News } TBK Capital

Well maybe something is now starting to happen?

I’ve just been looking back at what’s been happening in the New Zealand economy/business sector since the last election. I expressed my thoughts at that time in my 30 October Newsletter, New Government – New Opportunities.

They're selling postcards of the hanging
They're painting the passports brown
The beauty parlor is filled with sailors
The circus is in town

Bob Dylan – Desolation Row

I’ve just been looking back at what’s been happening in the New Zealand economy/business sector since the last election. I expressed my thoughts at that time in my 30 October Newsletter, New Government – New Opportunities.
It’s almost exactly a year since the final results came out. But even taking into account much of New Zealand is on “holiday” from late December until late March, it seems the post-election “uncertainty” has continued for longer than usual.
Well maybe something is now starting to happen? Some recent articles spring to mind.
First a Herald article by Heather du Plessis-Allen entitled “PM gets tough and shows real leadership”.

It’s got an opening that’s very complementary. “It feels like Labour's turned a corner. Finally, the party looks like it knows what it's doing in government.

Which is a weird thing to say. Because the past week and a half has been rotten for Labour. Two ministers down. Business confidence still in free fall.

But these things happen. Things go wrong. It's not those events that define a government as much as how that government responds.

And this government is finally calling the shots like a money-earning Wall Street broker.”

Wow! I hope that’s right.
Another strong view has been shown by Jenee Tibshraeny in with the headline “Why Westpac CEO David McLean is right in urging the business community to get over the election result and get on with business.”
In her view “The reality is that the economic cycle has naturally come off its peak. The supposed “heyday” of banks dishing out money left, right and centre, asset prices increasing 20% a year and labour being cheap and readily available are coming to an end.”
She asks what the business confidence figures would look like under National? And says “I suspect many more will weigh up the pros and cons and realise their level of confidence doesn’t have much to do with the new government.

We are in a new stage of the economic cycle, the international landscape is evolving, and we need to evolve too. It’s this need for change that’s creating uncertainty.

But the faster businesses accept where we’re at, the higher the likelihood they won’t talk themselves into a self-fulfilling spiral of doom and gloom.
Well said Jenee.
Third is a Herald article by Liam Dann entitled “Who is this gloomy business community anyway?” He’s of the view such a group doesn’t exist “as a distinct cultural entity” and it’s characterised along numerous lines, including regional differences, size and industry type.
His article includes a commentary on the Prime Minister’s speech to the “gathered captains of industry at Westpac’s head office” which included “chief executives, directors, and other senior leaders from New Zealand’s major corporate players.”   
All of the above articles are quite long, well worth reading, and I won’t go into them here. Other than to say that almost exactly a year after the election we’re finally seeing more action in both TBK Capital, and in our sister company Tabak Business Sales.
And by action I meant investors and buyers acting - not just looking.
Taking Action
The previous reluctance for buyers and investors to commit was something I could not quite understand.
So you can imagine my joy when I saw a positive call to action from Westpac CEO David McLean reported by Jenee Tibshraeny in last month. (Jenee has some other good ideas too).
Hosting the Prime Minister at a recent “breakfast for business leaders”, McLean said “Business confidence is important – it has real economic consequences. But in my view it is also time for the business community to get over the election result and just get on with business.
“Getting on with business means taking up the offer from the Government to constructively engage. It means not talking ourselves into a self-fulfilling spiral of doom and gloom which could have adverse economic consequences for New Zealanders."
“Successful businesses are resilient and cope with change, including change in Government.”
Recent feelings about this government’s call to action have been less than enthusiastic. Jacinda makes good copy, but there’s a feeling of wondering what’s behind it all. Even Winston Peters’ isn’t saying much.
Let’s hope we can see some comment and action over the next few months – it’s not that long to Christmas. 
What Not to Do?
Another New Zealand publication I regularly read is Chris Lee’s Taking Stock. The 23 August edition (scroll down to 23 August edition if you go to the link above) reflects on the ultimate misfortune of many amalgamations – with Fonterra appearing to be one of our more modern ones.
Chris opens his comments with “The general despair at the never-ending errors at Fonterra might be paused by the arrival of a new chairman and a new chief executive.” 
I’ve always wanted to make a study - and possibly a thesis - on Fonterra. But having completed university many years ago I’ll leave it to someone else.
Let’s hope it turns out well. Fletcher Challenge certainly had its moments.
Credit and Borrowing
Talking about economic publications, I’ve been a long time reader of John Maudlin’s Thoughts from the Frontline, a free weekly economics e-letter out of the U.S. It’s very American but I’ve found it well worth reading, and you can subscribe here.
One that’s stuck in my mind was reported in Opinion in the 11 June edition of about debt. In this Maudlin says “The advantage of debt is it lets you bring the future into the present, buying things you couldn’t afford if you had to pay full price now. This can be good or bad, depending on what you buy.
“Going into debt for education that will raise your income, or for factory equipment that will increase your output, can be positive. Debt for a tropical vacation, probably not.”

The 31 August edition, The Growing Economic Sandpile, is also very interesting, and goes back to what he wrote in 2007 (remember that was the year before the 2008 crash). It provides good thinking about the statement “We no longer have business cycles, we have credit cycles”.
Another excellent book to read about that era is The Big Short by Michael Lewis. They even made an Oscar winning movie about it. For those of us who were in Investment Banking at the time it brings back some startling memories – and warnings.

By the way, if you are interested in borrowing money for property or business, check out my last newsletter on this subject here or visit our website.

Capital Raising

Since we formed TBK Capital just over 7 years ago, we’ve made numerous of investment opportunities available. And more are about to released. To see the current Offers go to our website here.   

Virtually all the investment Offers we make available are only to those who qualify as “Wholesale Investors”. Not all appear on our website.

So if you’d like to join our special list of prospective Wholesale investors, or would like to know more, reply to this email or call me on +64 21 902 901.

Any reference above to investment is not an offer of financial products that requires disclosure under the Financial Markets Conduct Act 2013 (Act) and is available only to wholesale investors as defined by that Act. It is intended for distribution only to selected people to whom, under the relevant laws, it can be lawfully distributed. It cannot be distributed in any other jurisdiction, or to any other people. It is not an offer or solicitations in any jurisdiction in which such offers or solicitations are not authorised, or in which the person making such offers or solicitations are not qualified to do so, or to any person to whom it is unlawful to make such offers or solicitations. Any representation to the contrary would be unlawful. No action has been taken by any person that would permit a public offering in any jurisdiction where action for that purpose would be required.


John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 10, 120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Mobile +64 21 902 901

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