June 2021 - Bay of Plenty Business News

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4 BAY OF PLENTY BUSINESS NEWS June 2021 From the editor www.bopbusinessnews.co.nz CONTACT INFORMATION PUBLISHER Alan Neben Ph: (07) 838 1333 Mob: 021 733 536 Email: alan@bopbusinessnews.co.nz EDITOR David Porter Mob: 021 884 858 Email: david@bopbusinessnews.co.nz PRODUCTION Copy/Proofs/Graphic Design Times Media – Clare McGillivray Ph: (09) 271 8067 Email: clare@times.co.nz ADVERTISING INQUIRIES BUSINESS DIRECTOR Pete Wales Mob: 022 495 9248 Email: pete@bopbusinessnews.co.nz ELECTRONIC FORWARDING EDITORIAL: News releases/Photos/Letters: david@bopbusinessnews.co.nz GENERAL INQUIRIES: info@bopbusinessnews.co.nz Bay of Plenty Business News has a circulation of 8000, distributed throughout Bay of Plenty between Waihi and Opotiki including Rotorua and Taupo, and to a subscription base. www.bopbusinessnews.co.nz Bay of Plenty Business Publications 309/424 Maunganui Road, Mount Maunganui, 3116 Bay of Plenty Business Publications specialises in business publishing, advertising, design and print media services. As a monthly newspaper we don’t usually delve into stories that are likely to be rapidly changing before we go to print. But given the focus of our issue this month is on developments in hi-tech, the problems bedevilling our close neighbours in Waikato did catch our eye. In addition, members of our staff have been personally disrupted by the chaos that has resultd from the hacking. If nothing else, the latest hacking demonstrates just how vulnerable we can all be to cyber intrusion. Radio New Zealand has already reported that there is widespread alarm about what might happen to highly sensitive patient and staff information from Waikato District Health Board. A group purporting to be responsible for May’s cyber attack has emailed some media saying it has personal information of patients and employees and scores of records and documents containing names, phone numbers When we went to press minister of health Andrew Little was refusing to speak directly on the matter, issuing only a statement saying ransomware attacks were a crime. He has been in touch with the Waikato DHB Commissioner Dame Karen Poutasi about any assistance the DHB requires. “There is an active police investigation. Other agencies such as the NCNS [National Cyber Security Centre] and the Privacy Commissioner continue to support the DHB,” the statement said. Cyber experts say the danger is the hackers could sell the data to other cyber criminals, which could then be used to scam the victims, but whether a ransom was paid or not there was still no guarantee the data would be secure. National Secretary for APEX Union and the Resident Doctors Association, Deborah Powell, described it as “just low-life behaviour”. Staff at the DHB were already dealing with the stress of the fallout of having the whole IT system compromised, and Powell said “the way we react is important here...”. That is why people in financial markets are watching inflation really closely, because history has told us that a rise in inflation is usually a precursor to a rise in interest rates.” – Mark Lister, Craigs IP Craigs draws strong crowd at Trustpower Baypark – p3 Craig Lister addresses clients in Tauranga. David Porter Waikato DHB chief executive Kevin Snee said the DHB was constrained by what it could say. “We can’t comment as it’s a matter of police investigation and we are aware that public commentary can be monitored by the malicious actor so we will not be commenting any further.” RNZ’s checkpoint quoted reporter Phil Pennington, who has reviewed the documents, said: “It would be a very big exercise indeed to fake something like this, it does appear that they do have sensitive patient information ... there is a lot of it.” We would respectfully point you to our tech section and urge that you ensure all of your systems are secure. The past year or so of Covid-19 has been wild from my perspective.” – Hadleigh Ford, SwipedOn Bay company survives pandemic thanks to global support – p11 Get the latest investment insights to your inbox Subscribe to the Craigs Investment Partners informative Market Insights enewsletter and keep up to date on the latest investment insights. The Craigs Investment Partners research team provide timely and regular content, including commentary and analysis on market developments, help with understanding investing jargon and how current events impact investors. To subscribe to the enewsletter go to craigsip.com/insights 0800 272 442 / craigsip.com Craigs Investment Partners is a NZX Participant Firm. Adviser Disclosure Statements are available on request and free of charge. The Craigs Investment Partners Limited Financial Advice Provider Disclosure Statement can be viewed at craigsip.com/terms-and-conditions.
