Taking Stock 29 November 2018


AS the people of Christchurch debate the sale of ancient aquifers to a Chinese water bottling company, the late South Canterbury money man Allan Hubbard might be heard muttering from his coffin.

Hubbard owned the land on which the aquifer is located, at Belfast, on the Christchurch city fringes.

I can guarantee that were he here today the aquifer resource would not have been sold to the Chinese, or anyone.

Hubbard bought the land when the Belfast Meat Works closed, recognising that the strategic value of the land was far greater than its cost.  He spent about $10 million buying around 200 acres, the price being so cheap because the land had been contaminated by the meat works.

Asbestos building materials were suspected.

Meat Works had buried all sorts of material in the land.

Years earlier Southdown in Auckland had closed its meat works.

The canny Auckland entrepreneur John Sax took the risk of borrowing to buy the land and decontaminate it.  After rehabilitating the land, it was rezoned and the entrepreneur pocketed perhaps a $100 million gain, a one-off transaction converting him to a position of extreme wealth.

Hubbard observed this.

In Christchurch both the Belfast and Islington meat works closed down.

In both cases for a modest sum Hubbard bought the sites, in the case of Islington sharing the purchase with the Gore businessman, Ian Tulloch.

Belfast’s site was decontaminated during a project led by the Wanaka property consultant John Coers, a meticulous specialist who patiently worked his way through the process which includes hearings and rezonings.

Today Belfast has a huge area zoned residential, comprising some 600 sections, probably worth nearer $200 million than $100 million, and it has a large area zoned industrial.

The Belfast Residential Park gained value after the dreadful Christchurch earthquakes, but its greatest boost came from its decontamination and subsequent rezoning.

Were Hubbard alive, and had his finance company South Canterbury Finance survived, the Belfast added value would have been a major boost to SCF’s capital.

Islington’s site, now a blossoming industrial park, has increased in value even more dramatically. Hubbard’s half share would be worth at least $125 million.

My book being published in a few months will discuss this sort of subject, but clearly Hubbard’s shortcomings did not include blindness to such opportunities.

At Belfast his land sat on the aquifers, said to be ancient, clear waters of a purity that is rare.

The manager of the Belfast re-zoning project, John Coers, knew of the value of the access to this water.  The residential area would have retained it, had Belfast not fallen into the hands of others. Years ago he strongly opposed a sale to the entrepreneur who has now achieved ownership of the aquifer.

Curiously, Belfast’s coveted site has continued to be associated with Hubbard people, its residential park now managed by an ex-Westpac and SCF lender and asset manager, Ian Thompson. Also involved in the sale was Mike Coburn, once a controversial property consultant used by SCF.

Just as curiously, a Christchurch entrepreneur with links to Westpac and SCF was involved in a sale to the Chinese bottling company, capturing a life-changing fee from the sale process. Phil Burmester was once a business partner of Thompson.

Access to the aquifer clearly has not been regarded as crucial for Christchurch’s water supplies, its control of water, its availability for the 1000-plus people who will live in the new residential park, or regarded as necessary supplies to fire hydrants, or other emergencies.

Burmester has made a pretty shilling by selling this asset of nature.

Selling a water supply to foreign buyers was never a part of Hubbard’s plan. I can guarantee that Hubbard regarded the control of water, and the use of land, as New Zealand’s most sacred assets.

Of course he fought for irrigation throughout the South Island and was a loud voice in the building of the Opuha dam in the South Canterbury area, which ultimately converted thousands of hectares, flood-prone and then parched, into productive land.

The significant increases in cropping and dairying resulted from the rehabilitating of the land and led to major economic boosts for the area.

Fonterra built a new dairy factory, McCain’s built a cannery, the Port of Tauranga extended its facilities and literally hundreds of jobs were created.

No one should forget the significant achievements of Hubbard. Nor should he be viewed only from the angle that highlighted his collapse, some of the blame for his collapse being attributable to others, as my book will display.

One imagines that if he were able to observe others selling Belfast’s aquifer, he would have been stitching together a deal to buy out the Chinese and repatriate the H2O.

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TWO of the characters involved in the sale of the water go back a long way, having been involved in a failed property development many years ago.

Both have had many connections with the finance companies and property developments prior to 2008, and both are fairly typical of a property development scene in Christchurch which has visited all ends of the spectrum.

One day some inquisitive energetic journalist will venture into that Christchurch property world, which has some fairly dark corners, as well as examples of persistent decent people who have helped Christchurch develop, no better example of good development being the Rolleston suburb, which began with a waste water system designed and paid for by entrepreneurs, later to be on-sold to the council, enabling the area to be developed.

At the opposite end of those visionaries have been a large group always in danger of bankruptcy, operating in the shadows, enabled by poor council practices, third-tier lenders and one must say, a high level of skulduggery.

One must imagine that one day the enforcement of higher standards will bring about change, perhaps prompted by a more vigorous media.

To date, the laws, the energy, and the lack of concern have not been in tune with New Zealand’s aspiration to be transparent and corruption free.

My book will be proposing a review of a great many laws and practices which enabled the transformation of South Canterbury Finance, from a stable status to a bottom-tier lender with a depleted fire-fighting force but with ample access to arsonists.

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NOW that Kiwibank has signalled its intention to abandon its NZ Post-shared quarters, look for a new round of NZ Post closures.

Without the foot traffic of Kiwibank customers, NZ Post will be able to display that its visitors are falling dramatically.

NZ Post is almost certain to follow Kiwibank into local supermarkets, open all hours.

I would not want to own small buildings in small centres and be dependent on rent from a short-term NZ Post lease.

In Wellington, two large suburbs, Johnsonville and Petone, are to lose their Kiwibank branches.

The response to those closures has been predictable, many customers with no desire to use internet banking arguing that Kiwibank is delivering an ‘’underarm ground-grubber’’ in aping the Australian banks’ desire to cut costs at the expense of service.

NZ Post simply has to cut costs, even though its parcel delivery service is not threatened. Indeed it is energised, by the modern practice of buying goods from the internet.

However NZ Post clearly is facing the prospect of ever-declining letters, a handwritten note no longer an everyday event, and payment by cheque, a rare event.

The supermarkets may be the right site. Perhaps petrol stations might also be a possibility.

The solution for Kiwibank and all banks might rest on mobile banks, perhaps a suitably secure caravan being brought to different centres for set times each day.

It is easy to imagine small towns adapting to a three-hour banking facility at set times.

Security would be a solvable problem.

Until every customer is happy to use modern banking techniques, a daily service in small towns ought to be a priority.

