Chris Lee & Partners Ltd

Taking Stock 29 January 2026

We should first acknowledge that the Fast Track consenting process is in its infancy. Accordingly, it is open to silliness, indeed childishness, as various parties test the boundaries of the process.

To be applauded is the convener of the Fast Track panel, Jane Borthwick, previously an environmental judge. 

She deserves great credit for her dignity and tolerance last Friday when her procedural meeting was hijacked by various parties. A process meeting was held to determine a time frame for the FTA panel to weigh the consent application of Santana's gold project at Bendigo-Ophir, near Cromwell, and to get advice on the required skills of the panel.

That meeting was crassly misused by some parties which conflated the time frame issue with their highly extravagant personal plans to disrupt the process. 

Their submissions at the timeline-setting meeting were often dishonest, irrelevant or misleading.

For example, the issues of the Treaty of Waitangi, the science behind modern mining, the engineering efficacy of Santana's infrastructural design, and the means by which the historic gold mining sites would be preserved had absolutely nothing to do with a time setting meeting, and little to do with choosing a panel.

The somewhat divided Otago Regional Council wanted the Fast Track maximum time laws to be ignored, claiming the need for 150 working days to process the aspects of the application that applied to the council. That would eat seven months from the start date.

Some appeared to want a right of veto based on the need to wish to preserve the “culture” of the Clutha River.

Santana believed that the huge quantum of science, prepared at a cost of nearly $10 million, provided the answers to all relevant issues of science. So they wanted the approval process to be done in 30 working days, 60 maximum. 

Santana would have noticed that the consent application was forwarded on November 30, and that January 23, the day of the time-setting meeting, was at least 25 working days into the time limit set by the Fast Track law.

Had the meeting discussed the time limits and found a workable compromise — say 60 or 90 more working days — and discussed none of the sometimes hocus pocus claims of opponents, then the meeting would have concluded and work could have started on setting the time frame and choosing the panel.

Remember that the point of the panel's assessment is to measure environmental risk against economic benefit.

The economics are pretty well unarguable.

The Fast Track panel will weigh the benefits against the risks to Santana's calculations of return, financial, social and environmental. (Santana proposes to enhance the value of the land it mines — its own land). It will include the benefits of some billions of tax paid to New Zealand, measured against perceived environmental risks which will be assessed with balance.

In essence, Santana must show that its mine would not poison the Clutha River or local water bores, that it would not create dust that poisons foliage, that it would not kill unique flora or fauna, that it would treat the water and sludge produced by the gold-extraction processes, and that it would not generate toxic levels of diesel fumes, or noise.

The panel will then deliver a verdict after the agreed time. Jane Borthwick’s ambition will be to leave no room for nuisance appeals. 

All the chatter about redistributing wealth being more acceptable than generating new wealth should not take up one minute of the process; no relevance to the process.

 Frankly, neither should Maori believe that private land projects are subject to an interpretation of the treaty.

Chairwoman Jane Borthwick showed immense patience and occasional glimpses of irony and humour during the more absurd presentations and claims made at her Zoom meeting. 

One hopes her experience and common sense will ensure the process is not abused by people seeking a platform to show off or enhance their public visibility.

Whether or not the project is consented is to be decided by a judgment of science and economics. 

I have no ability to forecast that outcome but would despair for NZ if the outcome was influenced by irrelevant chatter, or fee-chasing lawyers.

Borthwick's role is to prevent that, so science and economics can be applied. I have respect for her and confidence she will perform her role skilfully.

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The mayhem in Japanese bond markets is having a much more profound impact than causing losses to traders. 

Last week the 40-year Japanese bond, for so long yielding around 2%, was trading at double that rate, causing panic in the market.

The result that really mattered was that this very high Japanese rate incentivised Japanese investors to sell their US government bonds, repatriate the money to Japan, and invest locally at the highest rates that Japan has seen for decades. 

The implication for American investors, watching the money exit US bonds, would lead to a significant fall in the US dollar, inevitably leading to higher interest rates. Inflation links to falling currency.

The probability of higher rates in the USA, meaning even greater debt servicing costs, and consequently even higher fiscal deficits, spooked investors, everywhere.

Recall that in 2018 the long-term (10-year) Japanese bond rate was negative. That prevailed for at least two more years. 

By 2023 the (10-year) Japanese rate had reached 0.5%, still a figure so low that Japan, like New Zealand, should have filled its coffers for the next decade by ramping up its debt issues (at 0.5%). Grab the cheap money while you can.

Like New Zealand, Japan lacked political leaders with the gumption to capture the moment, costing their country through lost opportunity, tens of billions. The NZ cost was $10 billion, leaving a legacy that Ardern and Robertson, and the public sector, will not enjoy.

Between December 2024 and last week the Japanese 10-year bond rate doubled to 2.3%, and the 40-year rate soared to 4%. 

Japan is in the top bracket of indebted countries, its sovereign debt at 230% of GDP, worse even than that of Greece during its crisis years 15 years ago. 

