so today’s borrowers won’t have the benefit of inflation to help with their debt burdens.

If mortgage borrowing rates in NZ were to return to their pre-GFC levels of 7% - 9% I think debt servicing would be extremely challenging for many NZ homeowners and very negative for the housing market and economy in general.  An interest rate increase of this scale seems very unlikely at this stage.

However there is a risk that if longer term rates increase in the US they might go up here by default.

With Trump at the helm anything is possible. Banks are displaying their desire to increase interest rate margins so will be quick to lift the rates they can charge even if deposit rates do not move upward.

Trump’s trade protectionism policies have the potential to create inflation in the USA, as do his proposed tax cuts and infrastructure projects although there is still great uncertainty about what will actually eventuate from all the noise and bluster.  The USA does not allow its President to behave like a dictator.

One thing that does seem certain is that with all of the world’s major economies submerged in debt there will be a concentrated effort to keep debt servicing costs, and therefore interest rates, as low as possible for as long as possible.

Kiwis and Australians with big mortgages will be hoping they succeed but the current behaviour of ‘keep borrowing more’ implies failure is more likely.

One does not extract oneself from too much debt by borrowing more!

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STILL on the subject of debt a snapshot of the US Debt Clock shows their national debt at just a few shillings short of US$20 trillion.

This represents $61,340 debt per citizen, $166,773 debt per taxpayer and costs $14,074 in interest every second.

New Zealand’s national debt totals NZ$87.5 billion or $18,727 per citizen and $134 in interest per second.

To put debt quantities in perspective using units of time:

One million seconds = 12 days

One billion seconds = 31 years

One trillion seconds = 31,000 years

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FISCAL SPACE - On a positive note for New Zealand, a recent article in The Economist ran a list of countries’ risk levels measured by their ‘distance to estimated limit in debt to GDP ratio’.

New Zealand scored 3rd best on the list behind Norway and South Korea and ahead of Hong Kong, Luxemburg and Australia all of whom were judged to be at the high end of the ‘safe’ zone.

The US finished midfield together with Germany, Netherlands, Austria, Malta and Canada, all of whom were still judged to be in the safe zone but at the thinner end.

France, Spain and Ireland all recorded in the ‘caution’ zone and at the ‘grave’ risk level were Cyprus, Greece, Italy and Japan all of whom scored ‘nil’ (deceased?).

I am always a bit nervous about the accuracy and science behind some of the information you find online but what the Fiscal Space report confirmed for me was that if either New Zealand or Australia were impacted by either an internal or external financial shock both governments would have plenty of headroom to borrow and provide fiscal stimulus. This capacity improves if we use some of the pending surpluses to repay a proportion of current government debt.

As previously mentioned in this article many countries have already accumulated far too much debt and in the Eurozone, for example, there are restrictions on deficit spending, although enforcement is weak.

Trump will soon need to increase the debt ceiling in the US so that he can fund his expansive agenda. The US Government already spends US$600 billion per year more than it earns.

Most of the world’s major economies already have interest rates near zero so reducing rates to fight the next recession will also not be an option which begs the question - what will they try next when the economy desperately needs help?

Perhaps these facts explain the theme of our investment strategy seminars around New Zealand – right now NZ seems a sane choice for NZ investors.

2017 promises to be another very interesting year.

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TRAVEL

Chris will be in Christchurch on February 28 and March 1, at a new venue (to be advised) and Auckland 20th March.

Edward is in our Wellington office (Level 15, ANZ Tower, 171 Featherstone St) on Tuesdays, available to meet new and existing clients who prefer to meet in Wellington.

Kevin will be in Queenstown on 24 February and Christchurch on 3 March.

Michael will be in Auckland (North Shore) on 28 February.

Anyone wanting to make an appointment please contact us.

Kevin Gloag

Chris Lee & Partners

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TAKING STOCK 9 February

 

THE vexed question of how to fund property development is being addressed by the right minds, at a time when banking lines are being withdrawn.

There is no debate required about the need for funding.

