New Ocker syndrome: Stop the world we want to get off

The schizophrenic outcome of the Australia election back in August featured two distinctly non-global politicians.

Both exploited xenophobic fears – even to the point of ignoring the role New Zealand should play in Australian policy considerations.

So it is not surprising this fortress mentality is starting to imbue the business scene, with reports highlighting a rush of foreigners buying up farm land (sound familiar?) and companies failing to make the most of opportunities overseas.

There have been a few exceptions – OneSteel has made a successful $US930 million bid for AngloAmerican’s steel grinding unit, Scaw Metals Group; ANZ Bank is spending another $A126 million to maintain its 20% stake in China’s Bank of Tianjin during a capital raising;.and Brambles has paid €923 million to buy Germany’s IFCO Systems, a plastic returnable crate business.

Then there’s the other side of the story: BHP was forced to called off its $US40 billion bid for Canada’s Potash Corporation because of government intervention.

That leaves another of the week’s big deals – AMP’s acquisition of one-time life insurance rival Axa, formerly National Mutual. This deal is worth $A14.2 billion and follows an unsuccessful bid by National Australia Bank.

That was turned down by regulators and protected Australia’s “four pillars” banks from getting any bigger in the domestic market. AMP has aspirations to join them – but it has come at a high price.

French pluck the plum
The true winner in the AMP-Axa merger is Axa’s French parent that first bought a halfshare of National Mutual back in 1995.

That 51% cost $A1.1 billion some five years after ANZ had been prevented from buying the company. (NAB’s offer was also more than AMP is paying.) But the point is that Axa is finally winning control of its Asian assets, which are worth some $A10 billion and most likely to expand rapidly.

The outcome has saddened observers, who would have favoured that growth occurring under Australian control. But as Robert Gottliebsen has noted, the French had the upper hand over Axa Asia Pacific’s directors:

When you have been bombarded by Axa France people for such a long time, becoming exhausted is human. In addition [if] they oppose the bid the short-term orientated institutional shareholders would give them a withering blast, which could turn nasty.

Accordingly, I not don’t blame them. They are to be pitied because they will very likely discover that what they are selling for $A10.4 billion will be worth $A20 billion or even more in the next decade.

In a separate commentary, Gottliebsen castigates Australia’s non-resources businesses for their failure to tap the growth markets of Asia.

He says the star performer was, in fact, Axa, which built up the valuable business being sold. Others in his top 12 of exceptions (details are in the article) are Macquarie, BlueScope, Lend Lease, Ramsay Health, Leighton, ANZ, Toll, WorleyParsons, Orica, Coca Cola Amatil and Computershare.

Dalai Lama effect
No one country walked away with much to show from the G-20 summit or even Apec, so news that New Zealand and Russia had clinched agreement on an FTA negotiation was indeed big.

The deal was justified in strategic terms, rather than trade ones, as New Zealand was pitching itself as a free trade purist for large powers to engage (or in the case of Japan, to reproach).

In a multi-polar world, these power games are serious, with Russia bidding to join China and the US as a major player. Even the Russians concede free trade helps economies and it wants to learn the ropes from New Zealand.

Russia is already an exponent of using trade, or specifically energy supplies, as a lever. Now a study by German scholars reveals how China uses the “Dalai Lama effect.”

This occurs when a nation hosts the Tibetan leader and the Chinese retaliate.

According to the authors, both from the University of Goettingen in Germany:

”Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China.”

Using data from the UN and the World Bank, the authors found that “official” meetings between the Dalai Lama and the leadership of a country resulted in a cut in exports to China from that country of an average of 8.1%.

This effect, the authors say, lasts about two years. They involve mostly machinery and transport equipment.

It has political consequences, too; in 2008 the annual China-EU talks were shelved for the first time in 11 years after French President Nicolas Sarkozy met the Dalai Lama.

More recently, the effect turned sinister with China suspending rare earth metal shipments to Japan over the capture of Chinese fishing boat captain near some disputed islands.

And, of course, there is the heavying of Norway over the award of Nobel peace prize to a jailed Chinese dissident. (Japan is the latest country to ignore the Chinese threats.)

Wheels within wheels
The coincidental launches of two “biographies” in the same week – of Truth newspaper and Sir Geoffrey Palmer’s parliamentary years – would have tested the endurance of those familiar with both.

Sir Geoffrey was also involved in the formative years of the National Business Review and he grew up in Nelson, as I did, where his father was editor of the Nelson Evening Mail (it has since dropped the “Evening” though that’s when it still comes out).

According to Redmer Yska’s colourful account, teenaged law clerk Geoff Palmer worked at Truth for 18 months, writing the Ask a Lawyer column. Even at that time, he was interested in what is now known as media law but was more commonly called defamation or libel.

Sir Geoffrey later got to rewrite the law, though not to his own satisfaction and to the continued frustration of editors and publisher ever since,

Another interesting connection is his editorship of Salient, the Victoria University paper, when its printing moved to Truth’s new presses in 1963.

As a result, Salient looked more professional than either of its daily counterparts, the Evening Post and The Dominion.

I am looking forward to a planned Salient reunion next year for those who produced the paper at Truth while it was also attacking students. (Disclosure: I later did some part-time subbing at Truth.)