Japan's nominal GDP is US $4.46 trillion, and grows at around 1.1% p.a. The new high interest rates there are sure to push up inflation, and eat Japan's tax revenues.

In these critical moments Japan’s new Prime Minister, Sanae Takaichi, (first woman to be elected PM) has called a snap election (in the next fortnight) and signalled some tax cuts, running an even bigger fiscal deficit and even higher sovereign debt levels, aping the formula of the very short-lived Liz Truss government in Britain.

The global bond market responded by selling Japanese bonds, in anticipation of higher rates when Japan raises more debt. 

Note that a 1% increase in funding costs slices US $44.6 billion from Japan’s government revenue.

In summary, these are the issues that led to a crisis resulting in Trump suggesting Japan and the US would combine to regularise the market in Japanese bonds. 

This may sound as if Trump has currency firepower. We shall watch what the bond market thinks of that and understand that a sceptical response might haunt Trump, who needs US interest rates to fall, and be less unaffordable.

Takaichi, and Trump, may be about to discover that the bond market, which funds the deficits of over-spending countries, have a bigger bazooka than any country head. 

Bond markets do not tolerate stupidity or those who cannot do arithmetic.

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The ODT (Otago Daily Times) editor, Paul MacIntyre, narrowly avoided a nasty clash with the Press Council when this week the ODT published a strong rebuttal of some very poor ODT journalism.

MacIntyre is one of the many ex-Brits who have retreated to NZ to climb the journalism ladder, advancing from roles in Radio NZ, Nelson’s paper and The Christchurch Press, to become Allied Press’s choice as editor of the ODT in 2023.

Until 2023 the ODT was my preferred NZ daily paper, largely because of its coverage of world news and the rural sector, and the absence of opinion-based columnists pretending to be journalists.

Whether MacIntyre is responsible or not for its current collapse into activist journalism, my judgement is that that collapse has occurred.

Central to that collapse is very poor editorial direction and a new, I consider careless, tolerance of some faux journalism from another ex-pat Brit, Mary Williams. 

The paper's coverage of the company that would transform Central Otago, Santana Minerals, has been atrocious, with Williams' sometimes unhinged, incorrect articles being part of a barrage of nonsense, including giving airtime to factually incorrect contributed columns from a local lawyer, a film star/property developer and a left wing Auckland academic.

The lack of balance reached its zenith last week when the ODT headlined a poor piece of reporting with the words that Santana's "consent application had 'faltered'". 

The poor reporting followed a Zoom meeting which debated whether Santana's consent application would take 30, 60, 90, 120, 140 or 150 days, Santana being pushed into recommending 60 days. 

The convener of the Zoom meeting did not make a decision on the suggested timeline, but fielded opinion.

Williams somehow mistook that deferral of a decision as an invitation to mislead readers with the claim of the consent bid "faltering".

The result was that one investor in Santana was spooked into selling some millions of shares on Monday of this week, a day when the Australian market and the Auckland brokers were closed, significantly reducing liquidity in the stock. 

The shares fell from $1.33 to $1.06, the spooked seller losing value of some hundreds of thousands of dollars. 

I have no idea who the seller might have been. Perhaps it was a bunch of investors from one nominee company.

But money was lost. There may well have been a link with a newspaper error that would not have occurred had the reporter and the editor performed their roles to the level of competence that I would expect. (Nobody would be spooked by the loonies on social media).

Two days later the ODT published a well-written response from Santana, which by implication highlighted the incompetence of what seems like an editor-approved campaign from an activist reporter.

My complaint to the Press Council had been drafted before I read what could reasonably be described as evidence of contrition, a Clayton’s apology, by the ODT.

The ODT’s chairman, Julian Smith, needs to investigate the paper’s mostly inaccurate and incompetent coverage of Santana’s project. The campaign is unintelligent.

The spooked share seller might not find it hard to link his loss to the silly reporting. The share price returned to $1.33, where it was before the ODT article, within hours of the appearance of the rebuttal on Wednesday. Publishing that rebuttal may have stopped a trip to the Press Council. 

The ODT would be lucky if there were no other repercussion.

Travel

12 February – Lower Hutt – David Colman

18 February – Christchurch – Johnny Lee

3 March – Ashburton – Chris Lee

4 March – Timaru – Chris Lee

Chris Lee 

Chris Lee & Partners Limited

Taking Stock 22 January 2026

James Lee writes:

“The best time to be CEO at Auckland Airport, James, is after the last CEO has just finished a wall of capex spend.”

I was sitting with the then CEO of Auckland Airport after a global roadshow and he was explaining that the enjoyment of the CEO role went in cycles, depending on capital expenditure (capex).

When the airport needed to invest large sums of capital, their clients hated them because airline prices were going to increase, they needed massive amounts of capital, large capex had lots of risk and the demand was always a risk. When they had just finished investing, prices would go up nicely because their returns were regulated, earnings would pay off debt, earnings per share would go up, keeping shareholders happy, and life was easier than the previous person had it.

