Brokers are angry at continued technical problems slowing NZX market trading, which the FMA says it is aware the NZX board is working on. Virgin Australia is put into administration, while NZ$ and stocks fall after oil collapse

Not good enough: The NZX is once again under fire from brokers frustrated at ongoing “technical issues” in recent days that have delayed orders from being executed on a timely basis. ASB Securities displayed a notice on its website yesterday apologising for the slow execution of trades and blaming the NZX for the problem. The issue once again highlights ongoing under-investment by the stock exchange operator in keeping its technology platforms updated which has been further exacerbated when trading volumes spike as they have done in recent days. Newsroom’s calls to NZX CEO Mark Peterson yesterday seeking comment went unanswered.

On notice: A spokesperson for the Financial Markets Authority said they had been briefed by the NZX on the issue. “We understand that rectifying the issue is their highest priority and the NZX Board is looking at any additional processes or governance necessary to ensure it is fully mitigated and not repeated. We are satisfied with this approach and will remain informed by the NZX, as they progress the resolution of these matters.”

Past its use by date: While they’re at it, the NZX might also consider upgrading its very tired looking website which was originally developed at the time Mark Weldon was CEO from 2002 to 2012, and has remained largely unchanged since then. Brokers have said the rise of intense amounts of small lot trading from the Sharesies platform is partly responsible for the issues. The NZX has not responded to our queries.

Lifeline for SMEs: Small businesses, particularly those in the hard-hit retail and hospitality sectors, could be thrown a lifeline as Government ministers hinted at the possibility of extending the wage subsidy scheme beyond the 12-week period adopted in the initial round of funding. Finance Minister Grant Robertson also encouraged businesses in a select committee hearing to talk to their banks about the Government-backed lending scheme announced earlier this month, but which only became formally operational last weekend.

Kiwi weakens: After initially strengthening following the Government’s announcement of the move down to Level 3 lockdown next week, the Kiwi dollar traded lower yesterday following the big slump in oil futures that saw the May contract for West Texas Intermediate fall well into negative territory for the first time in history. The Kiwi was trading at 59.85 US cents late yesterday afternoon from 60.51 cents at the same time on Monday following the Prime Minister’s lockdown statement. The trade-weighted index was at 68.26 from 68.76.

Down she goes: The NZX50 suffered its biggest one day fall in more than two weeks yesterday retreating 2.1 percent and closing at its low for the day at 10,536 as investors reacted to the big slump in oil prices which saw U.S. markets closer weaker. It was a similar story in Australia where the ASX200 fell 2.5 percent to close at 5221.

Virgin ending: Virgin Australia has become the Southern Hemisphere’s first major high-profile business casualty of the covid-19 pandemic. Australia’s second major airline succumbed to third-party led restructuring that could lead to a possible sale.

Airlines globally have been seeking government aid to survive after grounding the bulk of their fleets due to an unprecedented plunge in travel demand that is forecast to cost the industry NZ$523 billion in revenue this year.

Bleeding badly: Virgin’s problems were already well known having reported annual losses for seven consecutive years leaving accumulated debts of around A$5b. The company had previously sought a A$1.4b loan from the Australian government which was rejected. More than 10 parties have already expressed interest in recapitalising Virgin, which is continuing to fly a skeleton schedule under its current management team.

Ready to restart: Carpet manufacturer Cavalier Corporation said it would be progressively opening its manufacturing operations in Auckland, Napier and Whanganui following the lifting of the Level 4 restrictions next week. The company said while trading in NZ had ceased for the last month, trading had continued in Australia and sales volumes for the first three months of the year were above the prior year, though these have declined in April.

Directors pitch in: The company had applied for $2.8 million of the Government wage subsidy in New Zealand, while Government support is also being considered in Australia. The Board has also agreed to take 20 percent of their directors’ fees for this year in shares to assist with cash flows and to better align their interests with those of shareholders.

Red Faced: Metro Performance Glass has become the latest company to fall foul of the employment regulator for contracts that did not correctly calculate Holidays Act entitlements. According to a recently released Employment Court judgment, labour inspectors questioned issues with the company’s short-term incentive schemes and how it treated annual holidays during its annual Christmas closedown period.

Employees short changed: The inspectorate accused Metro Glass of paying less holiday pay by not appropriately recognising its short-term incentive scheme as part of employees’ gross income which resulted in the underpayments. In its judgment the Court also pointed out that a 2011 amendment to the Employment Act was created to close down loopholes whereby employers avoided paying holiday pay on variable payments which it said Metro Glass had breached.

UK Gloomy: The Bank of England and the Treasury say they are braced for a prolonged UK economic slump after the coronavirus lockdown restrictions are lifted, amid fears many workers would be reluctant to ramp up spending or even go back to work. Ben Broadbent, deputy BoE governor, said this week that a 35 percent contraction in Britain’s economy in the second quarter predicted by the Office for Budget Responsibility did not look unrealistic and he warned that escaping the downturn would not be easy.

Workers fearful: In an online presentation to businesses Broadbent noted that some industries, such as construction, had halted activity despite there being no government requirement for them to do so. The fear among sections of the population of catching Covid-19 after the lockdown is lifted was reflected by growing concerns in the Treasury that Britain is heading into a prolonged U-shaped recession.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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