Indeed it could be a ubiquitous banking service, offering all the brands, the costs of the service shared, perhaps on the basis of market share.

Might the Post Offices have to consider the same sort of approach?

Someone might have to invent a mobile caravan with a Mr Whippy-like musical catch cry.

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ONE hopes that those who comment on our capital markets will have time to celebrate the achievements of the founders of Trade Me, a platform for exchanging goods that has captivated a large number of New Zealanders.

Thanks to its NZX listing Trade Me has attracted, from a British equity fund, a bid for a sum that would make thousands of New Zealanders wealthier.

Building a business, developing it, and then selling it for a huge sum is not an easy feat. The builders and developers deserve acclaim.

Nor is the sale a display of NZX weakness.

It is not the job of the NZX to chase off bidders for its listed companies, nor should we blame our fund managers for pricing the company’s shares at a lower price than a British bidder wants to pay.

There is no blame anywhere. The highest bidder at the daily auction has prevailed.

Because of its traditionally poor governance, and a period of poor leadership, the NZX has often attracted criticism, but as far as I can see its governors now seem credible. Its leadership improved dramatically when Tim Bennett arrived and has continued to hold the higher standard under Mark Peterson.

I do note that the Trade Me share takeover price was not second-guessed by inside traders in the weeks before the bid was announced.

Back in the bad days insiders would have stolen value.

There appear to be no front runners setting the pace today.

Trade Me has been an excellent New Zealand success story.

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THE death of Nigel Wynn last week may not have been widely published but he was a genuine contributor to the much improved services now available to retail share investors.

A tall, bespectacled, strongly-built accountant, Nigel at a young age (20s) had the entrepreneurial spirit and energy to set up a share trading platform that cut costs for traders.

My company for a short while was the largest client of his company, Direct Broking Ltd.

We had become friends when we first met, having a similar sense of humour and a shared attitude towards corporate correctness and corporate greed.

If Nigel had been able to preview this tribute to him he would have laughed, I suspect. When we first met he was a large man, with a lovely wife (Tania). We used to joke that we met at the far end of the shirt rack at Kirkcaldies, fighting to find shirts that covered an ample girth.

Oscar Wilde once said of a large person that they were not so much dressed as upholstered.

Nigel and I might not have been of that girth, but we laughed about it.  I did nothing about it.  He did. He rode his bike from Johnsonville to work, down and then up Ngauranga Gorge and eventually achieved spinach-leaf dimensions.

I admired that but more did I admire the culture of his firm (Direct Broking).

Two of my sons cut their sharebroking teeth there.  He was a kind and modern boss.

I recall how one young woman operator made a horrific ‘’fat fingers’’ error that was undiscovered until the necessary repair had cost Nigel nearly $100,000, at that time more than the salary he paid himself.

The young woman was not fired, or even ridiculed.  He was a kind man.

Eventually after a mistaken sale to Dorchester Finance, Direct Broking was sold to the ANZ, became ANZ Securities, and in a few weeks will become a FNZC platform, the ultimate prize for any NZ sharebroking firm.

About 10 years ago, barely in his 40s, Nigel began to lose some memory. He retired and lived with his wife and family in a city apartment.

As the Toyota advertisement’s dog might say, the memory loss was a ‘’bugger’’.  An excellent man had his career and life shortened.

Share investors everywhere should know that his discounted brokerage platform was what led to today’s minimal transaction costs, at least in New Zealand.

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Our future travel dates can be found on this page of our website: https://www.chrislee.co.nz/request-an-appointment

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

Chris Lee

Managing Director

Chris Lee & Partners Limited

Taking Stock 22 November 2018


THE inevitable decision to liquidate CBI, the operating company of CBL, must surely be the catalyst for a review of our laws and protocols.

Equally obviously we must take the opportunity to test the obligations of directors to earn their fees and justify their status in capital markets by providing meaningful governance standards.

We should start with our laws and protocols.

Currently a slightly aloof and academic Reserve Bank monitors and supervises our banks, insurance companies and major finance companies.

The Reserve Bank is our central bank, the organisation charged with supervising the financial sector, assessing the needs of our economy (implementing tight or easy monetary conditions) and managing our exchange rate by occasionally intervening.

Its prime role is to guide the market.  Its supervisory role of the major capital market players gives the Reserve Bank considerable power.  Generally, the Reserve Bank has been effective in managing the banks.

Regrettably, it exhibited no wish (or obligation) to intervene in our finance company sector when that sector was busting at the seams in the previous decade.

Nor has it displayed any great skill in the area of insurance.

CBI was originally a simple insurance company with one product. Its initials stood for Contract Bonding Insurances, a specialist form of insurance aimed at the construction industry.

CBI was formed and owned by a construction company (Angus Construction) which ran its bonding insurance business well.  Angus Construction, in the aftermath of the 1987 crash, closed down, paid off its creditors, and sold CBI to a young solicitor and to associated people of Peter Harris, then a young entrepreneur.

Harris led CBI down much more adventurous paths, seeking to build a giant empire, largely as an international specialist insurance company with a focus on France.

Along the way he and his directors came across some dubious characters, one accused of drug smuggling, others with Mafia links, resulting in CBI becoming what must politely be described as unorthodox.

When Forsyth Barr listed it in New Zealand, CBI found investor support.

Its chairman, John Wells, had governance and executive experience, notably with the tiny merchant bank Bancorp, but also with Fisher Funds and, in the 1980s, with NZI.

The market treated CBI respectfully, its reported results and growth was respected, its share price rose and various of our most reputable fund managers invested hundreds of millions in its listed shares.

The ACC was one such manager, Harbour Asset Management was another.

The ACC’s executive are highly regarded, deservedly so, and were not marked down when the National party imposed Trevor Janes as the ACC’s chairman of its investment division.  Janes, once chairman of the deplorable Capital & Merchant Finance, is a controversial figure, now retired from ACC (and KiwiRail), but is unlikely to have had any significant role in the ACC’s decision to buy into CBI.

Harbour Asset Management is managed by Andrew Bascand, a respected fellow who would be ill-described as commercially reckless.  His business methods are dry, more based on economic analysis than corporate networking as far as I can see.

His cousin is Geoff Bascand, whose Reserve Bank role is to head the supervision of insurance companies like CBI.  Very clearly the Chinese Walls are effective, for his cousin Andrew was buying CBI shares long after Geoff was judging CBI to be insolvent.

Thank heavens for this Chinese Wall.  Symmetry of information to the whole market is the basis of trust in our market.