It is this concept of cycles and business being hard that I want to talk about this week and then incorporate that discipline of cycles into our investment thoughts.

Over the break many of my feeds were full of geo-political commentators who, by and large, were just shaking their head at just how the US is behaving, whether that be internally or internationally.

The others were full of media and market commentators being incredibly critical towards a range of listed companies in New Zealand, or how bad employment and the economy had been, and finally some lamenting that the All Blacks had had a poor season.

Between these views it is hard not to be nervous and negative about the world.

The fact, however, is that it is easy to commentate after the fact that a company falters, or the All Blacks have been beaten. Most commentators have never actually done the job they are commenting on, and ignore the simple truth that running a company or being an All Black is hard. And I mean really hard.

The very best commentators don’t judge after the fact. They explain what led to the change and what to look for next time so you can see it coming.

In 2023 I listened to a podcast from a large investment bank where the investment manager was explaining that the key thing to watch was a change in tone towards Venezuela from the US. Venezuela was a top 10 country by value of its natural assets, but 128th on a GDP per capita basis. Eventually either the regime would change or the US government would alter its tone. To be fair to the commentator he never assumed it would be via force, but his logic back then seems pretty sensible today.

Therefore, reading commentators’ views, or self professed experts portraying hindsight gospel without explaining, is mostly noise, and does little to actually help inform our next decision. Frankly that should be their job, not to entertain but inform. Clickbait is for the mindless.

Jim Cramer, John Oliver, Hasan Minhaj and Madison Malone all do a decent job using their roles to inform on different topics for those wanting some easy to watch versions.

In 2026 at Chris Lee & Partners we want to focus on helping, what to look for going forward, as I am sure our clients will know by now, we think the world is very tightly wound with lots of relatively large risks that are almost unforecastable. My central view is that logic always prevails, but in this case it might take time.

Over the past seven years, the economic environment has been tremendously difficult, the normal economic cycle was running out of steam in 2019 but we then got Covid, collapsing interest rates, massive debt build up, huge input inflation, trade disruptions, two wars, surging energy costs, employment went up, especially as people invested into IT, then rates went up in almost a straight line and now AI is leading to spiking unemployment in white collar jobs.

To say a company is poor because it didn’t navigate that set of events well is insane. What matters is what it does next and how it is set up for success.

Xero is one my favourite companies. In that time period its stock has gone from $40 to $140, back to $70, then $190, and today back to $100, so in 7 years it outperformed the Nasdaq but over the last five years materially under-performed.

That doesn’t make it a bad company. Business cycles, investment cycles, and economic cycles are long and hard.

Two things matter in investing; being on the right side of that cycle, and the management team/ board being aligned to the right things during those cycles.

The company I am going to use to highlight that is Fonterra.

Fonterra is New Zealand’s biggest company, with revenue last year well over $20B. What many forget is that it is a young company. Fonterra was formed in 2001 with the stated purpose to build a unified, farmer-owned co-operative that would be globally competitive and deliver strong economic returns to New Zealand dairy farmers. Within two years both the CEO and Chair were new, and began the era that was dominated by Henry Van Der Hayden and Andrew Ferrier.

The first phase (or Henry & Andrew phase)

In 2001 Fonterra was a new company with a new CEO and new Chair. It began its life by expanding globally. Between 2003 and 2011, Fonterra grew into Australia via Bonlac, formed a joint venture with Friesland Campina, entered China with Sanlu, Chile with Saprole, and formed Dairy Partners America with Nestle. I would argue it did what the farming community asked. Debt actually fell until it undertook a large capex upgrade.

Van der Hayden and Ferrier oversaw Fonterra growing from 12B of revenue, a circa $4 milk price and 500m EBIT to 20B of revenue, $7.6 milk price and $900m of EBIT. Now I would note that revenue growth and the milk price are highly correlated.

The second phase (or John & Theo phase)

Two things changed in 2012; new leadership, with both CEO Theo Springs (a 30-year global veteran most recently from Friesland Campina) and chair John Wilson taking the rein. The co-op listed the Fonterra Shareholders Fund and began to act like a listed company. Consultants were brought in for enormous fees to change strategy, and the company began a new 6-year plan.

This period saw a few things happen. The company’s plan was to double EBIT from 1B to 2B, so it rapidly expanded its balance sheet, with debt going from $3.8B to $7.2B at its peak. It invested heavily into China, both directly into farms and an infant formula brand, which would appear at face value to have cost them $1B in losses.

Revenue from 2012 to 2017 was flat, EBIT fell from $900m to $750m, the milk price fell from $7.60 to $4.60, and as mentioned before, debt levels went up significantly.

Culturally Fonterra was viewed as a big corporate now, and was widely viewed by the corporate world as arrogant, self important and showing too much interest in what a small contingent of its stakeholders (i.e. the capital markets) thought. Salaries were plump and farmers were broadly unhappy.

