Auditor-general John Ryan has announced an inquiry into aspects of the government’s strategic Tourism Assets Protection Programme established in May last year and how AJ Hackett Bungy, Whale Watch Kaikōura and Tourism Holding’s Waitomo operation were able to receive funding before the opening of the formal funding round.
$10 million was given to Queenstown based AJ Hackett Bungy, while NZX listed Tourism Holdings received $4 million specifically to protect its Waitomo operation. Whale Watch Kaikoura was allocated $1.5 million from the fund.
The programme was intended to protect tourism assets considered “strategic” and which contributed significantly to regional or national tourism.
However, many tourism operators were highly critical of the scheme at the time, calling it unfair.
Concerns had been raised about the clarity and transparency of the programme’s criteria and whether they were applied consistently, Ryan said.
“Because of the concerns we have heard, the amount of public funding involved, and the importance of robust processes to ensure public trust and confidence is not eroded, we have decided to carry out an inquiry.”
The auditor-general said he would look at whether there was any evidence applications had been assessed inconsistently.
Markets push higher while NZX50 loses ground
Investors will hope the NZX50 can get its mojo back this week after closing on a downbeat note last Friday falling 0.5 percent for the week to finish at 13,054. Rising bond yields and better than expected employment numbers had investors retreating to the sidelines as they weighed possible implications for the Reserve Bank’s monetary policy statement on February 24.
Across the Tasman, the ASX200 ended the week strongly after gaining 3.5 percent to close at 6840 with resource stocks continuing to benefit from higher commodity prices.
Stocks in the US had their best week since November recovering from the previous week’s sharp fall. The S&P500 gained 4.6 percent to close at 3886 after better-than-expected earnings from market heavyweights Apple, Google and Facebook gave investors confidence about the state of the US economy with the prospect of a US$1.9 government stimulus package also on the cards.
Oil continued its recent strong run with Brent Crude futures gaining 7.8 percent for the week to close at US$59.34 a barrel, while gold was weaker as the US dollar continued to strengthen. It closed down 1.8% for the week at US$1813 an ounce after falling below $1800 earlier.
Bitcoin was the biggest mover for the week gaining more than 17 percent to close at a new weekly high of US$38,858.
Interim earnings results next week from Contact Energy, Fletcher Building and Auckland International Airport will be closely watched.
Commerce Commission approves sale of Sky Television subsidiary
The Commerce Commission has granted approval to NEP Broadcast Services to acquire Sky Network Television subsidiary Outside Broadcasting (OSB).
The commission had previously voiced concerns the acquisition would lead to NEP’s monopoly of the market and would lead to unfair dominance by NEP in domestic sports and events contracts.
Chair Anna Rawlings said: “After careful consideration, the commission is satisfied that there is no realistic prospect that OSB would continue to provide outside broadcasting services if the proposed transaction did not proceed. Rather, we consider it would seek to outsource those services to a third party, most likely NEP.
Rawlings said the Commission also took into account that that, “absent the sale to NEP, OSB’s assets were unlikely to be sold to another outside broadcasting provider and used to compete against NEP.”
Sky Television shares closed on Friday at 18.3c up 1.7 percent.
ASB raises its LVR for property investors to 40 percent
ASB Bank has increased its minimum deposit requirements for housing investors pushing its loan-to-value requirement from 30 percent to 40 percent with immediate effect.
ASB chief executive Vittoria Shortt said the stricter borrowing rules had been imposed following concern “continued high levels of investor demand are unsustainable.”
The move follows ANZ Bank’s recent decision to also require investors to have a minimum 40 percent deposit.
Both ASB and ANZ initially increased their in-house LVR restrictions on speculative home buyers to 30 percent in November, ahead of the Reserve Bank of New Zealand’s decision to reintroduce all pre-covid LVR restrictions in March in an attempt to cool the property market.
That will require banks to lend no more than 5 percent of its loan book to investors with a deposit of less than 30 percent.
The change will apply only to home loan applications and top-ups which have not yet been conditionally or fully approved.
Rival TikTok app lists at big premium to its issue price
In one of China’s most anticipated market listings so far this year, rival TikTok app Kuaishou saw its shares skyrocket in value on Friday in Hong Kong making it the most successful IPO globally since the coronavirus pandemic began.
The shares closed at HK$300 (NZ$54.50) marking a 161 percent jump over the HK$115 ($20.85) the firm issued them at. The company raised a total of HK$41.28 billion (NZ$7.5 billion) in the offering.
It’s the world’s biggest tech listing since Uber’s IPO in May 2019, and the largest public offering globally since Saudi Aramco’s float in December 2019.
Kuaishou is one of China’s leading social media firms. The Tencent-backed company, whose name means “fast hand” in Chinese, owns a popular short-video and live-streaming app. Its platforms and mini programs have more than 300 million daily active users.
It generates most of its revenue from the live-streaming business, where users can buy virtual items and present them as gifts to their favourite hosts. Live-streaming transactions accounted for 84 percent of revenue in 2019, according to a company filing. It also makes money from online advertising.
Though its listing success has proven to be a major win, Kuaishou still faces significant challenges. It’s long competed with industry leader ByteDance, which owns the Douyin app — the Chinese version of TikTok.
McKinsey pays NZ$807 million to settle US states’ Opioid claims
Global consulting giant McKinsey has reached a US$573 million (NZ$807 million) settlement with nearly 50 state governments in the US as well as the District of Columbia and territories, over its role in helping to market and boost sales of high-risk opioids including the controversial drug OxyContin.
Most of the funds will be devoted to paying for treatment and rehabilitation programs in communities devastated by the addiction crisis. However, as part of the settlement, McKinsey admits to no wrongdoing.
This deal heads off civil lawsuits threatened by multiple state attorneys-general.
The settlement follows a rare apology issued by McKinsey in December, when it acknowledged its behind-the-scenes work for the opioid industry.
As part of the settlement, the company will also be required to make public tens of thousands of internal documents detailing its work for Purdue Pharma and other opioid companies.
Kevin Sneader, McKinsey’s global managing partner said the consultancy deeply regretted its actions.
“We chose to resolve this matter in order to provide fast, meaningful support to communities across the United States. We deeply regret that we did not adequately acknowledge the tragic consequences of the epidemic unfolding in our communities. With this agreement, we hope to be part of the solution to the opioid crisis in the US.”
According to documents made public as part of bankruptcy proceedings against Purdue Pharma, the maker of OxyContin, McKinsey’s helped Purdue “turbocharge” opioid sales at a time when the risks of addiction had been well-documented.
McKinsey is one of a dozen blue-chip American companies embroiled in the legal, financial and public relations debacle linked to the opioid industry.
In October 2020, Purdue Pharma reached a deal with the US Justice Department valued at more than US8 billion.
Hyundai Kia denies plans for joint EV car with Apple
After intense speculation last week of a possible tie up between Hyundai Kia and Apple to launch a new autonomous electric vehicle, the South Korean automaker yesterday scotched the rumours.
Hyundai shares fell 6.21 percent following the announcement while Kia Motors shares plunged almost 15 percent. Other affiliates including Hyundai Wia, Hyundai Mobis and Hyundai Glovis also fell sharply.
“Hyundai Motor is getting requests from multiple companies for cooperation in the joint development of autonomous, electric vehicles but nothing has been decided” the company said in a statement.
“We are not in talks with Apple on autonomous vehicle development,” it added.
Kia Motors also said it was not in talks with Apple either.
Hyundai initially said last month it was in early stage talks with Apple, but later revised the statement and made no mention of the iPhone maker. It led to a surge in shares of Hyundai and its affiliates, including Kia Motors, at the time.