Business Archives - Page 13 of 42 - Tim McCready

China Business Summit 2023: Prize draw

July 17, 2023

Prize draw courtesy of Air New Zealand with Auckland Business Chamber’s Live and Digital events coordinator Katy Riddell.

China Business Summit 2023: Call to order

July 17, 2023

MC: Tim McCready

China Business Summit 2023: Summit close

July 17, 2023

MC: Tim McCready

Future of Consumption (Asia NZ Foundation & Auckland Business Chamber)

June 20, 2023

FUTURE OF CONSUMPTION – SESSION ONE from Auckland Business Chamber on Vimeo.

FUTURE OF CONSUMPTION – SESSION TWO from Auckland Business Chamber on Vimeo.

The future of consumption is constantly evolving, with new technologies and innovative practices transforming the way we consume foods to the sustainable practices we adopt. From sustainability and vertical farming to cell-based cuisine, the future of consumption is full of exciting developments.

To help you stay ahead of the curve and gain valuable insights, you will learn about the impact of sustainability, vertical farming, and cell-based cuisine on the future of food, as well as how these practices are being implemented in the industry.

Join the Asia New Zealand Foundation and the Auckland Business Chamber for two sessions delivered digitally on the 20th of June. These sessions will take a deep dive into these seismic changes with business leaders from the Asia region to discuss the forces, the opportunities, and the challenges that are shaping the future of consumption.

Infrastructure: A billion-dollar plan to build resilience (NZ Herald)

June 7, 2023

Infrastructure: A billion-dollar plan to build resilience (NZ Herald)

The Government set aside $6 billion in last month’s Budget as part of a National Resilience Plan for strategic investments to “build back better” following the damage from Cyclone Gabrielle and the Auckland Anniversary floods.

This is in addition to the Government’s $71b infrastructure plan over the coming five years.

Damage from Cyclone Gabrielle and the Auckland Anniversary weekend floods has been estimated by Treasury as ranging from $9b to $14.5b — second behind the Canterbury earthquakes in terms of damage from natural disasters New Zealand has faced. Of this, $5b to $7.5b of damage is expected to relate to infrastructure owned by the central and local governments. These costs relate to damage, without including all the immediate and ongoing support for communities and businesses.

The North Island weather events hit the country when the Budget 2023 process was already relatively advanced, requiring Minister for Cyclone Recovery and Minister of Finance Grant Robertson to reprioritise other initiatives in the draft Budget to make way for the response.

Robertson said while the investment will initially focus on building back better from the recent weather events, it will include future-proofing road, rail and local infrastructure wiped out by extreme weather, as well as telecommunications and electricity transmission infrastructure.

“Addressing vulnerabilities in our infrastructure systems to function during adverse conditions and quickly recover after an event is fundamental to the wellbeing of communities,” he said.

“I expect to continue to build on the plan over many years to reduce the severe infrastructure deficits that have held New Zealand back.”

The package would also deliver a new Crown infrastructure delivery agency, Rau Paenga, which could be engaged to assist agencies to deliver the projects in the National Resilience Plan at a cost of $100 million over five years.

This funding follows the $1.1b pre-Budget announcement to assist with repairs to basic infrastructure including road, rail and schools and providing flood resilience support.

Infrastructure funding in the announcement included:

Roading: An additional $275m into the National Land Transport Fund to support the immediate response and recovery costs for state highways and local roads. This comes on top of the $250m allocated to fix roads in the aftermath of Cyclone Gabrielle.
Rail: $200m to repair North Island railways, with repair work to rail tracks, sleepers, bridges and other structures on the North Auckland line, Palmerston North to Gisborne line, Auckland metropolitan network, North Island main trunk and East Coast main trunk.
Schools: The more than 500 North Island schools damaged by the severe weather events would receive $116m for repairing and rebuilding, with additional funding for the potential redevelopment or relocation of schools. A further $700,000 would be invested over two years for Special Reasons Staffing funding, with $315,000 available immediately.
Stopbanks: Regions affected by the recent North Island extreme weather events will be able to apply for funding from an initial $100m in Budget 2023 for local solutions to keep them safe from future floods. This includes raising stopbanks and shoring up lifelines that failed during the record rainfalls.