It would be easy to say that this period was just poor execution, poor leadership, or bad luck. Critics of listed companies would say that the problem with listed companies is that incentives drive behaviour, and that while only a tiny proportion of its equity was provided by listed market investors, they had too much influence vs the other stakeholders.

But I think this is too simplistic. In 2007 Fonterra was reviewing its capital structure because the dairy industry was growing more competitive, and the legislation was such that Fonterra had to buy back any equity when farmers wanted to sell, leaving its balance sheet inappropriate, given the ambition of global expansion.

It had two options: change the capital structure to support the strategy, or change the strategy to work within its capital structure.

 It chose to try to change the capital structure. It was this decision and the ultimate execution that failed, and in a large part it failed because the actual people funding the strategy, being the farmers, had had enough and effectively took back the company.

2018 to today (the Peter and Miles era)

After six years of investing, nearly doubling of debt and flat EBIT, the board of Fonterra clearly had a long look at itself. One of my favourite analysts wrote that, since inception, Fonterra had invested billions of capital but had returned less than 200m of free cash. It would have been better to have just taken those billions and bought Nestle shares.

In 2018 the board took the view that somewhere between 2003 and 2011 it had lost its connection to both its stakeholders and its purpose. It made a number of hard choices, including cutting the fund, selling assets and simplifying the business to focus on its actual purpose, being to deliver strong returns to farmers, not build a global empire.

It sold pretty much everything non-core - China, Chile, DFA, Tip Top, investments and finally Mainland. It gave farmers a few billion dollars back and reduced debt to sustainable levels.

Today Fonterra appears to be a focused co-op that will stick to its actual purpose and what its actual capital providers want. My bet is the corporate veil continues to dwindle and over time it becomes an increasingly simple business – a cooperative.

To put some context, revenue in 2026 was 26B, EBIT in 2025 was over 1.7B, nearly double what it was in 2018, and debt is now very much under control.

Summary

The listed history of Fonterra had two clear stages, the 2012-2019 and 2019 to today period.

Reading this cold, you would have said the stock would have declined from 2012 to 2019 and then gradually recovered from 2019 to 2025. The truth is that, between 2012 to the start of 2018, the stock was broadly flat, with some good days and some bad periods. The stock began its slide at the start of 2018, falling from over $7.00 to $2.5 in 2024, and really only recovered once the Mainland sale process started. But today the share price is back to levels of 2012.

My take on this is that markets often stay positive too long when cycles turn, i.e. give companies the benefit of the doubt, and then take a long time to believe that a cycle has turned, and are then too pessimistic when the cycle has turned.

What can we learn from this for our 2026

Businesses, no matter how big or profitable, need a few simple things - a clear strategy that is agreed by its stakeholders, a structure to support that, and the resources to execute. It doesn’t matter if you are running a 20B revenue dairy company or corner dairy. Those three things are uniform in business.

Businesses go through cycles, even good businesses. Sometimes it might be the economic cycle, sometimes it is the commodity cycle, but being disciplined and ensuring your strategy meets the needs of your stakeholders is critical.

It doesn’t matter whether that is Disney, Nike, Fonterra or Xero, they will go through those cycles. Half of their choices are affected by random, unpredictable events.

As we look for investment opportunities this year we need to do two things - look at our winners who appear to be doing really well, and look at the stocks everyone is saying are terrible companies. It’s like Spark at $5.00 and Fonterra at $2.5; sometimes the opportunities are when everyone loves one or hates the other, an emotional, illogical mindset.

We should be looking for where the board and management team are making significant cultural and structural changes, and finally we should be patient. The markets will not reward these companies instantly when they turn around, but when they do we should be willing to look.

So in 2026 we will reopen the file on Fletchers, Sky City, Warehouse and Air NZ, given the changes they are making to see if our position should change, and we will check that we aren’t complacent on some of our traditional winners like Infratil, EBOS and Fisher & Paykel Healthcare.

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Travel

23 January – Wairarapa – Fraser Hunter (FULL)

27 January – Christchurch – Fraser Hunter (FULL)

28 January – Auckland (Albany) – Edward Lee (FULL)

29 January – Auckland (Ellerslie) – Edward Lee (FULL)

12 February – Lower Hutt – David Colman

13 February – Blenheim – Edward Lee

18 February – Christchurch – Johnny Lee

3 March – Ashburton – Chris Lee

4 March – Timaru – Chris Lee

James Lee

Chairman

Chris Lee & Partners Ltd

Taking Stock 15 January 2026

ONLY a few weeks ago, Taking Stock suggested to our investment clients that an investment return in 2026 of 5% might not be ambitious, but it could be achieved in New Zealand with little risk, and considerable daily visibility of progress.

Only a few days ago the democratically-elected president of the world’s strongest economy, Donald Trump, foreshadowed his plans to make the US stronger.

He introduced new risks that no New Zealand investor would have foreseen and that, to date, have not had a financial market response.

1) He declared it lawful, and outside the checks and balances of government, to bomb a foreign country as part of a procedure to arrest its president and his wife.