If there were exceptions for family we would be reverting to the bad ‘’wild west’’ days of the 1980s, when insiders made fortunes.

Indeed, in the UK insider trading was legal until 1985.  If one remembers the behaviour of our fund managers, like Leadenhall, our lending companies, like Brierleys, and our wide range of stock exchange brokers, insider trading in New Zealand in the 1980s might have been compulsory.

While CBI’s share price was rising so was their undeclared, unconventional behaviour.  Going right back to ten years before Harris sought a listing, CBI was being subjected to a whispering campaign that the market regulators chose to ignore.

The dreadful behaviour of the regulators surfaced only in 2017, when the Reserve Bank was shown evidence that CBI was assessed by actuaries as being insolvent, and when market informants were alleging appalling and undeclared market behaviour.

The Reserve Bank reached a conclusion.

Meanwhile a group of hapless people, appointed to assess New Zealand’s best entrepreneurs, were displaying the value of such awards by naming Harris as the country’s leading entrepreneur.

One recalls that another group of such hapless judges had only a few years earlier chosen the Hanover Finance and Pumpkin Patch chairman as New Zealand’s ‘’best’’ chairman.

Good manners will prevent me from further discussion, both on the people who make such awards, the depth of their research, their street wisdom and, most of all, the value of such awards.

What the CBI case has shown is that there is no commitment in NZ to the continuous disclosure laws, no commitment to whistle-blowing, no height to our standards of governance – and no one seems to care.

Remind me of the last convictions for non-disclosure and lazy governance.

Does not the CBI case evoke memories of South Canterbury Finance, which hid its problems for years, and was outed by the Crown as insolvent more than a year before its demise?  It displayed governance of a standard that might not be accepted by a minor sports club.

At what point must we demand that continuous disclosure queries MUST be referred to the directors who MUST disclose to the market, unless it has access to the rare, and improbable, exemptions to the law?

CBI’s disgrace simply must be the detonator for some sort of explosion in the smug halls of parliament, the Reserve Bank and the market regulators.

New Zealand will re-emerge as an admired country, with little corruption and well applied commercial laws, only after we prove that there is responsibility, accountability and meaningful sanctions when the laws are not respected.

We might also want to reassess how we monitor and supervise institutions, and what might be effective bridges between observed problems and delivered solutions.

Of course there is one case in front of the courts now – the Mainzeal liquidators suing Mainzeal’s guileless and inadequate directors, led by a politician whose suitability for such a role is not obvious to me.

If in this case the sanctions are a financial penalty that causes aspirational directors to pause and test their own suitability to such important roles, then progress will be made, albeit at the painful expense of those who have found themselves being used as examples of our poor corporate practices.

Right now there is a clamour to find appropriate women to bring their perspective to company boards.

My view is that competence, experience, relevance and energy are the criteria a board panel should examine -  gender, height, race, weight, colour of hair and elocution being somewhat less relevant.

From CBI’s shameful behaviour may come a desired result.

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ONE can hardly blame middle New Zealand for being reluctant to use fund managers or invest in listed securities, given the involvement of our arguably best fund managers in the CBI debacle.

I recall being horrified thirty years ago when TV3 listed its shares.

It was apparent to almost everyone then, that TV3’s aspirations confused product appeal and journalism ego with surplus revenue and dividend needs.

Yet National Mutual, one of our poorest fund managers at the time, gleefully announced it had succeeded in obtaining a large TV3 shareholding.  The holding enabled National Mutual to have courtside seats as the shares fell from $2 to nothing.

Fund managers in those times were not often available to the media to discuss their views and their selections.

It is vastly different today, when a wide range of fund managers are regularly in the media, explaining five cent falls in share prices, or making the politically correct noises on subjects that the media refer to as ‘’sin stocks’’, or on governance standards.

The fund managers today are given ample opportunity to talk their book, an expression that refers to the practice of making your sales and purchases, and then seeking to persuade investors to follow, either ramping up share prices, or fleeing with the cash.

Most people tolerate this new practice because the general run of business journalism is so bleakly inept, inexperienced, and distrusted that the self-focussed fund manager is the last real voice available.

The void has been highlighted by the lack of reasoned debate over the fall in the NZX equity market in recent months, the NZX 50 index having retreated from its high by around 10%.

The media’s response has been a whole series of articles discussing global crashes, with various people asked to discuss the sort of disaster associated with the 1987 and 2008 crises.

Perhaps the words ‘’sharemarket crash’’ helps lift the casual sales of newspaper providers.

The reality is that 2018’s sharemarket movements have almost nothing in common with the circumstances that were around in 1987 and 2008.

In 1987 the NZX had nearly 450 listed companies, at least half of which had no credible business, no real shareholders and no hope of survival.

In that era, interest rates were high, earnings were low, dividends were low and insider trading was mundane.

After the crash some 300 listed companies disappeared.  Companies like Aden Corp, Como Holdings, Prime-West, Angora, Equiticorp, Chase, Renouf Corp, Natpac, Kiwi Bear, Ascent Corp and Investment Finance Corp disappeared, their implosions leaving behind detritus that was hosed into Cook Strait, near Moa Point.

The property market in particular was dreadfully mis-priced, with rental yields far lower than the cost of debt.

In 2008 it was the finance company sector that had lost control, the owners and directors often revealed as simply greedy, incompetent people, pick pocketing their clients while distracting them with audited, regulator-approved financial statements that were supported by ridiculous accounting laws.

The crash wiped out about 60 such companies.

Today’s environment is far different, with artificial but virtually permanent interest rates at levels that make 6% dividends look attractive.

A crash would be worth discussing in the media if a significant number of our listed companies were about to implode.

They are not.

The heights achieved by the market were unsustainable for three key reasons.

The first factor was the unrelenting and unthinking buying by Exchange Traded Funds of two shares A2 Milk (ATM) and Synlait (SML).

These two companies for a while led the index to a level that had nothing to do with dividends, or even prospective dividends.

The ETFs were gamed. When the other market participants had had their fun, the ATM and SML prices fell by 30% or more. The short sellers were laughing at the ETFs.

The second factor was the revelations of poor management, poor culture and poor investment decisions by two of our largest companies, Fonterra and Fletcher Building.  Poor governance will eventually lead to a falling share price.  Fonterra and Fletchers have seen their shares fall by more than 20% in recent months.

The third factor was the Australian Commission of Enquiry into its banks.  Poor culture and poor practices were revealed, leading to a 25% fall in the share price of the banks, even hitting our niche bank, Heartland, which was mildly criticised during the enquiry for not being loud enough about the risk of Home Equity loans.

