Business & Investing: What is Peter Beck’s high school careers advisor thinking now? Plus international freight charges rise steeply

Following 24 hours of intense media speculation Rocket Lab yesterday confirmed what had largely become common knowledge – that it would list on the tech heavy Nasdaq exchange in New York, bypassing a local listing or even a dual listing on the ASX.

The proposed backdoor listing of Rocket Lab will occur through Nasdaq listed Vector Acquisition Corporation (ticker VACQ), a special purpose acquisition company (SPAC) that listed on the Nasdaq itself in November last year. Vector Capital, a San Francisco based investment company with US$4b of assets under management, is the promotor and founder of Vector Acquisition Corporation.

Vector’s share price closed at US$13.95 on Tuesday up 36 percent following news of the Rocket Lab deal which values the company at US$4.1 billion (NZ$5.7 billion) putting founder Peter Beck not far off poll position on the country’s Rich List.

There can be little doubt the NZX would have dearly loved the opportunity to host Rocket Lab on the local exchange, though it doesn’t quite have the cachet of a Nasdaq listing with the significant analyst coverage and publicity that will accompany its addition to the boards. It’s to be hoped founder Peter Beck will also be accorded that most coveted of opportunities for new listings, the chance to ring the opening bell watched by a global audience of millions on multiple international business news channels.

Beck now follows in the footsteps of Xero founder Rod Drury having created a multibillion-dollar global businesses from New Zealand in a sector that few would have imagined even a decade ago could ever be established here.

Its testament to Beck’s tenacity and vision and all the more impressive given that he never attended university, yet the overwhelming majority of his staff are graduates of some of the world’s most prestigious universities.

And just as an aside, it does make you wonder what advice he received from his careers advisor in his final year at James Hargest College in Invercargill where he completed his secondary education.

International freight charges surge in the wake of continued shipping delays

Higher international freight costs arising from Covid-related shipping delays and culminating in a global shortage of shipping containers have seen transport costs surge by $100 million, or 15 percent, during the December quarter.

Statistics NZ data showed sea transport was up almost $70m and air transport climbed by $24m, however total transport costs were down $531m for the quarter on a year-on-year basis, reflecting the impact of border closures on international travellers and a drop in the value of imported goods.

Overall, the value of imported goods rose $213m, or 4.2 percent to $5.3 billion. A 15 percent rise in vehicles and parts to $806m from $700m and a 21 percent increase in electrical machinery and equipment to $521m were the main contributors to the rise.

The biggest falls for the month were in aircraft and parts, down 74 percent at $28m and petroleum products which dropped 37 percent to $359m.

Commodity exports were strong with seasonal fruit exports more than doubling in value to $67m from $33m and medical equipment, which was up 104 percent year-on-year to $183m for December.

Offsetting these rises was a 19 percent fall in dairy products, down by almost a fifth for the month to $1.6b.

In total, exports for the year to December 2020 were largely unchanged at $60b compared with the prior calendar year.

Business leaders call on the Government to share its post-Covid recovery plans

A group of senior business leaders is pressuring the government to be more transparent about its post-pandemic plans, calling for a “clear path out of Covid” and to work with business more to “sustainably” manage the virus.

The group, which includes chairs and directors of major NZX companies, has issued a plea for greater “openness” as the country endures its fourth lockdown, and for Auckland, it’s third at Level 3.

In a statement, the group sought clarity from the government on its plan for getting the country to a “covid normal”.

Chair of Chorus NZ and Auckland International Airport Patrick Strange said Covid-19 is now “firmly part of how we live and work”.

The group, which also includes Warehouse chair Joan Withers, SkyCity chair Rob Campbell and Fisher & Paykel Healthcare chair Scott St John, are asking the Ministry of Health to be more open about sharing New Zealand’s long-term Covid-19 strategy including the government’s plan to develop the ‘world’s smartest border’.

“It will be beneficial for all New Zealand if the Ministry of Health and other agencies take an open and transparent approach to the development of a path towards sustainable virus management,” the group said in a statement.

In particular they are calling for a clear explanation of the key metrics, thresholds and milestones officials are tracking to judge “the ongoing performance of the strategy over time” with a view to reopening the border.

The group also wants to know what plans there are for automated tracking and tracing, health passports and other technology to manage future community outbreaks, and how it can allow NZ businesses to reconnect with overseas customers as well as permitting foreign students to re-enter the country through the use of ‘smarter borders’.

Finance Minister Grant Robertson said the government would take a look at what the group is asking for. “We are in constant contact with the business community and they have been heavily involved in the response.”

Reserve Bank of Australia commits to leaving rates unchanged until it sees evidence of wage growth

The Reserve Bank of Australia yesterday made clear it would not lift interest rates until it sees sustainable strong wages growth and low unemployment, while at the same time dismissing fears of an inflation outbreak as the economy continues to recover from the pandemic recession.

The bank held official interest rates at an equal record low of 0.1 per cent at its March meeting on Tuesday while committing to buying another A$100 billion of government debt over coming months to keep official borrowing costs down.

In recent days the bank has spent A$10 billion buying government bonds after interest rates started to rise faster than expected. The Australian dollar also appreciated, moving above US80¢ in a development that also caused concerns for the central bank.

The increase in global interest rates has been driven in part by predictions of a rise in inflation due to the $US1.9 trillion stimulus plan being put in place by the new Biden administration in the United States.

Governor Philip Lowe said the RBA was prepared to buy even more government debt “if necessary”, arguing there were few signs of an inflation rise in Australia that would require higher interest rates.

He said it was unlikely that inflation would be within the RBA’s 2 to 3 per cent target band until at least 2024.

GameStop shares on the rise again as European regulator issues a warning to investors

Remember GameStop from a few weeks ago? Shares of the much-publicised US video game retailer are back on the rise, the only problem being no one can quite explain why.

GameStop shares have tripled in value in the past two weeks from a low of US$40.50 on February 19 to US$120.40 yesterday, despite analysts saying the stock should be trading at around US$10 based on its current earnings.

This week, European regulators have weighed in on the issue, warning retail investors against participating in financial markets “purely” based on information they gather from social media.

The GameStop phenomenon witnessed in the US in January highlighted the impact of coordinated retail investment, when mainly amateur investors used the social media platform Reddit to discuss their intentions to bet on the American games and consoles seller, leading to a huge surge in its share price.

The main issue concerning regulators is that some of these investors were not fully aware of the details of the transactions.

In a parliamentary hearing last month Steven Maijoor, chair of the European Securities and Markets Authority, explained that “coordinated strategies to buy and sell at certain conditions and at a certain point in time with the objective to inflate the share’s price could constitute market manipulation.”

The regulator said it is monitoring developments around retail investment and has said it would make a point of scrutinizing the business models of the trading platforms used by retail investors in the coming months.

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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