Investment Strategies / Non-US Stocks
No. of Recommendations: 1
In the interest of diversification I've been exploring other markets and ANZ holdings, a New Zealand bank, came up. Been around since the colony was founded in one form or another. Several recent purchases of other NZ banks and currently holds ~30% market share. Decent dividend if you like that sort of thing. They've gotten themselves in hot water for their capital requirements. From the wiki page:
A Deloitte review found that "a historically complacent approach, the absence of a comprehensive compliance plan, diffused accountability and inadequate assurance processes, all contributed to the operational risk capital breach not being identified for more than five years". Huh. They seem to have a bad reputation with their customers (e.g. higher floating mortgage rate than thier competion) which may be good for stockholders?
Anyone have eyes on this one?
Rgds,
HH/Sean
No. of Recommendations: 3
A) In the interest of diversification I've been exploring other markets and ANZ holdings, a New Zealand bank
ANZ Bank ("Australia New Zealand Bank") is not a Kiwi bank, but as their name says a Australian & NZ bank. In NZ (probably/maybe in Aussie too) it's the largest one, followed by BNZ Bank.
B) They seem to have a bad reputation with their customers
Not in NZ. I was their customer in the 90s, my Ex is their customer since 2015. All good apart from once when she transferred money from Germany into her ANZ account being heavily overcharged by them using a 2% too low exchange rate. We complained to the Banking Ombudsman and ANZ quickly caved in, crediting 1.5% or so of those 2%.
This alone btw is not anything giving ANZ a worse reputation than any other bank, as they all have that "habit". Next year we did it the other way around, letting her German "comdirect" bank exchange the EUR into the then into her ANZ account transferred NZD. comdirect", daughter of one of Germany´s oldest and most reputable bank, overcharged (additional to their fees) even by a 2.2% lower exchange rate than the then exchange current rate of the ECD (European Central Bank) --- and our complaint at the German Banking Ombudsman, proofing the overcharging with detailed numbers and calculations, was greeted with a standardised reply essentially saying "... contract between comdirect and customers allows comdirect to use any exchange rate"). It was clear proof who the German Ombudsman works for and is paid by (the banks, not the customers).
C) In the interest of diversification I again have money in NZ. This time at BNZ bank, but only because my Ex (still good friends) as said has an ANZ account = to also diversify between banks. Otherwise I would without hesitation had an ANZ account.
No. of Recommendations: 6
A very much more general observation is that it's usually not a great idea to hold a meaningful position in a bank you don't truly know and understand really well. Which in turn requires the ability to really understand banks, which is a rare skill. I don't have it, but at least I have learned (sometimes painfully) that I don't have it.
Banking is a great business if you merely avoid doing stupid stuff, but the problem is that bank managers are as likely to do stupid stuff as a kid is likely to eat candy. And you never know till after the fact.
The great majority of the time the stupid stuff is lending to people who can't pay it back (and which was probably obvious at the time), most likely against property which is cyclically overvalued. So in theory you can avoid a few problems by not investing in the "high" part of the cycle. But every cycle seems to include a brand new way of doing stupid stuff. Right now we seem to be in that part of the cycle that it has been long enough since a banking crisis that the banks are lobbying, mostly successfully, to weaken the rules put in after the last one.
Other than a couple of specific exceptions, I don't do banks except when it's a small position as part of a diversified "shotgun" portfolio.
None of that is to suggest that banks down under won't do well for you, just a general health warning to consider.
Jim
No. of Recommendations: 0
Banking is a great business if you merely avoid doing stupid stuff
So ixnay on the ankbays? Got it.
Hard to identify the major industries. I guess Kiwi wines are a thing, but tariffs may cut their popularity in the US. (BTW I saw that US wine imported to Canada is down more than 90%. Whoda thunkit?) Phosphate mining? Healthcare? Is it still true there are more sheep in NZ than people?
Needs more study.