Specifically Heartland was criticised for not highlighting that if one lives to 120 one might have eaten one’s whole house.

While these factors have led the market back from its highs, most companies have continued to prosper, enjoying the very low cost of debt and the high levels of growth, largely caused by immigration levels, tourism growth, and generous prices for our lamb, fruit, wine, lumber, beef and dairy products.

Mainfreight, Freightways, Auckland Airport, Port of Tauranga, Infratil and even Hallensteins have all made investors smile.

The likes of Oceania, Summerset and Rymans are enjoying growing demand.

The property listed trusts have enjoyed the low interest rates and the growth of demand.  Even those that have high levels of debt are performing well.

Of course the media comments will refer to global issues, especially in areas like trade, presenting the risk that those who buy our surplus food might decide not to eat.

Given the world is growing in population numbers at a horrid rate, but not growing its food or water supplies, it seems a strange time to be fearful of falling demand for our surplus protein.

Crashes occur when companies are failing, making losses.

Corrections occur when prices are overheated.  In these times the overheating usually relates to ETF buying.

Rarely does anyone succeed in forecasting all the moves of a fickle market, priced not just by maths, but also by emotions and moods.

Perhaps a good summary would be to say that anyone bullied into a funk, to such an extent that they want to sell securities at any price, should go away, have a cup of tea, and ask themselves whether they really would swap a ten shilling note for two half crowns.

If they answer ‘’Yes’’ to this they should talk to their adviser before acting.

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NZ Refining has announced a new subordinated bond.

The offer document is available on the Current Investments page of our website.

We anticipate an interest rate for the first five years of around 5.00%.

Clients receiving financial advice from us can find a research article for this offer loaded to the Private Client Page of our website.


David will be in New Plymouth on November 26.

Our future travel dates can also be found on this page of our website: https://www.chrislee.co.nz/request-an-appointment

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

Chris Lee

Managing Director

Chris Lee & Partners Limited

Taking Stock 15 November 2018

THE Auckland Consumer Trust, Entrust, which owns 75% of the shares in the NZX-listed utility company, Vector, should be dis-established.

The shares should be distributed to the consumers and thus end a battle between a small group of right-wing politicians and an important public company.

There seems no other option but to disestablish Entrust after its takeover by a cabal that is grasping the opportunity to gain power by exploiting the low level of consumer participation in voting on the people who make up the Entrust consumer trust.

This group, chaired by a former Auckland City Councillor and one-time mortgage lender, William Cairns, comprises two National Party people, Paul Hutchison (a former MP), and Alastair Bell, a former National Party board member.

Combining with a former CEO of Hirepool, Michael Buczkowski, and a long-time lawyer, Karen Sherry, these five people captured control of Entrust after standing on a so-called consumer ticket during the election of the trust’s board.

They have since lost their cohesion, Sherry alleging Cairns has tried to intimidate her, but their plan to dismantle the board of Vector has proceeded.

Vector has long been chaired by Michael Stiassny, a professional company director who strengthened his board by appointing infrastructural specialists from Sydney, David Bartholomew and Sibylle Krieger, the former a long-time chief executive of a major Australian infrastructure company, Krieger a lawyer specialising in regulated infrastructural companies.

The means by which consumers are represented is by election of self-nominated candidates.

My experience is that the general public, of whom barely 5% own shares and rarely vote on corporate matters, are easily persuaded when postal elections of such obscure trust positions are held. Roughly 80% of those entitled to vote, choose not to use their vote.

The brochures with pretty pictures and self-written potted histories are often the only source of information that guides the tiny numbers who bother to vote.

So any motivated cabal has a very good chance of capturing control of consumer trusts. If the consumer trust controls the board of a large listed public company like Vector, as is the case now, the threat to corporate governance of a public company is obvious.

In essence, the cabal has more power than the Vector board and ultimately controls Vector.

Indeed, it now is exercising that power.

The Entrust cabal has advised it will vote out the two skilled Australian directors, having previously made it clear that if Stiassny had not retired as Chairman, he too, would be expelled.

Fund managers, institutions and professional investors will own 25% of Vector, unable to obtain more of the shares unless Entrust is disbanded and the shares either distributed to consumers, or tendered to real investors, the proceeds being paid to the consumers who are the underlying shareholders.

I am unaware of the plans of Entrust but as a holder of Vector securities I am most unhappy at the thought of this little group, almost self-appointed, deciding Vector’s future.

The structure simply does not work, it is open to exploitation by a group of motivated people with an unknown agenda.

Many believe that the worst underlying structure of a public company is the co-operative.

They point to Fonterra as an example of an ugly structure, confused by the different objectives of those who hold voting power and those who would participate in rights issues to build a proper balance sheet.

That corporate structure is indeed ugly, but it is no worse than the structure of a public company being controlled by a group of people of no obvious relevance, and possibly very little financial commitment to the company, controlling a one-asset trust.

If consumers want their money managed by elected people, they should at least be served by people with investment skills.

Must the Crown intervene and legislate to restore an appropriate structure?

Or should every single beneficiary of Entrust realise the risk of mediocrity and demand that the 75% of Vector’s shares be passed on, as shares or as cash proceeds from share sales, to the consumers.

The new cabal may be well-meaning and have a cunning plan, but they should not be able to exercise control without the meaningful endorsement of real investors.

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I HAVE often pointed out the hypocrisy of fund managers who seek a marketing advantage by promising not to invest in ‘’sin’’ stocks.

Tobacco, alcohol, armaments, pornography, fossil fuel, fizzy drinks, butter, sugar . . .  you can imagine the products some investors would exclude from their portfolios.

However, Alphabet (Google) facilitate pornography yet none of these funds wants to miss out on the bulging revenues that come from those who advertise on a Google platform.

Hypocrisy may be even worse than some sins.

So it was a nice balancing act that the independent market commentator Brent Sheather introduced recently, highlighting the dishonesty in the claims that sin-free investing produces superior financial returns.

Someone had to point this out sooner or later, just as it must be stated that the views of the markets of index-funds are of no relevance to anyone.

Index funds invest by a formula that must be maintained.

Indeed, there is no need for an index fund to employ any people with investment skills, so they do not.

They employ software people, administrators and salesmen, none of whose views are even remotely relevant to investment or governance debate.

Index funds do no thinking and do not react to the mores of the times. The whole appeal of the concept is based on its avoidance of the cost of attempting to make skilled judgement.

Sheather rightly advises his readers that the claim that a sin-free fund will provide superior returns is about as silly as the claim that the lack of new entrants to NZX listing is the fault of the NZX.