Capital Markets: Can ChatGPT predict share price performance?

May 25, 2023

It’s clear that the capital markets will continue to face significant headwinds, with many of the same pressures and external forces that have shaped the sector in recent years still in play.

Persistently high inflation remains a top concern. While it remains stubbornly elevated, there are encouraging signs that it may have peaked after a considerable effort from central banks to rein in spending.

Much of the supply chain disruption caused by Russia’s invasion of Ukraine has stabilised, but persistent geopolitical tensions and fragmentation, particularly between China and the United States, continue to pose a risk to economic and financial stability.

Adding to the complexity, the pandemic-induced global talent shortage is still acutely felt in multiple sectors, including certain areas of the capital markets.

Gaining momentum are several megatrends that have become entwined with the capital markets sector. These include the rapid technological evolution, the growing need for robust cybersecurity measures to protect against digital threats, and the ever-increasing demand for sustainable investment options.

Against this backdrop, here is a wrap of some of the key issues that are likely to shape the capital markets over the coming year.

Key drivers for capital markets

Despite a challenging global economic environment, the Asia-Pacific region is expected to offer some hope for the coming year.

Earlier this month, the International Monetary Fund (IMF) released a report on the region, noting that despite weakening external demand — such as the downturn in demand for tech exports — domestic demand has remained strong. China’s reopening is providing fresh impetus to the region and a glimmer of optimism for the rest of the world.

The IMF projects Asia-Pacific’s GDP to increase this year to 4.6 per cent, after growing 3.8 per cent in 2022 and contributing around 70 per cent of global growth. This will be driven primarily by the recovery in China as a result of its reopening and surging consumption, along with resilient growth in India.

It said the near-term economic impact of China’s recovery “will likely vary across countries, with those more heavily reliant on tourism likely reaping the most benefit,” and expects the rise in China’s imports to be most strongly reflected in services.

But despite its optimism for the region, the IMF downgraded its projections for Japan, Australia, New Zealand, Singapore and South Korea.

“Stronger external demand from China will provide some respite to advanced economies in the region, but is expected to be largely outweighed by the drag from other domestic and external factors,” it said.

Mind v machine in investing

A few months ago, ChatGPT was launched publicly and has quickly disrupted diverse sectors.

Analysts at Goldman Sachs believe artificial intelligence (AI) algorithms could ultimately replace 300 million jobs, and with its ability to interpret vast amounts of data and identify patterns, AI is expected to significantly disrupt the capital markets.

Recently, the University of Florida analysed the accuracy of ChatGPT in predicting whether a news item would affect stock prices positively or negatively.

The results showed AI could make accurate predictions on stock performance and demonstrated that traditional models did not provide any further predictive power over ChatGPT.

Since AI algorithms can process market data in real time, they can react to changes faster than ever before. This will inevitably lead to more algorithmic trading, where machines are able to make trades at the appropriate time without human intervention.

Financial firms are already using AI to understand their customers better. As this tool is refined, it will be able to assist in developing more personalised products and services based on customer behaviour and potentially other public data, such as social media activity.

AI-driven technologies are also being used to detect fraud and money laundering. By analysing large pools of data and identifying suspicious patterns, AI can help financial institutions prevent fraud far more quickly than before.

While AI offers an exciting future for the capital markets, there are some concerns that its increased use could have negative consequences, such as creating market bubbles or amplifying financial instability. But despite that, the rapid introduction of AI tools means that by this time next year, they will undoubtedly have had a significant impact on the sector, offering faster and more accurate decision-making and analysis.

ESG focus remains high but pushback is growing

Investing with ESG principles in mind has become a hot topic and the fastest-growing segment of the asset management industry.