New Zealand will not solve its housing shortage unless there are more land sub-divisions in or around metropolitan areas, and unless there are user-friendly apartment blocks built in city centres.

Population increases, largely fuelled by immigrants and returning New Zealanders, are unlikely to reverse so we clearly need more dwellings.

Yet the consenting process, the shortage of skilled tradesmen and the lack of competition amongst building material suppliers, combine to produce risk that needs a high level of reward.

Banking enthusiasm for the funding role varies, and relies on bank’s confidence in their own ability to raise long-term deposits to match the unknown, when a development is initiated.

At the planning stage, when funding must be arranged, no one knows how long the building process will take, and whether the potential buyers will emerge, and have access to funding.

Even if the sections or apartments are pre-sold, settlement is never certain, as the Australians are discovering now, many ‘’pre-sales’’ vanishing as Chinese buyers withdraw, losing their deposits because they cannot export funds from China or borrow from Australian banks.

It is the uncertainty that builds the risk.

Risk requires a matching financial return.  If risks are high, returns must be high.

A decade ago finance companies would agree to lend in return for high fees and high interest rates.

Bridgecorp, St Laurence, Hanover, Strategic, Capital & Merchant Finance, Dominion, South Canterbury Finance or Marac would take the risk, gleefully booking up high returns but failing to take measures to offset the high risk

Marac was the sole survivor, thanks to a huge rights issue arranged by First NZ Capital, underwritten by FNZC clients, and the now disbanded supporters of George Kerr, a part-owner of Marac.

None of the finance companies were able to match their own funding with the lumpy requirements of the property developers, and none found a structure that absorbed the risk of delays.

Even the banks themselves failed to cover delays.

Who in Westpac will ever talk honestly about the stupidity of its behaviour at Albany, where it wrote off $130 million on leasehold land, after a poorly constructed loan?

Today Albany thrives, land worth squillions.

Why the leasehold arrangements were not renegotiated, to the advantage of all parties, is one of the great unanswered questions from the 2008 property development market collapse.

Well, the good news is that First NZ Capital has again put its mind to a solution, prompted by the banks’ falling ability (and appetite) to fund property developments.

Banks will support proven, well-heeled developers who are gold standard and existing clients but have closed off their support of others.

And there is no Halifax Bank of Scotland (HBOS) to cater for the most improbable ideas, and no Canterbury Mortgage Trust or its like.

No finance companies, no mortgage trusts and no banks will fill the gap so FNZC has investigated the subject and come up with what seems to be a sensible solution.

It has partnered with Pearlfisher Capital, owned by some experienced and enthusiastic financiers, and will develop a model that allows wealthy investors to hand pick developments, taking on risk for a commensurate return, perhaps involving a mix of interest rate and profit share.

FNZC will present to wealthy clients, the funding opportunity, enabling them to focus on an asset class that dwarfs any other.

If the result is that developments are appropriately funded, and have the flexibility to survive problems, free of the blind panic that gripped Westpac (as an example), and free of the pressure to meet lender-imposed deadlines, then our property market may find supply gets closer to demand.

One imagines that the FNZC clients will invest in million dollar parcels, doing their own risk/return analysis, comforted by the role of FNZC.

Of course, FNZC cannot resolve all of the consent process blockages, and nothing alters the unhealthy dominance of just two companies, in the building supply chain.

Nor is there an obvious solution to the shortage of skilled labour, dreadfully governed contractors (like Mainzeal), and inadequate law, such as the law that allows sub-contractors to take risk with meagre return.

But the financing structure will improve the prospects.

We never again would want to see childishly naïve and greedy finance company owners using other people’s money to facilitate improbable developments.

As far as I know, those cheats never did finance an underground airport but even of that I am not completely certain.

(They did finance 30-story apartment blocks in the Spanish desert and proposals for a suburb at Baring Head in Wellington).

 _ _ _ _ _ _ _ _ _ _ _ _

THE Financial Markets Authority experienced and wise executive Liam Mason will have provided investors with great encouragement with his recently announced edict on capital market behaviour.