It is a sad truth that tobacco companies, despite all the taxes they pay, make handsome profits, as do those who distribute pornography like Alphabet, Apple and quite possibly Amazon, Netflix and Facebook.

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I WILL be quite possibly in a minority of one when I argue that the country does not need a commission of enquiry into our major trading banks or insurance companies.

My argument would be that an enquiry would not tell us anything we do not know and will not alter the fact that most of us, our business and my personal banking included, are very well served at minimal cost by the banks.

In my case the bank records accurately and instantly all the transactions, provides a cost-free data record that enables us to manage our cash flows and, in my case, stores my money safely, and puts right any mistake made.

If people somehow steal my money from my bank, the bank sorts it out and unless it is my fault, it does so without charge.

My high level of satisfaction is a result of my non-engagement with any bank products or services that I perceive to be falsely priced or of no use to me.

I don’t want its offers of cheap wine, I do not want it to manage my money, or sell me insurance, I do not want its expensive credit cards, and I do not have any need for its KiwiSaver offer, given that at my age there is no subsidy and no justification for parking up money in a fund that is managed for young people, but not those of my age.

I know that the banks are not the community focussed institutions they were when I was younger.

In those days bank branches had managers who were generally wise men with good general knowledge and a commitment to help their customers.

Back then branches sought to protect their long-term competitive advantage by wedding themselves to their clients, making the cost and difficulty of any new entrance to the industry a genuine obstacle.

In those days overdraft rates reflected the overall relationship one had with the bank. If one had large sums on deposit, one’s children found it easy to get a loan.

All of this mindset became Americanised when credit cards arrived.

Banks started a new focus on quarterly profits, based on selling high margin products. They sought to cut costs not just through technological advances (ATMs, etc) but also by dumbing down the community service contribution, eliminating middle managers, and undermining the concept of banking as a lifetime vocation.

They closed down branches in small towns, they bullied staff into becoming salesmen, they sought to reduce services that required capital, and they were even silly enough to reduce their capital, buying back their shares to improve the ratio of income and profit to share capital.

My bank, the ANZ, bought back its own shares for about $32 in the pre-2008 era and then sold more shares at half that price immediately after the crash.

This made them comparable with the British idiot Alan Bond, who went to Australia, bought a Kerry Packer TV station for several billion (with borrowed money), went broke and then sold him back the same channel for about a quarter of the price Bond had paid.

Packer, a taciturn and foul-mouthed character, noted, using my paraphrased words, that you are lucky enough to meet an Alan Bond only once in a lifetime.

The point is that all of the banks’ foibles are known. The poorly-priced offers and silly selling can be avoided by the use of the words ‘’no, thank you’’.

The core services, storing and returning cash, and providing accurate records, are deliverable for a pittance because other overpriced services and products subsidise the core product.

Jacinda Ardern can frown, Winston Peters or Shane Jones can threaten new tax surcharges, and a commission of enquiry can spend hundreds of millions telling us what is clearly evident.

The best way to remedy these abominations is to use the words ‘’no, thank you’’.

Nobody is required to bank with the big four Australian banks.

If the banks break the laws, prosecute them.

If they simply charge excessively, a polite ‘’no, thank you’’ solves the problem.

All that requires is consumer self-control, best exhibited by living within one’s income.

My personal observation is that most of the local branch staff I meet are helpful, nice people, and most of the executives I meet are just as likeable.

If it really is the Aussie bosses who offend us, why do we not let Kiwibank merge with TSB, Heartland and SBS, resulting in a real New Zealand bank with enough market share (it would be 15%) to compete in all areas?

Complete the merger, list 49% of the bank on the NZX, and watch it thrive on the sort of standards we want.

 _ _ _ _ _ _ _ _ _ _ _ _

NEW ZEALAND lost a true champion leader when Sir John Anderson died this week.

I have known, admired and befriended ‘’Andy’’ since the 1960s when we played premier sport together. The club to which we belonged had financial problems in the 1980s, by which time he was CEO of a major investment bank, and as I was CEO of a similar, but much smaller, operation, a sister operation, both of our companies ultimately owned by Lloyds Bank.

Andy rang me and told me he had a plan to fix the club’s problems, unilaterally appointed himself and me to implement the plan, and listed for me my tasks.

It worked. His solution was excellent. He had no time for democracy, or to be wasted with committees; just get it done.

His ability to solve problems became widely known. Ultimately governments of both hues sought him out to solve problems in health, education, broadcasting and, of course, to advise on law changes, especially in banking.

Andy moved from a high-performance investment bank to the chief executive and managing director roles in the National Bank and the ANZ, where he was widely known as our best-ever bank CEO.

A large man, with great presence, he believed in his executives, he nurtured his people, nurtured his clients and has around New Zealand many business people he has encouraged to achieve their potential. Perhaps I am one.

In recent years, after retiring, he took on chairmanships of often troubled companies, inviting a level of stress he did not need, either from a financial, a health or a family viewpoint.

He had had major heart surgery and he had back problems. Perhaps he might have enjoyed his gins and tonic and his cigarettes more than the modern health police would recommend.

His death at 73 is sad but he has had a great life, been a really great New Zealander, in business, as a sports administrator and a family man.

Rarely do I ever use the options of titles but in his case I salute Sir John Anderson. What a great Prime Minister or Governor-General he would have been, when he retired.

_ _ _ _ _ _ __ _ _ _

Chorus Senior Bonds – Chorus has announced a minimum interest rate of 4.35% for the first five years of its 10-year senior bonds. The Indicative Terms Sheet is available on our website. This offer is now open and we are taking firm requests. If you wish to participate, please contact our office, specifying an amount and your CSN, before Friday 23 November. Payment is due by 5 December.

_ _ _ _ _ _ _ _ _ _



Edward will be in Albany, Auckland on 21 November and has two spots left. This will be our last Auckland trip for the year.

David will be in Palmerston North and Whanganui on November 20 and New Plymouth November 26.

Our future travel dates can also be found on this page of our website: https://www.chrislee.co.nz/request-an-appointment


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




Chris Lee

Managing Director

Chris Lee & Partners Limited

Taking Stock 8 November 2018

NEW figures released on two of New Zealand’s new financial services reveal what many might have expected – Peer-to-Peer (P2P) lending is not a new social form of moneylending and crowd funding is simply exploitation of the financially vulnerable.

Who would have guessed?

New figures on P2P lending disclose that more than 90% of the money lent to those who need to borrow outside of the banks is provided by institutions and the ultra-wealthy.

Barely a few coins are lent by people motivated to be kind to the borrowers.