ESG principles consider environmental, social and governance factors alongside financials.

Ethical investment principles saw companies unwind their investments in Russia last year and the pandemic highlighted the need to consider societal impacts alongside investments. Locally, the recent climate events highlighted the importance of integrating ESG factors into investment strategies.

Despite growing interest in sustainable investing, the number of new sustainable fund launches has declined this year, according to financial services firm Morningstar. Regulatory uncertainty and increasing concerns about greenwashing are likely contributing to this trend, highlighting the need for greater transparency and accountability in the ESG space.

But while major investors continue to emphasise the importance and performance of ESG investing, some of Wall Street’s largest asset managers, private equity firms and brokers have warned that a backlash against sustainable investing has become a significant risk.

Larry Fink, CEO of BlackRock — one of the world’s largest asset managers — was one of the early and vocal supporters of ESG and stakeholder capitalism. However, in his annual letter this year, he de-emphasised ESG investing and entirely avoided using the three-letter acronym.

ESG has become a complex and challenging topic, particularly in the United States, where anti-ESG sentiment has gained momentum. Republican governors from at least 19 US states have pledged to resist ESG investing, and high-profile Republican figures Mitch McConnell and Ron DeSantis have campaigned against the use of strategies that penalise fossil fuel producers.

According to Fink, Republican state treasurers withdrew around US$4 billion ($6.3 billion) from BlackRock last year.

There are indications that US investors’ interest in green investing is waning due to repeated attacks on “woke capitalism”.

Scepticism towards ESG investing is likely compounded by the poor performance recently by technology stocks — a sector that green funds typically favour.

Increased interest in alternative investments

Alternative investments, or “alts”, are gaining popularity and finding their way into the portfolios of everyday investors.

These investments, which include hedge funds, private equity, venture capital, cryptocurrencies, commodities and rare collectables, have little or no correlation with traditional asset classes like stocks and bonds, providing investors with more diversification options.

The alternative investment industry gained momentum and accessibility after the economic downturn in 2008. With last year’s volatile stock market and the anticipation of slower growth and persistently high inflation, demand for alternative investing continues to rise.

Previously, alternative assets were only easily accessible to sophisticated investors. However, the growing number of alternative exchange-traded funds (ETFs) and managed funds are making them more mainstream, as investors look beyond conventional asset classes for returns in an unpredictable year.

All eyes on October

The coming general election is poised to have a significant impact on New Zealand’s capital markets.

Current polling suggests Labour v National could be one of the closest contests in some time, and likely to hinge on the decisions of kingmaker coalition parties — potentially Te Pāti Māori or New Zealand First.

Elections are viewed as significant risk events for market participants due to the potential changes in government policy and associated uncertainty.

It is already clear that wealth inequality, tax and inflation will feature prominently in the upcoming political debates and investors will be closely assessing the policies, platforms, and “bottom lines” of parties, and their wider implications for the economy and capital markets.

In the lead-up to October 14, the stage is set for a period of increased fluctuations in share prices and currency value, and uncertainty in the capital markets.

Capital Markets: Rising appetite for NZ on the ASX

May 25, 2023

Capital Markets: Rising appetite for NZ on the ASX

The Australian Securities Exchange (ASX) has been pursuing a strategy over the past five years to increase the diversity of stocks available.

Diversification is a central tenet of well-balanced portfolios, and that means companies in the technology and life science sectors are in high demand. Institutional investors, in particular, seek additional investment prospects beyond the long-standing dominance of mining and financial firms on the ASX.

Blair Harrison, head of New Zealand Listings at ASX, says investors are also looking for diversity in geography, and for that reason they also like to see New Zealand companies in the mix.

New Zealand’s burgeoning tech sector already has a formidable presence on the ASX.

Until recently, 10 of the 65 New Zealand companies listed on the ASX were technology companies, two of which were included in the ASX All Tech Index (earlier this month church donation company Pushpay was delisted after being sold to a consortium linked to a Melbourne-based private equity firm).