2) He declared it a legitimate strategy to use force to take over another country (Greenland) and foreshadowed a plan to “deal to” Colombia, Cuba and Mexico.

3) He stated that the controller of his plans was not US or international laws or procedures, but his own personal morality, measured by himself – judge and jury. His goals included reducing global oil prices, evicting governments that are corrupt, and preventing the entry to the US of dangerous drugs and illegal immigrants, as well as dictating bank lending rates.

Effectively, if all his plans were executed that would mean the world order had been handed to one US president.

To the World Health Organization, the United Nations, the World Trade Organization, the Climate Change Accord and the International Monetary Fund would be added NATO, the European organisation that has successfully curbed bellicosity in Europe since it was established in 1949. Trump would have dealt to them all.

All these organisations or agreements aimed at maintaining peace would need to go forward without American cooperation.

You can see easily why the first week in January this year will have provided a picture of new risks that cannot easily be weighed.

Yet the new risks affected no asset prices. Markets were either asleep or indifferent to what these changes will mean to the global order, and to asset prices, though oil, gold and silver prices rose.

If you believe this was a response calmly considered by financial markets everywhere, you must assume the world has endorsed Trump as the boss of everything, with the military might to do as he pleases.

For New Zealanders, the start point of any dissenting views may be to consider what effect Trump and the US is having on our own financial markets.

We read (from KiwiSaver managers) that the value of KiwiSaver accounts is predominantly influenced by US stocks, with some 70% of investor money allocated to those managed funds that are dominated by US stocks.

We know that 40% of the US S&P500 is made up of 10 stocks, most of which have borrowed hundreds of billions to invest in Artificial Intelligence. AI is an exciting concept but yet to be successfully monetised. Clearly our KiwiSaver returns are heavily dependent on the successes of those who will seek to monetise AI.

What we may not know might be the underlying short-term signals that seem to suggest the US is headed for an inflationary boom that is inevitably followed by an inflationary bust. AI will not be immune to that risk.

What will those phenomena do to the prices of the sort of assets that sit in the NZ$120 billion managed with a varying range of skills by our various KiwiSaver managers? We do know:-

1) That Trump’s tax cuts begin in 2026. These cuts will be relevant to high-income people. They invest their surplus savings.

2) That hundreds of billions have been borrowed to leverage the returns should AI be successfully monetised. (There are varying views on the likely time frame of monetisation. Some say many years, and not before some fallout.)

3) China seems to match AI progress at much lower costs than the US. Will the “Magnificent Seven” remain immune to competition?

4) The US and Russia are spending hundreds of billions of tax money, or borrowed money, to gain dominance in their areas of interest, like Ukraine, the Middle East and Latin America.

5) That the US and virtually every other country is running fiscal deficits, lifting debt levels, and relying on very low interest rates to ensure debt can be serviced. Put that another way – most relevant economies, including New Zealand, are spending larger sums on debt servicing and rely heavily on the savings of other countries to fund their government spending. If more debt fuels inflation, debt servicing will make a bigger hole in government nett revenue.

But we also know of the following internal conditions in the economy over which Trump resides, constrained only by what he describes as his personal “morals” but not constrained by long-established checks and balances (like Congress and the courts).

Read this carefully.

We know that:-

1) In 75% of the past 50 years, the US S&P500 index has risen. Rarely has it risen for four consecutive years. If it rises this year, it would be the fourth consecutive year.

2) Of 21 Wall Street analysts, 21 (100%) are forecasting the S&P5000 will rise in 2026. The average of all their forecasts is a rise of 10.29%. Of the big names, Deutsche Bank forecasts 16.3%, Morgan Stanley 13.4%, Goldman Sachs 10.49%, and Bank of America 3.22%.

3) The S&P500 relies on the technology sector. Year on year it is up 11.8%, while the manufacturing sector figure is 1.5%.

4) Consumer spending is up 2.6%, but disposable income has risen 1.5%. Is the spending based on use of long-term savings or on ever-more consumer debt?

5) Hiring is at a 15-year low. Firing is at a 5-year high. Workers are being pushed into part-time jobs, obscuring the real employment rate. Fulltime jobs are up 0.6%. Part-time jobs are up 6.6%. What does this imply for average incomes? Unemployment for those 25 years and older is at 3.7%. For those aged 20-25 the rate is 8.3%. Young people are struggling in the US, as they are here in New Zealand.

6) The labour share of national income is at an all-time low of 55%. Historically, that figure was nearer 70%. Investors get a much higher share of national income at the expense of the workforce.

7) For seven straight years, the US fiscal deficit has exceeded 5% of GDP, despite tariffs. Debt compounds exponentially.

8) Wage growth is up 3.5%. S&P earnings growth is up 23%. The inequality divide is growing at speed. Those dependent on wages are watching asset prices soar.