The institutions and moneylenders simply see the P2P platform as another cheap way of making a margin over their cost of funds.

They produce arithmetic models that guide them to lend their money to different credit risks, returning different theoretical interest income, with different default rates.

If you lend 50% of your money at 6% to low-risk borrowers, 25% of the sum at 9% to medium risks, and 25% to high risks at 30%, your model will calculate that you might get a real return of 9%, after write-offs.

If your cost of money is 4%, you have a nice margin.

Your model will even calculate the odds of the write-offs being worse or better in different economic cycles.

Your moneylending skills will help you to decide how default rates are predicted by the matrix of information gathered by your computer software when interviewing the sad applicant, so desperate for cash that they must resort to this robotic process.

What no model tells you with certainty is the integrity of the borrowers and what their likely response would be to stress.

Many of us will recall the husband and wife who owned a finance company and publicly swore that they would rather lose their family home than hurt any depositor in their company.

Many of us will observe the truth, that family trusts preserved multi-millions of assets, including the family home, so that when their company defaulted they spent not a penny bailing out the investors they had deceived.  Integrity is not something visible on the forehead.

On the other hand, many real people would sell their car and ride a bike rather than owe the milkman money.

P2P lending based on software assessment of creditworthiness is neither sound, nor even especially commercial, based as it is on moneylending without an examination of the borrower’s integrity.

Its implicit belief that it can perform this moneylending in a manner that is either smarter or cheaper than the banks can arrange is, of course, nonsensical.

The banks have the world’s best database, literally able to observe every transaction a customer makes, every bit of personal spending, every act of folly. Someone who spends money at casinos, brothels, and on vapour pipes is very likely to be regarded cautiously by banks.

Those who spend less than they earn, have second jobs, never miss an obligation, and buy consumables with cash, rather than on credit, will be regarded as precious by the bank.

To imagine that a P2P software programme is better able to assess risk, and price it correctly, is similar to imagining that a girls’ soccer coach in Carterton is better at assessing the scrummaging skills of an All Blacks prop than the All Blacks coach.

P2P lending will not withstand the test of a rise in unemployment, an inevitable segment of any economic cycle.

Crowd funding is an even more brainless concept.

A new or struggling business is allowed to gather in funds of any amount, based on a set of owner representations that need no external validation and lead to neither an obligation to report on progress, nor it seems any accountability for failure.

Just this week we have learned that a company wanting to grow medicinal cannabis raised millions through crowd funding, basing its appeal on a conditional agreement with a potential global partner.

The agreement lapsed a month or so ago.

The guileless investors will be told this rather solemn news ‘’soon’’.

How many of those who pledge their savings have even the remotest concept of what a conditional agreement might entail?

If the cannabis company was listed it would have been obliged to disclose the cancellation of the conditional agreement on the day it was cancelled.

To be fair, crowd funding is too young to claim that its failure rate will always be as high as the current rate, where statistics are skewed by the disgraceful behaviour of PowerHouse and the abject naivety of those at Andrea Moore, who thought they could weave the emperor’s fine silk into shoes for a princess.

There have been no examples of any crowd-funded business in NZ which has led to the sort of high returns that high risk should occasionally deliver.

Obviously there is no trading platform for securities bought in companies whose last resort is the kindness of crowd funders.

Perhaps there will eventually be such a platform (crowd-funded?) but it would reflect poorly on the Financial Markets Authority if it allowed trading in such opaque securities.

Indeed, it is my view that the FMA has been poorly advised ever to allow investors to place meaningful sums in any security so lacking in necessary standards and so lacking the only remaining safety latch – full accountability for failure.

There are barriers to funding a real company and having it listed with a platform to enable trading. These barriers are set in concrete and require money and effort to overcome them.

There is further protection for investors in the form of financial advisers who are bound to perform real research before recommending any such security to an advised client.

Crowd funding, by definition, appeals to those whose narrative does not appeal to market professionals. The donors, by definition, invest on hunches or from kindness.

The different sets of protection is an anomaly.

It is well past the time for the FMA to review its hands-free attitude towards crowd funding, except when it is simply a donation, such as occasionally occurs with good people helping others who are down on their luck.

The combination of no reporting requirements, no disclosure of matters like sales, debt and cash reserves, and no accountability, is potentially wealth-destroying.

When will someone admit that the introduction of this concept was a mistake?

The new figures released on crowd funding recently suggest that New Zealand has rushed into crowd funding far more enthusiastically than even the Americans, and that investors are putting as much of their money into a crowd funding offer as they might put into a properly disclosed offer.

Perhaps this behaviour has its origins in the same behavioural patterns of people who plunder their purses to buy more Lotto tickets than they can afford, or pour more into poker machines.

Desperate solutions seem to be found for desperate problems.

Crowd funding is not to be confused with ‘’angel’’ investing.

Those who use surplus cash to provide ‘’angel’’ support generally attend detailed presentations, receive copious information, confirm the credentials of the people involved, monitor progress regularly and ALWAYS are people who have ample, genuinely surplus, cash.

 _ _ _ _ _ _ _ _ _ _ _ _

THE Crown has embraced public opinion by announcing investigations into sectors which appear to be profiteering. Fuel companies, banks and supermarkets are the low-hanging fruit.

Next up might include such opaque products as income protection insurance, mortgage protection insurance, trust and estate management fees, receivership, statutory management and liquidator fees, credit card fees, portfolio management fees, and, if I had my way, an enquiry into the behaviour of those who set the salaries for public sector management.

 _ _ _ _ _ _ _ _ _ _ _ _

JUDY McGregor, a university spokeswoman on women’s affairs, has come a long way from the days when she worked for the misogynistic Sunday News, that dreadful rag that modelled itself on The Sun, with bikini models on Page Three.

It is rare for journalists to switch to academia but McGregor achieved this and has been skilled at achieving public attention ever since, wily in her use of the media.

However her recent description of New Zealand’s ‘’best’’ and ‘’worst’’ companies does suggest to me that she needs a filter to guide her forays into the public arena.

Her labels were awarded on the inane basis of what companies had most or least women on their board of directors.

It is logical and probably necessary for people of influence to campaign on the need for more women to step up into governance.

It is highly doubtful that academics like McGregor would be amongst those ‘’people of influence’’.

If companies need a refreshed board, or a change in the mix of the talents on the board, the only people with any influence ought to be the shareholders.

To assert that ‘’great’’ companies must have a particular gender mix is as absurd as arguing that companies deserving the appellation ‘’worst’’ qualify for that label because of the gender mix of its governors.