He has set in place five standards that must prevail.

In essence the standards outline a respectful and competent relationship that must be observed when providing advice or financial services.

Competence, communication and respect might all sound fairly mundane requirements but they have often been missing from relationships between insurance providers, investment product providers, advisers and bankers.

The behaviour of Tower for example, in the Christchurch earthquake claims, has been disrespectful and greedy, the behaviour of ANZ during the dreadful ING cash derivative fund was appalling, and none in my vocation will forget the cynically misleading brochures that the likes of AMP and Westpac used to promote badly-designed retirement savings products many years ago.

Neither will the new guidelines outlined by Mason, tolerate those investment advisory firms that in internal memos, describe their clients as ‘’flies’’.  Such organisations would need new leadership and culture to achieve harmony with the FMA edict.

But the guidelines might need to go further.

I am concerned at the new trend for advisers to align with single product suppliers, yet retaining their image of being independent.

Disclosure of conflict of interest is a start, but does not solve the problem, in my view.

I wonder whether such alliances should exclude the use of the word ‘’adviser’’, requiring the replacement by the word ‘’salesman’’.

One imagines the FMA will police the new standards and will gradually move to a stronger focus on how a ‘’fit and proper’’ person must behave.

We still live in an era where the drop-outs from the likes of Vestar, Reeves Moses, Broadbase and Money Managers can rebadge themselves with organisations that lack a quality screening process.

It is probably fair to say that the FMA regulatory function is evolving, and will make incremental improvements.

Hopefully there will be some lines in the sand.

Perhaps the FMA might rule that disclosure of conflict of interest is not sufficient, and that authorised advisers simply must not promote or present brands where they have ownership of the brand, or governance roles.

If Cecil or Myrtle are directors of a mortgage lending company, or a KiwiSaver provider or a finance company, should the public regard their ‘’advice’’ as neutral?

Does disclosure of interest, completed in a sentence, dismiss the issue?

Should authorised advisers relinquish that sobriquet if they want to invest in product providers, or take on internal roles with the provider?

The FMA’s new edict is most helpful, but might need to address these subjects with vigour.

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Kevin Gloag writes - 

Addressing inequality is arguably the biggest challenge facing the world today, and undoubtedly spurring support for populist groups.

Globally discontented working middle and lower class people, who have now endured declining living standards for several decades, are turning to anti-establishment politicians for hope.

Unconventional monetary policy since the GFC has disproportionately favoured people who own assets like property and shares, over those trying to save from average incomes, and has significantly widened the gap between the haves and have-nots.

 New Zealand is not exempt from uneven wealth distribution but doesn’t have the extremes of the countries mentioned later in this report.

It was inevitable that those who feel left out would find a way to be heard.

They are getting this opportunity at the polls as evidenced last year with the Brexit vote, which admittedly had many elements to it but for me the fact that a large number of older people voted to leave sends a clear message of dissatisfaction from those who have been toiling away in the system for years and are still waiting for the economic recovery to show up in their communities.

Older people have the benefit of reviewing how their lives and living standards have changed after years of working , owning a home, or renting, bringing up children, saving and preparing for retirement.

Clearly many older Brits believe they have been sold short.

Elections this year in The Netherlands, France and Germany will provide a measure of support for populist movements in these countries, with current indicators suggesting ‘’strong and growing rapidly.’’

A change of the guard seems inevitable in many European countries with the migrant crisis providing the ‘final straw’ to what was already a dysfunctional political and monetary alliance, in my opinion.

Donald Trump rose to prominence on the promise of making things better for lower and middle class working people.

At the very bottom end 50 million Americans, or one in every seven, rely on food stamps to exist.

Hardly a flattering statistic for the world’s largest economy and the hub of global financial markets.

Supposedly also the greatest place on earth for equal opportunity?

Not surprisingly global savings rates are also falling.

A recent survey, conducted by ING, concluded that 29% of people in Europe have no savings at all and a further third have less than the equivalent of three months’ pay put aside.