Do these facts paint an optimistic picture of the world’s largest economy? Perhaps they point to the accelerating rate of inequality. Perhaps that points to the stress leading to the changes to democracy and the world order which Trump and other messianic leaders seek to use in their quest to hold onto power, in a highly-stressed world.

Can democracy deliver a solution?

One of New Zealand’s deep-thinking business leaders recently posed this question: What would be the outcome if the workers in a company voted for the chief executive’s role, choosing the person who promises to borrow the most in order to pay the workers more?

Is this what “democracy” eventually encourages?

NZ investors are bound to observe these developments. Some will seek to align their investments with those outcomes that investors can reasonably observe.

A month ago our chairman, James Lee, suggested in Taking Stock that most investors should limit their risk to the strategies that have a high probability of delivering a 5% after-tax return.

He noted the risks in New Zealand were visible and could be assessed within reason, and for that reason suggested that 5% target made sense for investors in 2026.

The Wall Street people see 10% as their target. One wonders what Trump will do to deliver that, in a year when there are mid-term elections to decide whether Congress supports Trump or makes him a lame-duck president (or is it lame goose?).

Surely, one day, an adult in the room will call a stop to borrowing, booming inflation, and bust. As a strategy to maintain power, it might work if democracy is exercised by the self-focused.

As a strategy to deliver a better country, or world, it seems, to a cricketer, like Bazball on amphetamines. Madness.

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LAST week’s Taking Stock offered the government a way forward to stop the misuse of the law aimed at delaying progress on important projects.

I suggested the law should require a bond to accompany any attempt to use judicial reviews to delay approved projects.

The bond would have to be large enough to cover court costs and compensation, should the judicial review fail.

I referred to this bond as a “sustainable tariff”, intending to bring home the cost of delays caused by small, unelected platoons of people with no financial commitment, seeking to block approved major projects.

Major projects are what will deliver productivity gains, better paid employment, real tax revenue growth, higher exports, and thus real recurring income to pay for social services. Surely such a strategy is more desirable than further debt.

One hopes that Shane Jones is ruminating on the prospect of imposing bond conditions on protest groups.

_  _ _ _ _ _ _ _ _ _ _

THE surging price of gold, up 70% in the past 12 months, has been explained by recent statistics.

Central governments are now buying gold more enthusiastically than they buy Treasury notes.

Graphs show that many large countries are building their gold reserves.

What we also learn is that Russia, India, China, Brazil and South Africa are planning to introduce a new global digital currency backed by gold, oil and other commodities.

Gold is intended to be 40% of the backing.

The world produces a little more than 2000 tonnes of gold each year, some of it consumed by electronic products.

Governments are buying much more than 2000 tonnes. The reconciliation between production and demand is based on the sales of stored gold, by nations who will sell - at a price.

Footnote: some producing countries like Canada, Australia and even New Zealand do not store gold in vaults. Those countries can mine gold providing their laws allow it.

_ _ _ _ _ _ _ _ _ _ _ _

BNZ Bank – 5 Year Senior Note Offer

BNZ Bank (BNZ) has announced its intention to issue a new 5 year senior fixed rate note.

Although the interest rate for these notes has not yet been announced, we anticipate a rate of approximately 4.20% per annum, based on current market conditions.

BNZ will not cover the transaction costs for this offer. Therefore, brokerage will be charged to clients.

If you would like to register your interest, pending further details, please contact us promptly with the amount you wish to invest and the CSN you plan to use.

Please note that indications of interest do not constitute any obligation or commitment to invest.

_ _ _ _ _ _ _ _ _ _ _ _

Travel

21 January – Wellington – Fraser Hunter

23 January – Wairarapa – Fraser Hunter

27 January – Christchurch – Fraser Hunter (FULL)

28 January – Auckland (Albany) – Edward Lee29 January – Auckland (Ellerslie) – Edward Lee

12 February – Lower Hutt – David Colman

13 February – Blenheim – Edward Lee

Chris Lee

Managing Director

Chris Lee & Partners Ltd

Taking Stock 8 January 2026

THE New Year started on a positive note for investors, with the Financial Markets Authority undertaking to determine action to protect them.

Often criticised by random media commentators with but passing understanding of its challenges, the FMA today has recovered after losing two excellent leaders in Sean Hughes and Rob Everett, both of whom rebuilt the financial market regulator after its predecessor had had a decade of poor performance and dreadful leadership.

The common link in the regulator’s successes for decades has been its senior counsel Liam Mason, an accomplished commercial lawyer happy to stay out of the public eye over the past 25 years. His service has been heroic.

If walls could speak, they would tell an uncomfortable story about earlier years. The regulator endured a period marked by weak ministerial oversight under Lianne Dalziel, flawed executive leadership under Jane Diplock, and a number of directors who lacked the experience, energy, or clarity expected of a governance body.

Some were poachers with no sense of a gamekeeper’s responsibilities.

One was so dreadfully beyond their suitability for the role that the then chairman, tired of listening to their babble, instructed them to be silent at board meetings.

