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 Interest.co.nz 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 Interest.co.nz 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 interest.co.nz 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.
Cheers
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
Email john.paine@tbkcapital.co.nz