Xero has achieved “unicorn” status on the ASX as a technology company with a valuation or market cap of over $1 billion. With a market capitalisation of more than $10b, the New Zealand-founded accounting software company is now one of the largest on the ASX, the fifth largest company by market capitalisation in the All Tech index and a constituent of the ASX 50.

Harrison says from an investor standpoint, New Zealand tech companies are well respected globally.

“They tend to exhibit an entrepreneurial approach, demonstrate good governance, and possess a global mindset right from the outset,” he explains.

“This is largely due to the challenge of geographic distance. Being a country that is far away, these companies are aware they must target international markets and adopt an international perspective from the very beginning, which companies in Australia don’t necessarily have to do.”

The large investment community and significant number of companies in Australia mean that New Zealand technology stocks have greater scope to be covered by analysts. The ASX has close to 250 technology companies and around 200 companies that come under the umbrella of life sciences.

Harrison explains that this means that Australia has fund managers, researchers and brokers who can specialise and have greater familiarity with the sectors.

“Rather than one analyst who covers a range of sectors — from industrial to consumer products to technology — you can have a team of people focused on a particular sector, which means they have a very good understanding of how a company is performing.”

That research, in turn, raises the awareness of emerging New Zealand companies among Australian and international fund managers.

These companies can also be compared against similar ASX-listed healthcare and technology companies, which helps analysts determine company valuations and provides economies of scale in research.

Harrison says there is a robust pipeline of technology companies looking to list, and he expects to see New Zealand tech continue to thrive on the ASX over the next few years. This is driven by investor appetite, both from Australia and New Zealand, and further afield.

Beyond tech, other New Zealand sectors that are in demand from the ASX investor base are infrastructure stocks including airports and ports which are not common on the ASX. New Zealand’s aged-care sector is another of interest.

Looking ahead, Harrison says the scale of superannuation funds across Australia and New Zealand will have an impact on investment choices and companies that come to the stock exchange.

By 2041, the total superannuation assets of Australia and New Zealand combined are expected to approach A$10 trillion.

“We know that a lot of that superannuation fund money goes into the stock market,” he says. “That means there will be a huge demand for companies to come to the ASX, and in particular, demand for companies that meet the attributes that the demographic are looking to invest in.”

He points to the rise in economies focused on climate change and the future of food as an example of this.

“ESG is having a huge impact because investors are becoming more powerful. We are all becoming investors — either directly or indirectly — through our superannuation, which is growing exponentially.”

Listings down last year, but higher activity in follow-on offerings

When volatility and uncertainty sweep across global economies, the volume and value of initial public offerings (IPOs) on share markets fall. IPOs were down around the world in 2022, attributable to volatility in the markets brought on by significant macroeconomic events, including Russia’s invasion of Ukraine and surging inflation.

While this was also true for Australia, the ASX still managed 107 listings in 2022. Almost all these listings were in mining, particularly for battery materials like lithium, copper, nickel and gold, which are in high demand.

This figure is close to its annual average of around 135 per year, but down from a phenomenal 2021 that saw 241 companies debut on the ASX fuelled by the cash that was injected into the economy.

“We continue to engage with companies and stakeholders in the ecosystem,” says Harrison.

“Those conversations haven’t slowed down at all, and once the level of volatility returns to a normal level, we expect a lot of these listings to come to market.”

The ASX tracks volatility through the S&P/ASX 200 VIX, a real-time volatility index. This enables interpretation of investor sentiment and market expectations. Notably, the ASX tends to witness higher IPO activity when the VIX value falls within the 10-15 zone.

Despite the decrease in listings last year, the ASX saw higher activity in follow-on offerings as ASX-listed companies raised capital. Follow-on offerings, which include placements, rights issues and share purchase plans, can also be used to bring new sophisticated and institutional investors into a share register and help increase liquidity in a company’s shares.