Some of the people chosen to introduce financial adviser rules were asked to resign following evidence of their unsuitability for the roles they had sought. The regulator endured some awful years. Mason battled on.

The restoration of respect had much to do first with the energy and competence of Hughes, an ex-banker and the original FMA chief executive, and later the wisdom and experience of Everett, the second CEO. Both relied heavily on Mason.

Today the FMA, led by Samantha Barrass, has focussed on several key issues. Investor protection seems to be high on the agenda.

Hampered by rapid staff turnover, the FMA now has a better budget and has displayed its new retail investor protection role with strong action, in recent days against a privately-owned Rangiora start-up run by one Bernie Whimp, who named his company Chance Voight. Whimp, a rural town opportunist, has a history going back to a failed second mortgage lender (General Mortgages), from which he departed bankrupt, convicted of a technical crime and banned from company directorship roles in the early 2000s.

Whimp later paid off his debts and scooped up what he says was around $8 million by offering the unknowing public cash offers for listed securities at a rate well below market prices. Buying at a false price he then sold at the market price, benefitting from his low-ball purchases. Ultimately he was thwarted in this aspiration which aped a similarly anti-social endeavour practised in Australia.

Whimp now describes the success of his low-ball offers as coming from a social service to “help” people who did not know how to sell often small parcels of stock. He made it easy for them.

Later Whimp sought to buy South Canterbury Finance preference shares and had some luck when very few wanted to engage. This was fortunate for him. Thanks to the appalling leadership of Key’s Cabinet and errors by the Justice Department, the SCF preference shares became worthless.

Whimp presumably had believed some of the uninsightful guidance of one Samford (Sandy) Maier Junior who forecast a future for SCF investors without accuracy and in my view without even a smattering of the understanding needed to shift the forecast beyond the rating of “clueless”.

So Whimp, armed with some modest coin after clearing bankruptcy, has since promoted himself as an inspired stock picker and skilled money lender, on his website being described as New Zealand’s best stock picker.

He promoted the tiny group he named Chance Voight and by using exemptions available for those who service only wholesale investors, advertised largely in the South Island. Assisted by an accountant (and lawyer) Paul Currie, he raised some millions from “wholesale” investors and set about mortgage lending to property developers, while from investors he sought money with which to chase 20% per annum returns from the Australian share market.

I sought from the FMA guidance on what constituted a fit and proper person. Did such a definition embrace anyone who had had a failed finance company, had been bankrupted, convicted of a technical crime, been banned from a director’s role and been barred from making lowball offers by the market regulator? Perhaps I am about to receive the guidance.

Mason, to his credit, set in place investigations, possibly not prioritising the case because it seemed the money raised was not so much modest, as so shy of a sum that it barely was noticeable. Mason must prioritise where the biggest threats to investors are sitting.

In the past weeks the FMA tired of being unable to confirm that Chance Voight was solvent and was unsure whether its structure met the intentions of the Financial Markets Conduct Act. 

So the FMA requested that Chance Voight and at least one of the linked companies be liquidated, just before New Year.

Money in various companies linked to Chance Voight was ring-fenced.

Whimp is free to use his own money, though that must also be of little magnitude given his recent plea for investor help.

We know this as the FMA reports that Whimp has asked his clients, maybe numbering a few hundred, to donate money to him to enable him to fight the FMA action in court. Legal representation is affordable only for the pecunious.

The FMA has warned investors to “understand” the risks of advancing any money and has suggested to his clients that they consult a financial adviser.

Whimp has stated that if he is not reinstated to pursue his ambitions, up to $28m of money would be put at risk.

I have never met Whimp and am interested solely because of my view that only fit and proper people should be running financial services companies. We need guidance on the determination of a fit and proper person.

My personal definition does not coincide with the record of infringement that appears to be in Whimp’s history.

The FMA is to be loudly applauded for devoting some budget to investigating Chance Voight and for placing investor protection at the top of its agenda.

If from this action we get binary definitions on the question of a fit and proper person and get clarity on any liability from accepting advertisements from those not eligible to pursue investor funds, New Zealand would have taken two giant steps forward.

Whimp and his companies would then have performed a real service to investment markets by prompting such clarity.

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TWO more agents of the Crown won widespread applause from investors and financial market plaudits over the festive season.

The High Court made a predictable but nevertheless meritorious decision when it banished the Talleys group from the defamation case it had most unwisely filed against TVNZ for a programme the TV station had screened, trenchantly condemning Talley for its allegedly casual health and safety attitudes.

In what was a rare example of a TV investigation, TVNZ 1 had quoted unnamed staff and displayed photographic evidence to support a criticism of the privately-owned fishing company and food processor.

Whoever advised Talleys to prolong its time in the spotlight would not meet my definition of a seasoned corporate advisor.

From its days when Ivan Talijancich began a small fishing company in Motueka, his sons Peter and Michael (now know as Peter and Michael Talley) have grown Ivan’s company into a giant, one of New Zealand’s largest unlisted companies.