McGregor should reboot her thinking on the subject or be silent.

The reality is that until three decades ago the ratio of career executives was something like 95% men, 5% women, because that is how society was structured.

In those times people had different views of a satisfying life.

What that means is that the number of women today with three decades of accomplishment and business experience is still relatively low.

The numbers will even out in the relatively near future.

If there are then as many women as men qualified for any executive or governance role, and willing to take on the often crazy commitment, then the likes of McGregor will observe only rare gender imbalances on boards of directors.

It is a numbers game, not a game that excludes talent because of gender.

What I can say for certain is that the best and worst companies never will be defined by academics who look at gender, rather than talent, experience and availability.

We would be living in a crazier world, if that is imaginable, if we excluded the best person for a job because of their gender.

 _ _ _ _ _ _ _ _ _ _ _ _

THERE will be a flood of new bond issues before Christmas with Fonterra, Chorus and BNZ all tapping the market with fixed rates and fixed credit margins.

Fonterra’s offer was originally destined to feature an interest rate of less than 4% and accordingly had limited retail appeal, however with the increase in the swap rate yesterday, and with Fonterra being forced to offer a higher credit margin, the rate has been set at 4.15%.  It has retained, for the meanwhile anyway, its A credit rating, so will find it easy to raise $100 million from the institutions but its business model is fragile.

Accordingly, I expect the buy-and-hold retail investors, fearing change to Fonterra, would have been only a small participant in this offer.

Chorus, rated BBB, wants to raise $300 million with a 10-year bond, copying the recent Infratil offer, which reset the rate after five years at a predetermined credit margin.

Personally I dislike this formula as it commits the investor to a fixed credit margin effectively for a decade. My expectation is that it will be volatile. I do not enjoy committing to today’s margins for a 10-year term.

However, as is often the case, the institutional market has a different view, so Infratil’s formula worked well, its issue raising an extraordinary sum, of $135 million, I believe.

Chorus will need to be generous with its rate to raise $300 million.

It will have more competition than is currently disclosed.

I believe there are at least two more offers, perhaps one of subordinated debt (higher rates), cluttering the pre-Christmas market.

In amongst this the BNZ will chase a sum with a bond issue, probably priced similarly to the recent Spark senior bond, around 3.5%.

It seems extraordinary that NZ companies can win retail support at such low rates, the more so because the world’s media, politicians and market commentators all want us to believe that the global economy will suddenly strengthen, enabling central banks to raise base rates by a significant margin.

This opinion, which has been repeated every year since 2010, is at distinct odds with my own. I see no outcome from rising rates other than household, corporate and sovereign misery.

One cannot service hundreds of trillions of debt at any rate, let alone at a higher rate. That is why we have ZIRP – zero interest rate policies, and even negative rates.

For the very same reason – low borrowing costs for an indefinitely long future – businesses will produce earnings and dividends justifying much higher share prices than we have seen in any sustainable way, previously.

My eldest son once said to me: ‘’What would you rather do, Dad? Lend your money at 4%, or buy shares in a company that can fund itself at 4%?’’

It was a rhetorical question, unsurprisingly as like most sons he knows the answers before I get the chance to speak!



I will be in Christchurch on Tuesday 13 and Wednesday 14 November, in Nelson November 19 and 20 (am) and in Blenheim November 20 (pm) & 21 (am).

David will be in Palmerston North on Tuesday 20 November and New Plymouth on Monday 26 November.

Edward will be in Albany, Auckland on 21 November.

Our future travel dates can also be found on this page of our website: https://www.chrislee.co.nz/request-an-appointment


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

Chris Lee

Managing Director

Chris Lee & Partners Limited

Taking Stock 1 November 2018


Ask any couple planning their retirement to identify what most challenges them and you are likely to hear of the difficulty of assessing at least three subjects –

1.      How long will the health of the couple remain robust?

2.      How long will they live?

3.      How much money will they have to spend?

The health sector purports to be making great progress in estimating both health issues and longevity, forecasting that in twenty years there will be at least six times as many centurions as there are today.

Average life spans for New Zealanders were around 70 when I was a youth, a span that perhaps had been affected by the events of the immediate past, like wars, and the widespread use of tobacco.

Today a healthy person at 65 probably can anticipate twenty more years, rather than five.

So a retirement plan is likely to assume a 20-year period from 65 and might have some reasonable information on which to base an estimate of how many of those years might be unhindered by health issues.

The money question, however, remains a monumental mystery for most.

The median citizen at 65 still owns a house and has a modest level of savings, probably a little more than the $28000 revealed in the 2013 census.

Kiwisaver might have added something to this figure, perhaps helping the median 65 year-old to a lump sum of $50,000.

Less than 10% of retiring people will have $200,000 of savings and barely 2% will have $500,000.

Even for those with $500,000 there is still uncertainty, and even anxiety.

What assumptions must be made about investment or bank deposit returns and how much of the capital can be consumed each year?

In New Zealand investors are callously misled by the funds management sector, encouraged by the Crown to forecast highly improbable average returns, especially from an asset class like global shares.

Commonly the fund managers forecast gross returns from global equities of around 8%, presumably based on the assumption that businesses will continue to benefit from extremely low interest rates.

An alternative forecast might begin by calculating that cash rates from sturdy banks in New Zealand will return perhaps 3% after tax, over a long period, that dividend payments might return 4% and that capital returns from asset price variations might average anywhere between minus x and plus x, with x being a complete guess and therefore not worthy of recording. History is no guide to future sharemarket gains. Just one new issue is the unbelievable growth in global debt.

So the couple with $200,000 might plan on receiving their NZ Pensions, roughly $31,000 after tax per couple, and say $6000 investment income.

If they devour their capital at a rate of around $7000 per annum and spend the $31,000 plus $13,000 of interest and capital, they will run out of capital when they reach the 20-year guess of their longevity.

Their options are to take more risk, hoping to achieve, say 6.5% after tax annual returns, thus achieving the $13,000 without eating their capital.

They may also plan to eat their house, by accepting annuities from a reverse mortgage should they either over-spend or live too long.

If they live out their retirement (and die at 85) on an after-tax annual spend for 20 years of $44,000 they will have lived to a standard equalled by far less than 10% of the world’s retired population.

Nearly half the world live on an income of less than $5000 per annum, have no or poor access to health services, clean water, reliable electricity, public transport or social services.

A New Zealander owning debt free a house of average value, and enjoying an after-tax income of $40,000 is comfortably within the world’s most affluent 10%.