ASX was the top-ranked exchange globally for the volume of follow-on capital offerings in 2022 with 1060. This was more than double the comparable volume on the Nasdaq exchange in the United States, more than triple the volume on the London Stock Exchange and was higher than any exchange in Asia-Pacific.

This is the third consecutive year that ASX has led global rankings for follow-on offerings by volume. By value of follow-on offerings, ASX was the fifth-ranked exchange globally in 2022. More follow-on capital was raised on ASX last year than on the London Stock Exchange or Hong Kong Stock Exchange.

Some industries were hit hard through the pandemic and needed to raise finance to shore up their balance sheets and get through, but Harrison says that other raises were more opportunistic.

“For example, a company might have taken the opportunity to raise capital for an acquisition of a company at a good valuation compared to in 2021 when valuations were very high,” he says.

Blair Harrison

Blair Harrison is the Head of New Zealand Listings at the Australian Securities Exchange (ASX) and heads the ASX New Zealand office, based in Auckland.

Capital Markets: Hong Kong poised to make strong recovery

May 25, 2023

Since its borders reopened in January, Hong Kong has been focused on re-establishing itself as a prominent business hub and a connector between mainland China and the global financial community.

This was evident at Hong Kong’s Asian Financial Forum, held in person early this year, where it was noted that despite the need for Hong Kong to navigate macro-economic challenges on many fronts — including rising interest rates, the adjustment in the local housing market, and the global economic slowdown — its strong institutional frameworks and substantial capital and liquidity buffers have allowed the financial system to remain resilient and continue to operate smoothly through multiple shocks over the past few years.

Almost 70 per cent of attendees polled expressed a “neutral to positive” sentiment towards the global economic outlook. The upbeat attitude was likely bolstered by the border reopening just days before the conference.

Indeed, the International Monetary Fund (IMF) recently reported that Hong Kong’s recent lifting of Covid-related restrictions, including border controls that lasted nearly 1000 days, has helped to normalise its economic activity.

The resumption of cross-border travel has seen services exports expand significantly, and domestic private consumption has experienced considerable growth as pandemic restrictions have eased. The IMF projects a real GDP growth for Hong Kong of 3.5 per cent in 2023 and 3.1 per cent in 2024.

Hong Kong’s isolation from the rest of the world has created space for competition from Singapore to become Asia’s top financial centre. Singapore was one of the first countries in Asia to reopen its borders during the pandemic.

As well as losing its position as the region’s busiest airport to Singapore, Hong Kong was also overtaken in the Global Financial Centres Index, with Singapore becoming the third-largest financial centre, after New York and London.

But Hong Kong remains well ahead of Singapore in capital markets activity, with stock market turnover and market capitalisation more than seven times larger. At the end of December 2022, its stock market capitalisation reached US$4.6 trillion ($7.3 trillion) — around 13 times its GDP.

This year’s Asian Financial Forum placed a significant focus on Hong Kong’s efforts to stay at the forefront of the evolving global economic landscape in an effort to expand beyond traditional financial growth.

It is establishing itself as a leading global hub for green finance, reflected in the US$80.5 billion ($128 billion) in green and sustainable debts it arranged or issued last year, along with the world’s first government-tokenised green bonds, trialled last month, worth US$102 million ($162 million).

It is also courting fintech and greentech companies, with growing funding sources and regulatory reforms that allow new economy firms to list on its stock market and access capital.

Hong Kong’s position as a global financial hub remains strong, handling over 70 per cent of the world’s renminbi settlements. By focusing on emerging areas of financial services and leveraging its status as a financial gateway to China, operating unencumbered by the mainland’s more restrictive regulations, there is optimism in the sector about its prospects.

· Tim McCready was a guest of the Asian Financial Forum.

Capital Markets: Reshaping the financial markets for the next generation

May 25, 2023

Two emerging leaders in the capital markets speak to the Herald about their careers, the challenges women face in the sector, and what can be done to promote greater diversity and inclusivity.