Rgds,
HH/Sean
No. of Recommendations: 7
Hard to identify the major industries. I guess Kiwi wines are a thing, but tariffs may cut their popularity in the US. (BTW I saw that US wine imported to Canada is down more than 90%. Whoda thunkit?) Phosphate mining? Healthcare? Is it still true there are more sheep in NZ than people?
NZ is expected - and I believe it has been confirmed at based on the news last night but with the US ATM who knows - to get a 10% across the board tariff which is the lowest world-wide rate as I understand it. So while NZ selling prices for its exports to the US will rise, NZ in general is in a comparatively good place as its competitor exports will also rise the same or more. And so NZ is in a relatively OK place in that while the US is the #2 export partner, on a world scale its exports aren't that large (in volume terms) and as a result NZ is relatively easily able to pivot elsewhere where it makes sense most likely further into Asia.
And so the burden of this (bilateral) change will IMO most likely fall on the US as 1) the US consumer will need to fund the tariffs (or the export good will go elsewhere) and 2) NZ will look to move more of its 'strategic' large purchases (commercial aircraft, defense etc.) to less capricious partners that are more aligned on key issues like climate change or rules-based international relations than the US currently (as an example those two issues are critical for NZ). And - like a lot of the Pacific - NZ could fall further into China's already considerable influence, although the EU, UK, Canada, Japan etc. have already indicated they'd like (even) deeper ties as those countries / regions are looking to urgently manage their own tariff issues.
In terms of significant industries to invest. Dairy (Fonterra, A2 et al) is a huge thing for NZ. NZ is circa 30% of the world's dairy export market (most dairy production is for domestic consumption) but also forestry, agriculture (Zespri, NZ apples etc.) , increasingly mining. However where NZ companies have typically appeared as good value investment worthy companies is generally NZ Telecom, Fonterra / A2 etc., the banks (who are massively profitable & mostly Australian owned and so may be better accessed through investing in Australia), the energy companies (NZ is mainly renewable energy largely hydro but also with huge wind / solar resources and so somewhat limited investment with good & growing returns) & retirement. Raw returns might only be OK however there is potential for a double dip in that the raw return may be fine & then one might get a further leg up on the fx change.
And yes there are still more sheep in NZ than people. It's not as bad as the past when there might have been just under 60M sheep for 3.5-4M people (1990-ish). Today it's around 23.5M sheep for 5M people. Dairy & forestry have been the main improvers as the returns for those activities have generally been greater for farms in areas where all activities are possible, but the recent efforts to market NZ Merino wool have helped sheep-based returns lately I believe.
No. of Recommendations: 1
I guess Kiwi wines are a thing, but tariffs may cut their popularity in the US.
It is easy to get a decent Kiwi wine for under $7 here in the US, and that is after the recent bump up. Tariffs would have to get pretty big to get me to stop purchasing on a price basis. Health reasons are a different story, and we here in the US are getting hammered by news stories about how bad any alcohol is for you. Neither of our roughly 30 year olds drink alcohol, though with my French ancestry, it certainly was never prohibited. I suspect generational changes to consumption and possible impacts of climate change could be a bigger worry for the wine industry than tariffs, when it comes to profitability. No idea on conditions in NZ, but our vineyards here in VA are experiencing issues with heavy downpours, extreme temperatures and the invasive Spotted Lanternfly. Add to that a typical price point of about $25/bottle, instead of $5 for similar quality for NZ white wine. Tough to hear the live music from NZ vineyards from here though, but Wine Trail tourism is no doubt getting impacted negatively by this extreme heat...I know it dampens our desire to hang out outside for music.
IP
No. of Recommendations: 0
Tough to hear the live music from NZ vineyards from here though, but Wine Trail tourism is no doubt getting impacted negatively by this extreme heat
No extreme heat in NZ. I was there Feb-Apr (Summer there) and as usual the weather was very pleasant, not hot at all, at least compared to middle (Germany) to southern European summers.
