Reserve Bank eyes looser policy, which drives kiwi dollar down to 64USc; AJ Hackett gets $10.2m Government lifeline; Aroa Biosurgery picks ASX for capital raising

Whatever it takes?: The Reserve Bank expects it may have to do more heavy lifting in the near term to help support the local economy, saying that New Zealand’s success in beating back Covid-19 and the resulting economic bump might not last. The Reserve Bank maintained the scale of its current quantitative easing programme at $60 billion and kept the official cash rate at 0.25 percent, but the monetary policy committee said it would provide additional stimulus if required.

The toolkit: The RBNZ’s options include potentially expanding the large-scale asset purchase programme (LSAP) and using additional monetary policy tools including a term lending facility, a lower OCR – potentially even dropping below zero – and foreign asset purchases. The central bank said that to date financial markets are functioning well and the NZ government bond yield curve has flattened.

Kiwi eases: The kiwi dollar eased following the release of the latest monetary policy statement and at 7am was trading at 64.07 US cents from 64.99 cents immediately prior to the RBNZ announcement at 2pm on Wednesday. The kiwi has gained around 8 percent since the May MPS.

Tourism lifeline: AJ Hackett Bungy is the latest tourism company to receive a much-needed lifeline from the government to help it to continue in business. Waitomo Caves and Whale Watch Kaikoura have previously been allocated grant funding. Tourism Minister Kelvin Davis has allocated a $10.2 million package for AJ Hackett Bungy NZ comprising a $5.1 million grant in the first year, followed by a $5.1 million loan in the second year, if required. The funding draws on the government’s $400 million tourism package announced in the recent Budget and is aimed at keeping high-profile businesses solvent while international visitors are prevented from entering the country due to the border closure.

Just in time: AJ Hackett founder Henry van Asch told RNZ that without the funding it was unlikely the business would have been able to survive with its current level of staffing. More than 300 applications have so far been received from other tourism businesses seeking government support.

NZ listing on ASX: Aroa Biosurgery, an Auckland based soft-tissue regeneration provider, is set to raise up to A$30 million in an initial public offering on the ASX. The funding will be used to repay debt and expand its sales and manufacturing capacity. The company’s existing shareholders will also sell another A$15 million of stock into the offer, providing new investors with a 20 percent stake in the company.

Cornerstone shareholders: A total of 40 million new shares and 20 million existing shares will be sold at 75 Australian cents apiece, valuing Aroa at A$225 million. The offer opens on July 1 and closes on July 3, with trading set to start on July 30. Founder and CEO Brian Ward’s stake will reduce to 11 percent from 13.5 percent while the Movac Fund’s shareholding will fall to 8.6 percent from 9.9 percent.

Not all smooth: Travel expense software platform Serko reported an 11 percent lift in operating revenue to $25.9 million but a net loss of $9.4 million in the 12 months ended March 31, compared to a profit of $1.6 million last year. Pre-tax interest and depreciation earnings resulted in a loss of $6.1 million, compared to positive ebitda of $2.6 million in the prior period. The company’s annual operating costs jumped 59 percent as Serko added the cost of newly acquired InterplX and the scaling up of its presence in international markets.

Lockdown worth it: Serko said the New Zealand Government’s strict lockdown policy had been difficult at the time, reducing revenue to almost zero, but the move was now paying dividends with the travel management firm’s corporate customers able to return to work and travel domestically without the fear of infection. The company had also licensed a ‘white-label’ version of its Zeno product to in the UK and was expanding into North America. Serko shares gained 4.1 percent to close at $3.29.

Locked out: US President Donald Trump’s suspension of the H-1B visa programme has provoked outrage in India’s IT industry, leaving workers stuck abroad because of coronavirus now unable to return to their jobs and families. President Trump this week suspended issuing several visas including H-1Bs, a skilled worker programme often used by technology companies, for the remainder of the year as part of sweeping immigration restrictions in response to the pandemic. Indians make up about 70 per cent of H-1B holders, of which 85,000 are awarded every year.

Stranded workers: The situation has left many highly qualified workers stranded in India and unable to return home. Many work at some of America’s leading technology companies including Amazon, Microsoft and Apple, as well as Indian outsourcers such as Tata Consultancy Services. The President’s efforts to crack down on immigration, including what he sees as an abuse of H-1B visas to hire cheaper foreign labour instead of Americans, has stoked tension between India and the US, despite efforts by Mr Trump and Prime Minister Narendra Modi to improve ties. It has also prompted accusations of discrimination against Indian workers.

So long Segway: It was the invention that never really did find its niche in the way its developers had hoped and now it seems the end of the Segway is nigh with news that production of the personal mobile transporter is set to end. China-based Ninebot, which acquired Segway in 2015, will halt production of the PT, short for Personal Transporter next month.

Few buyers: The Segway PT, which first made its appearance in December 2001 when it was unveiled on Good Morning America, was the brainchild of inventor Dean Kamen. He predicted that an urban transportation revolution was coming, and cars would soon be obsolete. But with a price tag starting at $6,000 and sometimes reaching $10,000, only police departments and tour groups could afford them, the company said. The Segway PT project initially grew out of work in the 1990s on a self-balancing wheelchair.

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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