Fishing is a tough business not suited for sooks. The Talleys had the flint and the bloodymindedness to overcome their competitors and eventually expand into the somewhat kinder environment of food processing. This sector succeeds by eliminating wasted costs. Rarely is it seen walking up the aisle with trade union bodies.

TVNZ 1 is hardly an arm of the media that makes or breaks large private companies. Generally its investigative journalism has deteriorated to a kindergarten level. In this case, its criticism clearly raised contestable issues and clearly cast Talleys in a poor light. It was a brave but rare exception.

Such criticism almost never produces a great outcome for a company that alleges defamation or even damaged reputation. Companies win defamation cases only when they can prove they have suffered measurable losses because of unfair criticism.

It is highly unlikely Talleys would want to open its doors to build a team that would prove it has suffered damages. Its advisers should have told Talleys to move on, and maybe tidy up any unnecessary issues, rather than drag out the spotlight on its alleged poor practices.

The High Court Judge dismissed what would have been an expensive case from which lawyers emerge with stuffed pockets, and the plaintiff emerges more bruised than necessary, having wasted executive time and a huge sum of money.

If Talleys had been a listed public company now holding a public annual general meeting, it would surely have endured grumpy shareholders, questioning the value of what would have been a multi-million dollar investment in a defence of a mildly bruised reputation. Talleys made an inexplicable mess of its response to TVNZ 1.

Full marks to the judge whose decision should help investors from seeing their money be bonfired in any future similar argument.

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YET another agent of the Crown, the Fast Track Panel, also displayed skill and reason when it consented the Waihi North resource consent application to mine for gold under conservation land.

The panel cited the extreme value of the gold resource, noting billions of dollars of exports, a billion or more in taxes and royalties, hundreds of well-paid jobs, a lift to the country’s productivity and GDP per head, and by implication another boost for the area around Waihi.

In approving the application, the panel implied the benefits overwhelmed the opposition who argue against each and every extraction proposal. These people are entitled to their opinion. They do not have any other rights.

In taking this approach, the Crown-appointed panellists eased the fear that poorly-informed news media, like the Stuff Group and the Otago Daily Times, might set the agenda for future Fast Track decisions.

The panel instead did what any half-decent journalist or environmentalist should have done — visited the towns around the working mines and conducted research on what effects the mine has had on the people, the economy and the ecology.

Assisting the panel in taking an adult view was the Waitaki MP Miles Anderson, who wrote an unemotional support article for a proposed mine at Bendigo, near Cromwell.

Anderson is a man who has made his career on the land, later representing other farmers as chair of Federated Farmers, and later still coming into government as an MP. Like virtually all farmers, he prioritises the environment, knowing that sustainable practices mean survival and a long-term future. Farmers own land. They cherish it, except in very rare examples.

Macraes mine, near Oamaru north of Dunedin, has extracted millions of ounces of gold over the past 35 years via open pit and underground mining. It employs 600 people, making it easily the biggest employer in Oamaru and a huge contributor to the area.

Anderson, the local MP, found that all bar a handful of local people are highly supportive of Macraes, now owned by Canadian listed company OceanaGold, which also owns the mine at Waihi.

A technical report of 209 pages filed in December 2023 noted that overall no material environmental issues have arisen. Macraes has been a responsible miner for more than 30 years. The Oamaru water supplies have not been ruined, toxic dust has not destroyed nearby crops, tourists do not avert their eyes but in large numbers do visit the mine.

The Fast Track panel clearly considered the views of locals and, leaning over to be fair and wisely decoding the hysterical language of some opponents, had weighed the advantages with any, usually temporary, scars caused by extraction, and considered carefully the scientific and technical submissions.

The panel would have ignored the nonsense such as claims that no tax is paid, that hundreds of tons of rock are dug up to obtain a gram of gold (why would anyone do that? A gram of gold is worth around $240) or that toxic dumping destroys local rivers.

This display of respect for science, respect for credible opposition, but without time wasted on monkeys banging saucepans, has lifted Australian and NZ investor respect for the consenting process.

The discount on the value of the Bendigo / Otago project has been mildly reduced, the market value of Santana Minerals rising a little as a result of this display of common sense.

I suppose long-term media observers, such as me, were not surprised that not a single daily paper reporter visited Oamaru and recorded the facts - the economic benefits and the absence of environmental disasters after 35 years of mining.

If the Fast Track process is to be sabotaged by frivolous attention-seekers, the government ought to regulate the need to provide substantial bonds to compensate for any losses and legal costs. Perhaps that bond could be described as a sustainable tariff.

Over the past 45 years I have lent money to, and invested in, many mining ventures. My experience is that respected gold miners have built wealth in NZ and provided careers for thousands of New Zealanders.

As regularly disclosed, my family are minority investors in the Bendigo project and in another potentially valuable project at Waikaka.

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Travel

21 January – Wellington – Fraser Hunter

27 January – Christchurch – Fraser Hunter

Chris Lee

Managing Director

Chris Lee & Partners