June 2021 BAY OF PLENTY BUSINESS NEWS 5 Jump in bond yields Investment market update (for the quarter ended 31 Apr, 2021) The most significant market move over the last quarter was the jump in longer-term interest rates. Bond prices move in the opposite direction to interest rates (or bond yields) – when yields rise, bond prices fall (and vice versa). For years (or really decades) bondholders have benefited from falling interest rates, and therefore rising bond prices. Over the last six months the direction has reversed, with higher long-term bond yields resulting in some of the biggest bond price declines for many years. Shorter-term rates didn’t rise as much, but most bond portfolios would have lost value over the past six months. For investors who plan to own bonds to maturity, these “losses” on bonds aren’t permanent – holders will still receive the same interest on their investment and be repaid in full when the bond matures (unless, of course, the borrower defaults, generally not a common event). Higher interest rates reflect the improved outlook A powerful combination of huge stimulus measures from central banks and governments (literally injecting trillions of dollars into the global economy) coupled with Covid-19 vaccine rollouts has boosted economic activity around the world. Not all that money has yet been spent. Savings have been boosted in many countries. Today’s higher-than-normal savings could support economic activity in the future. The rise in bond yields reflects confidence in an ongoing recovery, but also the risk of higher inflation medium-term. Higher inflation lowers the value of money over time – investors, therefore, demand higher interest rates to compensate. Inflation remains a key uncertainty for markets. We do expect inflation measures will jump in coming months as (1) prices recover from the falls seen during last year’s lockdowns, and (2) supply constraints and shortages of skilled workers (often due to current migration restrictions) around the world push up costs for businesses, which are being passed onto consumers. The chief unknown, however, is whether this inflation will be temporary or sustained. Central banks’ current view is it will be transitory, but there is a risk it becomes more entrenched. Equities continue to perform well Despite the jump in longer-term interest rates, it has still paid to remain invested in equities. Global equity markets have continued to push higher with WHAT TO DO WITH YOUR MONEY > BY BRETT BELL-BOOTH Investment Adviser with Forsyth Barr Limited in Tauranga, and an Authorised Financial Adviser. Phone (07) 577 5725 or email brett.bell-booth@forsythbarr.co.nz. companies generally delivering better-than-expected results benefiting from a combination of improving economic activity and significant cost savings. A softer New Zealand market the exception New Zealand equities underperformed major markets over the quarter. The NZX50 market index is dominated by a relatively small number of companies – the largest eight companies account for around half the index. What that means is any price changes (up or down) in these larger stocks has a significant impact on the overall index. During the quarter we saw falls in some of New Zealand’s largest listed companies, for company or sector-specific reasons, plus a general pullback in defensive, dividend stocks – which dominate the market. • Clean energy exchange traded funds’ (ETFs) buy high, sell low strategy has caused significant volatility in electricity stocks, particularly Meridian Energy (New Zealand’s second largest listed company) and Contact Energy. For a deeper discussion please see our Focus article ‘Sleepy Joe causes a power surge’ published on 15 February. • A2 Milk lowered revenue and earnings guidance for the third time this year. Border restrictions are limiting how much of A2’s product is getting to the key China market. Cautiously optimistic We remain confident in a strong global economy over (at least) the next 12 months or so. That said, there are still risks for markets. Asset prices are not cheap by any historical reference, and levels of speculation and exuberance in markets are high. Risks of higher-than-expected inflation and therefore upward pressure on interest rates is higher than it has been for a fair while. These factors mean we do expect future returns are likely to be lower than what we’ve seen over the past decade or so. This column is general in nature and does not take any of your personal circumstances into account. For personalised financial advice, contact Forsyth Barr for an overview of the services we can provide. NEWSBRIEF Trustpower to explore potential retail business sale Tauranga-based utility Trustpower has stated that recent results confirm the merits of its recent strategic review. Trustpower chair Paul Ridley-Smith said the strong performance of each operation reaffirmed the board’s decision to explore the potential sale of the retail business and establishment of a standalone generation business. “We firmly believe in the growth potential of both the generation and retail businesses. These results confirm that both generation and retail are sound operations that could thrive independently of each other.” Recent Trustpower developments include: • The launch of a voice of customer programme to track, understand and remedy pain points in the customer experience journey, as part of a commitment to customer-centricity. • Successful execution of asset maintenance and enhancements despite ongoing Covid-19 Alert Level changes throughout the year. • Enhancements at Waipori, Cobb and Kumara contributing an additional 9.5GWh in annual generation volumes. Strategic Review In January 2021 Trustpower announced a strategic review of its retail business. This review is aimed at testing market interest in the sale of its mass market retail business and exploring the business case for a standalone generation business. In April 2021, Trustpower announced its intention to enter into due diligence with a number of interested parties to further explore the possible sale of the retail business. At the time of this announcement the process remains ongoing. Dividend Ridley-Smith announced the Board has approved a fully imputed dividend of 17.0 cents per share, as well as a one-off special dividend of 1.5 cents per share, also fully imputed. He said the special dividend was a ‘catch up’ on the previous year, where Trustpower declared a reduced dividend of 15.5 cents per share amidst the uncertainty surrounding the impacts of Covid-19. Together with the interim dividend of 17 cents per share paid in December 2020, this provides a total fully imputed dividend of 35.5 cents per share for the 2021 financial year. The dividend will be paid on 18 June 2021. Trustpower said it would look to provide market guidance once the results of the strategic review were known. EXPERIENCE. THE DIFFERENCE ADDS UP. 07 927 1200 | 60 Durham St, Tauranga | www.inghammora.co.nz
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June 2021 - Bay of Plenty Business News

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