In the US the result was better with only 16% without savings but, of those Americans who do have savings, 41% have less than 3 months’ salary stashed away and six in ten Americans couldn’t muster up as much as $500 in an emergency.

41% of those people surveyed cited low interest rates as their main deterrent to saving.

Theresa May and Donald Trump have both acknowledged that inequality must be addressed before the social cost becomes unmanageable although I don’t see an easy fix and doubt the sincerity (and integrity for that matter) of at least one of these leaders.

What does encourage me in the US is that, in Trump, we are finally seeing some fiscal policy, for better or for worse, and it’s no longer just about monetary policy in terms of economic direction.

We will see if NZ politicians spot this trend by presenting balanced budgets rather than large fiscal surpluses.

For most of this century central bankers have had a much greater influence on the global economy than politicians and in many countries governments seem happy to watch the bankers experiment with their theories and academic models.

Janet Yellen and Mario Draghi provide the most obvious examples, although I think that the era of central banker dominance might be coming to an end.

Trump will replace Yellen with one of his own and I believe he will assert a lot of influence over that person, despite the supposed independence of monetary policy makers.

I think you will see the same pattern evolve in other parts of the world as leadership changes result in more inward looking foreign policies and fiscal policy taking the baton from monetary policy, the latter’s effectiveness now seemingly exhausted.

Admittedly Central Banks didn’t create the world’s biggest problem, the accumulation of too much debt, but their perseverance with low and negative interest rates has simply enlarged the debt pile.

Defaults seem inevitable although they could be years down the track.

One area where central bank policy has been hugely successful has been in driving up asset prices, particularly in property and shares, which has disproportionately favoured the wealthy and further widened the inequality gap.

A recent Wall Street Journal report on wealth distribution gave examples of the percentage of a country’s wealth held by the top 1% of its population.

Surprisingly Russia wasn’t on the list, although if 110 Russians own more than a third of the country’s assets it seems extremely likely that they would have qualified.

India topped the list as the world’s most ‘unequal country’ where it is reported that 1% of Indians hold 58% of the country’s total wealth.  This must change if it is to truly become the economy that commentators predict/desire.

They also provided a rather chilling example of the massive divide between the rich and poor in that the annual dividends paid by Spanish clothing retailer, Zara, to the world’s second richest man, Amancio Ortega, are equal to 800,000 times the annual wage of a worker employed by a garment factory in India.

It also stated that the combined wealth of India’s 57 billionaires is equivalent to that of the country’s poorest 70%.

Surely this level of wealth disparity is not sustainable.

India has recently adopted a plan to eliminate poverty within 16 years, although there were no details on how.

Others to feature on the list were Brazil (48%), US (42%), South Africa (42%), Mexico (38%), and Sweden (36%), Denmark and Germany (31%), Canada (26%) and France and Italy (25%).

Slightly more equal were the UK (24%), Australia (22%) and New Zealand (20%).

 

Supposedly the richest 1% of people in the world own 51% of the world’s total wealth.

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SOME clients and the public who attended our investment seminars have requested the notes outlining the subjects covered.

These notes were in a headline form only, but will be fleshed out a little, and emailed to those who requested them, next week.

We thank all who attended.

 _ _ _ _ _ _ _ _ _ _ _ _

TRAVEL

Edward will be available in Auckland (Remuera) on 17 February.

Edward is also in our Wellington office (Level 15, ANZ Tower, 171 Featherstone St) on Tuesdays, available to meet new and existing clients who prefer to meet in Wellington.

Kevin will be in Queenstown on 24 February and in Christchurch on 3 March.

Michael will be in Auckland (North Shore) on 28 February.

Anyone wanting to make an appointment please contact us.

Chris Lee

 

Managing Director

Chris Lee & Partners Ltd

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TAKING STOCK 2 February

OUR meetings around New Zealand with 1500 clients/investors in nine cities produced two often-repeated comments or questions:-

One:  Will interest rates rise in NZ to much higher levels than the rates of recent years?

Two:  What are the obvious risks to the encouraging signs of economic growth and investment stability in NZ?