Daniela Bossard

Daniela Bossard is an investment director at Rangatira Investments, a leading long-term investor in private New Zealand businesses.

In her role, she is responsible for assessing new investment opportunities and ensuring they align with Rangatira Investment’s core investment principles.

This involves identifying and evaluating potential investments, conducting due diligence, and presenting investment recommendations to the board. Additionally, Bossard works closely with existing portfolio companies to help them achieve their growth objectives. As a long-term investor, Rangatira Investment takes a partnership approach with its portfolio companies, working collaboratively to achieve its shared objectives.

She says it is a rewarding position that allows her to make a meaningful contribution to the growth and success of New Zealand businesses.

Bossard’s interest in the financial markets sector started at a young age, which led her to study finance and economics at the University of Auckland.

She started her career in investment banking, working closely with founders, senior management teams, and boards on potential acquisitions and divestments.

Bossard hopes to contribute meaningfully to investment outcomes that benefit Rangatira’s shareholder base. She is proud that around 60 per cent of its shareholders are charities or charitable trusts, allowing her to make a positive impact on New Zealand’s wider communities while leveraging her core skill set.

Bossard says one of the biggest challenges facing women in the sector is a lack of visibility and representation. She explains that this has a twofold effect: firstly, younger women have limited access to female role models, making it harder for them to envision themselves in leadership positions. Secondly, when there are so few women in leadership roles, they may be seen as tokens, putting undue pressure on them to be perfect and potentially stifling their leadership styles.

She says tackling this issue is not easy, but it is essential, and while the sector has grown its focus on promoting diversity and inclusion, further changes are required to address inequitable outcomes.

Bossard says Rangatira is committed to promoting diversity and inclusion at all levels of its portfolio companies, and discloses its efforts to achieve gender balance in its annual report.

By working together to promote diversity and inclusivity in the sector, Bossard believes a more equitable and thriving industry can be created that will benefit everyone.

Kate Le Quesne

Kate Le Quesne is the director of prudential policy at the Reserve Bank of New Zealand — Te Pūtea Matua. She leads the teams responsible for writing and reviewing the prudential rules that deposit takers, insurers and financial markets infrastructure must meet.

Le Quesne says she fell into financial markets “almost by accident”, having studied actuarial science. She became excited following the economic environment in real-time, which took her through a range of institutional banking roles in Australia, New Zealand and London.

More recently, she joined the public sector, where she found an array of roles that need specialist technical finance skills alongside a broad range of other skills — particularly good leadership.

She says she has been lucky in the Reserve Bank to have roles spanning both financial markets and financial stability, both critical areas to the functioning of our financial system.

Le Quesne was chairwoman of Young Women in Finance in Wellington for three years, which she says was a fantastic way to build a network with the shared goal of raising awareness around issues that matter to young women coming through the industry, to build support and awareness more broadly and to showcase some great role models.

She is keen to help mentor the next generation of leaders in the financial sector, acknowledging that in her own career, she has been lucky to have people who have been instrumental in helping her seek new opportunities and build confidence.

But she says it is still a challenge since there are fewer women in senior roles within the sector.

This means there are fewer role models and fewer of the benefits that come with a diverse set of leaders.

Le Quesne says the sector can drive change as it brings through the next generation, ensuring it puts unconscious bias aside to attract and retain a broader, more diverse workforce and ensuring organisations value diversity, inclusion and a range of skill sets, experience and backgrounds.

Project Auckland panel: Simon Bridges, Viv Beck & Mark Thomas

April 11, 2023

Project Auckland panel: Simon Bridges, Viv Beck & Mark Thomas

NZ Herald’s Tim McCready leads Heart of the City CEO, Viv Beck, Auckland Chamber CEO, Simon Bridges and Committee for Auckland Director, Mark Thomas in a discussion on the pain points plaguing Auckland’s infrastructure.