The good, the bad and the ugly – NBR's plays of the week
Boat builders bounce back
Despite the failures of a number of high profile companies, New Zealand’s superyacht industry is in good health and recovering strongly from the financial crisis.
As reported in today’s National Business Review print edition, orders have been made for 10 $20-60 million boats in the past 10 months.
Marine Industry Association executive director Peter Busfield said that after a slow-down in 2008/09 New Zealand has retaken a considerable share of the international superyacht market.
The exchange rate is one factor making New Zealand-built boats a more attractive option for the world’s wealthy elite, he said.
Although New Zealand’s dollar is higher against most currencies than a few years ago, the exchange rate has been relatively stable, a factor Mr Busfield says is more important to prospective buyers.
Failures in the spotlight
The news the superyacht industry is recovering after struggling for the last couple of years is a boost to an industry that has been in the spotlight for all the wrong reasons recently.
It appears that the collapse of boat-building companies such as Salthouse Marine, Ivan Erceg’s Sensation Yachts and Bill Lloyd’s Sovereign Yachts has done little to dent the reputation of New Zealand boat builders internationally.
This is crucial because, as Mr Busfield points out, the marine industry is New Zealand’s biggest manufacturing sector.
Perhaps now some of the bad apples have been cleared out it can move forward and continue to thrive, generating export revenue and providing well-paid jobs.
Peter Maire swears off public companies
As reported in last Friday’s NBR print edition, prominent entrepreneur Peter Maire has said “no more” to putting his money in public companies.
His decision comes after the failure of eftpos business ProvencoCadmus, which went into receivership last year.
The Navman founder bought a $4.25 million stake in Cadmus pre-merger in 2006 and at the time ProvencoCadmus went into receivership he owned 6.2% of the shares.
“I’ve gone out of public companies that’s for sure, except for Rakon,” Mr Maire said. “Just private investments now.”
While it doesn’t exactly sign the NZX’s death warrant, it does go to show that it is not just gullible grannies that lose money on New Zealand’s stock exchange and decide to stay away.
And if more wealthy investors take the same stance it could make sourcing local capital even more difficult for New Zealand’s publicly listed companies.
Once bitten, twice shy
Although he is on the Rich List and has years of business and investing experience behind him, Mr Maire’s sentiment is similar to that of many other New Zealanders who have had their hands burned investing in the share market.
Ever since 1987 when the stock market crash knocked over an array of flimsy and often fraudulently run companies New Zealanders have by and large shunned shares, instead ploughing money into over-priced leaky houses.
KiwiSaver was supposed to plug more money into local capital markets but unfortunately a large percentage of people who join the scheme are ending up in default funds due to apathy and ignorance, meaning much of their money goes to cash and government bonds.
With most of New Zealand’s biggest companies either foreign owned, privately owned or government owned it is clear the NZX is hoping to build from the ground up by growing small listings into behemoth companies.
But new listings are few and far between, small listed companies aren’t making the step up to the big league and the likes of recently-listed scented candle maker Ecoya are hardly going to set capital markets on fire.
If things get any worse NZX’s lobbying for compulsory superannuation could start to get louder and louder.
Government mining backdown farcical
Behind National’s humiliating backdown from its proposal to open up conservation land for mining lie bigger issues that could determine New Zealand’s economic future.
This week Resources Minister Gerry Brownlee announced that not only would the Schedule 4 protected land be off-limits but also that another 12,400ha would be added to it and future national parks and marine reserves will also be un-minable.
If anyone had any doubt where National’s loyalty lies, this proves conclusively that it cares more about far-left environmental groups than it does about wealth-producing New Zealanders.
New Zealand’s comfortable upper class (eg, Lucy Lawless) can afford to have trendy concerns about the “environment” and “conservation.”
And the green lobbyists despise material wealth anyway so they’re happy to impoverish their fellow countrymen in order to protect scenic locations few New Zealanders even get to benefit from seeing.
End the National-isation
An estimated 40% of New Zealand’s mineral wealth lies beneath Schedule 4 lands, which make up 13% of New Zealand’s land mass, meaning billions of dollars worth of resources have been locked up.
The story attracted plenty of comments on the NBR website with Ross putting it down to bad PR: “This is another case where the Govt. has been very poorly served by its communications people (they employ truck loads of them).
“The whole idea was to explore the possibilities and potential for mining – not to start digging holes tomorrow.”
What is really needed to sort the mining/conservation mess out is clear property rights and de-nationalisation of mineral resources.
The government should sell all these “conservation” estates and let the market decide what the preferred use of the land should be, while getting out of mining altogether and letting private companies do the prospecting.
It seems likely that tourism companies would buy the most beautiful spots and they could work together with the mining companies to ensure there wasn’t too much environmental damage (as that would drive the tourists away).
If the reported 50,000 people who marched against the mining proposal really cared that much about this land they could start up a fund to buy some of it.