Investment seminars are a useful delivery system for information, the main risk being the possibility of a grey subject curing insomnia.

However they rarely lead to any presenter offering any certainty on the big questions!

Interest rates in New Zealand and globally are most unlikely to rise extravagantly.

Indeed there is a global strategy to keep rates at zero level to avoid the damage to banks, governments and households that would surely follow any rapid rises in the costs of debt-servicing.

In New Zealand a dramatic rise in mortgage rates (say, 3%) would create havoc in those households which have borrowed hundreds of thousands to buy homes.

Not too many households could easily cope with a $10,000 rise in annual debt servicing. Consumption would suffer, job losses and tax revenue falls trailing the fall in spending.

My view remains that notwithstanding Trump’s appetite for immediate change, the interest rate strategy will change at a very slow pace.

I expect bond rates (medium and long term) will perhaps rise a little with credit margins being restored to saner levels, but I would regard it as unlikely that rates will rise significantly.

Mortgage finance may be harder to obtain but it is likely second mortgage lending will grow, albeit at rates reflecting risk.

So my guess is that for many years investors in bank deposits and senior bonds will receive returns in the 4-6% range, bank deposits at the lower part of the range.

Banks will be looking to curtail lending growth, focussing on retaining good clients, but foregoing growth to improve sustainability, and to ensure the banks can meet the higher capital ratios required internationally.

What may result from this lending constraint is a new round of corporate issuance, perhaps of capital notes, or convertible notes with equity credit, to help corporates with their credit ratings.

I imagine the large strong companies will fund growth by offering a security that pays interest quarterly at a lean rate, say 5%, but offers the retail investor, perhaps even institutional investors, some further upside.

For example if the investor could choose to accept cash on maturity, or a switch to shares at a predetermined price (say, a tiny premium to today’s price) then investors might be attracted.

It is also likely that the banks (ANZ, quite soon) may issue more subordinated debt, tier one or tier two.

Given our banks remain sober and well regulated, investors might continue to support these issues, though the margins will need to be more attractive than we saw from the banks in the latter months of 2016.

The second question about risks will also draw a range of opinions.

Clearly the risk of a serious aftershock from the Kaikoura quake is lower than it was before Christmas, but that risk is still not zero, and never will be.

Buildings shaken up by the quake on November 14 are not in better shape than they were then.

A second obvious risk is loosely described as geo-political risk.  Trade is our lifeblood.  Trump wants to rewrite trade practices.

There is no need to detail the unpredictability of events in the Middle East, the South China Sea, North Korea or the Nato/Russian border.

Nor do we know the future of the European Union.

Domestically our obvious risks are an unexpected fall in the value of commodity prices or a continuing rise in the value of our currency.

The latter is possible.  NZ is a rare developed country operating a fiscal surplus, repaying debt, enjoying full employment and economic growth, and not burdened with extreme sovereign debt.

Our banks and central bankers have repeatedly forecast a fall in the value of the NZD, effectively ignoring the currency buying that comes from immigrants, tourists, and ignoring the global sentiment that our policy-settings are robust, and our governance is reliable.

A return to a US dollar crossrate at much higher rates is possible.

Interestingly one of our most thoughtful chief executives believes that there is a risk that our appeal to tourists may continue to rise so sharply that we might undo the prospects of our tourism sector.

His thesis is that we have grown our tourism numbers more quickly than is sustainable, much faster than we expected, faster than our infrastructure can cope.

If numbers grow this year as rapidly as they grew last year, we may be unable to cater for the numbers, and may damage our reputation, affecting what is now our biggest export earner.

How would Queenstown cater for an additional 5,000 tourists each month; or 10,000 or 20,000?

We know Auckland Airport is not coping well now, as nearby roadworks create gridlocks.

The numbers coming here generate income but if the experience is of inadequate infrastructure, the resulting dissatisfaction is highly undesirable.

When I left Auckland Airport last week it took 30 minutes to clear the airport grounds, and that was NOT at a peak time.

Has New Zealand planned for the growth?