Those whose main concern is the nett return from their $200,000 of savings, or perhaps the likely growth rate of their $200,000, are by global standards privileged to be allowed to worry about this.

Given the unprecedented conditions that threaten global financial stability – monumental, rising sovereign, corporate and household debt being just one factor – it is simply dishonest to pretend that any asset type can be relied upon to produce any particular return.

Yet we still read idiotic commentary and observe goofy projections on what ‘’growth’’ rates and ‘’returns’’ are fair to assume. Often we read of these predictions from people who never once in their careers have been engaged in the investment markets.

Rarely does anyone explain how a world fixated on quarterly returns and revolting executive salaries and bonuses can be reconciled with any plan based on sustainability.

I expect to see never ending changes in funds management as the speed of new experimentation in styles produces a drop-out of those whose credibility fades.

 _ _ _ _ _ _ _ _ _ _ _ _

THE nonsensical forecasts of financial returns was first challenged in Taking Stock in the late 1980s, after the sharemarket crash.

AMP at that time had superannuation salesmen rushing around the towns armed with brochures that illustrated the outcomes of their schemes if 30-year average returns were 12%.

To be fair Tower, National Mutual and probably other companies chasing the massive fees (5% plus) earned by selling those mirages would have been just as guilty.

My campaign – to expose the stupidity of these forecasts – succeeded after enduring a period of corporate vitriol, usually in phone calls or letters from people seeking to protect their corporate strategies and salaries.

The brochures were gradually withdrawn, and the practice of selling by forecasting improbable returns eventually faded away, possible when Money Managers collapsed, and when both NZ Funds Management and ING were forced to concede that ‘’super yield’’ or ‘’diversified yield’’ funds filled with toxic, high-risk synthetic instruments were not quite comparable with bank deposits.

In their place had come the fund managers like Fisher Funds and Milford Asset management, both of which, thankfully, no longer quote previous performances as any sort of omen for future performances.

However, the temptation for high risk takers remains.

Perhaps it is time for the law to remove the temptation, by simply legislating that it is illegal to display past returns without a tobacco-packet-like warning that only a knave would promote the past as being an indication of the future, when the subject is an investment return.

 _ _ _ _ _ _ _ _ _ _ _ _

THE decision by AMP to quit New Zealand, selling out to the British insurer Resolute, ends a long history for the Australian company, in NZ.

For many decades AMP made a contribution to NZ, providing pricing tension in insurance to keep honest the British insurance companies. Had the Brits been left uncontested, the margins we colonials would have endured would have been even worse.

Government Life (later Tower) provided resistance, as did National Mutual, ultimately leading to the exit of so many British companies, Prudential, Royal, South British, Sun Alliance and General Accident being just a few that I recall.

However, the temptation to act as an informed cartel became overwhelming and by the time the ’87 sharemarket crash occurred, the insurance industry was rightly regarded as dreadfully inefficient, incompetently managed, constipated from the fat margins, the lack of accountability, the mediocrity of the investment managers and the absurdity of the process that appointed the governors.

Mutuals, like AMP, National Mutual and Tower, invited policy-holders to select the governors, without ever providing the truth about the achievements of the governors standing for office. Policy-holders were voting blindly.

Contingency funds, deducted from profits and put aside to cover mistakes, led to invisibility of real performance and provided a shield for inept governors and managers.

One obvious example of such ineptitude was National Mutual’s $130 million wipe-out when it had an improbable crack at converting to a bank.

Tower blew tens of millions on predictably hopeless computer developments.

As mentioned last week, AMP blew a cool billion on an empty-headed purchase of a re-insurance company.

National Mutual adopted a disastrous policy of ‘’golden handcuffs’’, seeking to padlock its sales force to its brand by lending literally millions to often goofy salesmen to invest as they saw fit.

A tiny number used these ‘’borrowings’’ to invest in productive assets but most ended up losing speculative investments and requiring the ‘’loans’’ to be written off.

The 80s and 90s unfolded as a crazy era, eventually leading to ‘’demutualisation’’, a process by which policy-holders swapped an opaque share of ‘’profits’’, supposedly added to policy benefits, for transparent shares in what became listed public companies.

Gradually the British companies merged or reverted to the mother lode, Tower blew itself apart, with a succession of poor chief executives, while National Mutual first sold to AXA, a French company, and then found itself merged with AMP.

The AMP decision now to sell its insurance business to the British is an admission that its market status is now irretrievably damaged, not helped by the outcome of the Australian’s recent enquiry, but caused more by failure to adapt, than by poor practices.

AMP hopes to sell its wealth management business, by which it describes its product-selling business and its KiwiSaver participation.

It will have tried hard to sell this to a competitor, thus avoiding the intrusive examination to which it would be subjected during a listing process.

The KiwiSaver business will be of growing value if AMP’s participation in this sector is judged to be competent.

Selling teams, however, are not an easy fit for a listed public company model.

Harcourts Real Estate is an example of a failed listing.

It is not clear to me why anyone would have chosen to hold AMP shares in the last decade or two.

If it moves slowly, destroys those things with which it makes contact, and pines for the days when its playmates were moas, then it might not just look like a dinosaur.

I suspect the model of selling wealth products is an obvious future victim of technology.

It will be most interesting to see which parties volunteer to dress up AMP and sell it.

If it does have a listing potential, it will surely be for its KiwiSaver future, not for its obsolete branded products.

 _ _ _ _ _ _ _ _ _ _ _ _

PGC shareholders are asked to vote this week, on a proposal to shift its domicile to the Guernsey Exchange.

The media may present this as another loss of a company listed on the NZX.

I guess some Australians, using the same sort of sentiment, regret the loss of potential consumers when a handful of New Zealanders are sent back to Aotearoa.

My view is that PGC/Torchlight is completely unsuited to any external, retail investor.

Rather than vote, I simply accepted that if PGC ever does provide returns to shareholders, I would not be one of them. I sold my PGC shares some time ago and bought Heartland Bank with the proceeds.

Heartland, spun out of PGC, has succeeded admirably, and visibly.

PGC? How would I ever know?

 _ _ _ _ _ _ _ _ _ _ _ _


Edward will be in Albany, Auckland on Wednesday, 21 November

David Colman will be in Lower Hutt on Wednesday 7 November.

I will be in Christchurch on Tuesday 13 & Wednesday 14 November.

I will be in Nelson November 19 & 20 (am) and in Blenheim November 20 (pm) & 21 (am).

Our future travel dates can also be found on this page of our website: https://www.chrislee.co.nz/request-an-appointment


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


Chris Lee

Managing Director

Chris Lee & Partners Limited

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