Can we allow hundreds of thousands of additional tourists to drive around New Zealand without separating the left hand side of our roads from the right, with a barrier?

Do we need to provide an army of personal drivers to keep our tourists safe?

Do we have enough hotels and rental cars, if numbers keep expanding rapidly?

Might we turn off those who dislike our prices (in part, higher because of the exchange rate), and expect more modern comfort stops, better road signage, multi-language directions, safer roads?

Is excessive growth of numbers a real long-term risk to our economy?

Some people at the centre of our capital markets believe excessive tourism growth, much earlier than planned, is a real risk to our economy.

 _ _ _ _ _ _ _ _ _ _ _ _

OUR investor meetings, followed by separate meetings with SCF investors who are hoping that a claim for compensation will be filed, were aimed at explaining our strategy to cope with the various puzzles that are being set for investors.

A large number of attendees asked for copies of our notes.  These will be emailed on request in a few days.

Others requested seminars in cities like Tauranga and Hastings.

Those who would attend such seminars are welcome to advise us, as this would assist with planning.

Those who attended the seminars are welcome to email with comments or suggestions on content, or any other matter.  We welcome suggestions.

 _ _ _ _ _ _ _ _ _ _ _ _

MANY investors expressed surprise at the practice in New Zealand of short selling shares to gain, by speculating on share price falls.

Short selling is the means by which money is made by those who wish to guess that there will be falls in the price of a particular share.

The speculator borrows the shares for a fee from someone who must hold the shares, or wants to hold the share.

For example an NZX Top 10 exchange traded fund must hold shares at a set proportion in the top 10 companies, and would only sell all the shares of the company if it fell out of the top 10.

So, to be practical, it owns Fletcher Building Shares (FBU), and will not sell them but it will lend them to selected borrowers (short sellers).

A short seller who believed FBU was about to lose value, might borrow, say, a million FBU shares from the ETF (or any fund manager).

The short seller pays a fee measured against the value of the transaction (say $50,000) and promises that in a defined time (say 30 days) it will return one million FBU shares to the ETF manager.

The speculator borrows and immediately sells the shares, say for $10.

One month later the speculator buys a million FBU shares and returns them to the ETF (or re-borrows the shares for an extended term).

If the share price has fallen to $9, the speculator has gained a million dollars (less the $50,000 fee).  If the price did not fall but rose, it might cost him $11 to repurchase, at which point the speculator has lost $1 million (plus $50,000).

Fund managers regularly lend their shares to speculators, carefully assessing the ability of the speculator to honour his commitment to return shares in the defined period.  Collateral is provided by the FBU borrower (speculator) to minimise the overall transaction risk.

Of some interest to all investors in ETFs or managed funds is the question of what happens to the $50,000 fee, obtained by lending the shares.

The shares belong to investors, not fund managers.

If, for example. Harbour Asset Management lent the one million FBU shares for $50,000, it would credit the fee to the fund that had the shares, improving the return for investors.

However the NZX Smart Funds, all ETFs, pay the fee to the manager, the NZX, so in this case the beneficiary of the $50,000 (return for rental and risk) are the NZX shareholders, not the owners of the shares in the ETF.

I do not imply this is improper.  If disclosed, this practice is a choice ETF investors have accepted, but fee-sharing would be a more proper outcome.

These fees do enhance NZX income and appear in the NZX income statements.

Many times, various parties have called for a ban on short selling, claiming it was simply ‘’gambling’’ and was inherently destructive.

Others claim it is a natural hedging mechanism and is no more destructive than any other derivative.

The practice is legal, managed well as far as I can see, and there is not much point in my citing market purity.

The practice, some would say, helps the market discover a true price for a security.

My only point is that it seems obvious to me that the owners of the shares held within an ETF might want to know of the practice of not crediting the fee to the relevant investors.

I assume that those that sell ETFs would remember, if they know, to disclose the separation of fee income.

 _ _ _ _ _ _ _ _ _ _ _ _

INVESTORS in two of the late Allan Hubbard’s oddball funds, Aorangi Securities and Hubbard Funds Management, are being asked to accept a small sum from Hubbard’s Estate.

Both funds were ‘’managed’’ by Hubbard personally and were mismanaged, to put it politely.

Hubbard did invest money in some things but he fabricated transactions, wrote to investors claiming non-existent trading gains, and behaved no differently from Bernie Madoff, in many ways.  Madoff, of course, fooled Americans with completely fictitious trades, costing investors billions of dollars.

Hubbard operated on a Kiwi scale.

Investors will have had back virtually all of their original capital but none of the fictitious gains that Hubbard recorded by hand.

Some believe Hubbard’s misbehaviour with HFM and Aorangi Securities played a role in SCF’s demise, claiming he was coerced into dreadful decisions in SCF by some who knew of his illegal behaviour in HFM and Aorangi.

Certainly, Hubbard made many bizarre decisions that seemed to have no benefit for him, for SCF, or for other parties he might have wanted to protect.  The decisions often benefitted others.

In some instances the only visible logic is that he was in danger of being exposed for his behaviour with Hubbard Funds Management and Aorangi Securities.

Investors in HFM and Aorangi will have ample reason to celebrate if they have had back their original capital.

 _ _ _ _ _ _ _ _ _ _ _ _

THE number of new companies joining the NZX might be impressively high this year but it now looks very doubtful that the often-touted Perpetual Guardian Trust sale will be one of them.

PGT has a view of its potential that is rather more optimistic than the views of some investment banks and bankers.

It is much more likely to be sold at a confidentially modest sum to an Australian capital markets participant, than it is to be listed by way of a new share issue, either here or in Australia.

My own view has always been that its ownership structure is impermanent and that the aspirational British entrepreneur Andrew Barnes has always planned a sale.

It now seems that Barnes and George Kerr shared a vision, when Barnes, armed with bank and mezzanine finance, bought Perpetual, borrowed more to buy the unloved NZ Guardian Trust, and then achieved synergies by merging them, with one or two tiny additions.

For a while Kerr and Barnes argued, wanting the Court to determine quite what the details of their private agreement were.

That dispute seems to have been settled, perhaps with a promissory note, which might convert to cash when Barnes manages to sell PGT.  Kerr may then cash in the promissory note, if that indeed is the mechanism used to resolve this dispute

The market guesses that to clear debt and repay Kerr, Barnes needs someone to pay $100 million for PGT, a figure well north of what I would value the company, but well south of the $150 million that Barnes may regard as achievable.  My valuation is nearer the $60 million Barnes seems to have spent on these acquisitions.

Very clearly the public should not pay anything like $150 million without evidence of significant growth potential for a business model that I regard as outdated and unsustainable, being reliant, as it is, on faith in its people to compete as a fund manager.

My view is that no one should allow any trust company to manage money.  I am not even sure that trust companies, in their current form, are sustainable business models.

The small number of skilled fund managers who provide any value for money do not, and in my view would not, work for trust companies.  Investors surely would want the best fund managers, not those who languish in trust companies.

Barnes now may be planning to repay bank and mezzanine debt, settle with Kerr, and move on, perhaps back to Macquarie, where he was a senior manager, his pursuit of an arbitrage with PGT ending in a trade sale to an Australian institution with a better ability to price and then manage PGT.

Whether I am right or wrong on PGT’s real value, it seems obvious to many that the sale of PGT to the public, for anything like the enterprise value discussed, is not likely to occur.

 _ _ _ _ _ _ _ _ _ _ _ _

TRAVEL

Edward will be available in Auckland (Remuera) on 17 February.

Edward is in our Wellington office (Level 15, ANZ Tower, 171 Featherstone St) on Tuesdays, available to meet new and existing clients who prefer to meet in Wellington.

Kevin will be in Queenstown on 24 February.

Michael will be in Auckland later in February (dates to be confirmed).

Anyone wanting to make an appointment please contact us.

Chris Lee

 

Managing Director

Chris Lee & Partners Ltd

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