New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

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<h2>Morning News Summary<br>BoE&nbsp;Hikes, ECB Continues QE — Stocks Like It</h2>
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<p>Equity markets&nbsp;traded mixed on Thursday after three major central banks pulled on different policy levers.&nbsp;​​​​​​​</p>
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<h3>Mixed follow-up to yesterday's Fed policy decision</h3>
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<p>US stock performances diverged on Thursday after the Federal Reserve on Wednesday announced an accelerated tapering of its asset-purchasing programme and indicated it would likely hike interest rates three times in 2022, stating that the US economy no longer needs policy support as inflation has soared. Having sent bond yields higher immediately after the Fed's announcement, investors had second thoughts on Friday, with the US 2-year Treasury yield dropping back -6pb to 0.63% and the 10-year down -3bp to 1.43%. Initial jobless claims increased 18,000 to 206,000. Investors took profits on mega-cap growth stocks like <strong>Tesla</strong> (-4.0%), <strong>Apple</strong> (-2.6%), <strong>Microsoft</strong> (-2.0%) and <strong>Amazon</strong> (-1.9%) — weighing down the tech-heavy Nasdaq (-1.2%) — and shifted into cyclicals and defensives, lifting the <strong>Dow Jones</strong> +0.5%; it all averaged out in the <strong>S&amp;P 500</strong>, which was flat. <strong>Adobe</strong> fell -9.4% following relatively disappointing Q4 results and FY22 guidance. <strong>Accenture</strong> jumped +7.9% after a strong fiscal first-quarter earnings result and raising its 2022 outlook. <strong>Qantas</strong> (-0.6%) chose Europe's <strong>Airbus</strong> (+3.0%) as the preferred supplier to replace its domestic Boeing (-1.8%) fleet.</p>
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<h3>European stocks jump as ECB dithers on ending QE while inflation runs hot; FTSE up despite&nbsp;BoE&nbsp;surprising with rate hike</h3>
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<p>The&nbsp;Stoxx&nbsp;600&nbsp;climbed +1.3% after the European Central Bank kept rates unchanged and effectively eased off the brakes on its bond buying programmes even as it raised its inflation forecast for next year from +1.7% in September to +3.2%. The ECB will wind down its&nbsp;Pandemic Emergency Purchase Programme as scheduled, but will instead increase bond buying&nbsp;in its&nbsp;Asset Purchase Programme ​​​​​​​in order to provide continued support to the&nbsp;Eurozone's&nbsp;Omicron-affected economy.&nbsp;Swiss&nbsp;pharma&nbsp;company&nbsp;Novartis&nbsp;(+5.6%) launched a share buyback. London’s&nbsp;FTSE 100&nbsp;gained +1.4% as the Bank of England surprised investors by raising its interest rates to 0.25% from 0.1% to try and curb high inflation. Banks such as&nbsp;Lloyds&nbsp;(+5.0%),&nbsp;Barclays&nbsp;(+4.1%) and&nbsp;HSBC&nbsp;(+3.8%) all&nbsp;benefitted&nbsp;from the&nbsp;BoE&nbsp;announcement. ​​​​​​​Boohoo&nbsp;(-22.3%)&nbsp;lived up to its name, warning that 2021–22 earnings may come in below expectations.</p>
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<h3>Asian investors take the Fed's announcement in their stride</h3>
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<p>Asian shares closed flat or in the green after the Fed’s interest rate hike announcement. China’s Shanghai Composite and CSI 300 gained +0.8% and 0.6% respectively. Japan’s Nikkei 225 increased +2.1%, South Korea’s KOSPI rose +0.6% and Hong Kong’s Hang Seng climbed +0.2%. The ASX 200 slid -0.4%, weighed down by CSL (-8.2%) as trading resumed after it completed an A$6.3b equity raise, the biggest in ASX history, to fund its acquisition of Vifor Pharma. Six of the eleven sectors closed in the red, while tech increased +2.1%, tracking Wednesday's +2.7% gain in the US. Mesoblast recovered +10.9% after saying it would conduct another phase three trial of its drug for back pain, following feedback from the US FDA. Miner IGO gained +1.4% after confirming a A$1.1b bid for Western Areas (+5.6%). The NZX 50 lost -0.7%, with Sanford falling -3.4%. Chorus tumbled -2.2% after the Commerce Commission issued its final determination on how much revenue the company can earn from its broadband fibre network.</p>
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<h3>WTI Crude, gold and iron all up +2%​​​​​​​</h3>
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<p>WTI crude&nbsp;increased +2.0% to US$72.93/bbl,&nbsp;gold&nbsp;gained +2.0% to US$1,799.10/oz and&nbsp;iron ore&nbsp;also rose +2.0%&nbsp;to US$109.22/MT.</p>
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Morning News Summary BoE&nbsp;Hikes, ECB Continues QE — Stocks Like It


Equity markets&nbsp;traded mixed on Thursday after three major central banks pulled on different policy levers.&nbsp;​​​​​​​



Mixed follow-up to yesterday's Fed policy decision


US stock performances diverged on Thursday after the Federal Reserve on Wednesday announced an accelerated tapering of its asset-purchasing programme and indicated it would likely hike interest rates three times in 2022, stating that the US economy no longer needs policy support as inflation has soared. Having sent bond yields higher immediately after the Fed's announcement, investors had second thoughts on Friday, with the US 2-year Treasury yield dropping back -6pb to 0.63% and the 10-year down -3bp to 1.43%. Initial jobless claims increased 18,000 to 206,000. Investors took profits on mega-cap growth stocks like Tesla (-4.0%), Apple (-2.6%), Microsoft (-2.0%) and Amazon (-1.9%) — weighing down the tech-heavy Nasdaq (-1.2%) — and shifted into cyclicals and defensives, lifting the Dow Jones +0.5%; it all averaged out in the S&amp;P 500, which was flat. Adobe fell -9.4% following relatively disappointing Q4 results and FY22 guidance. Accenture jumped +7.9% after a strong fiscal first-quarter earnings result and raising its 2022 outlook. Qantas (-0.6%) chose Europe's Airbus (+3.0%) as the preferred supplier to replace its domestic Boeing (-1.8%) fleet.


European stocks jump as ECB dithers on ending QE while inflation runs hot; FTSE up despite&nbsp;BoE&nbsp;surprising with rate hike


The&nbsp;Stoxx&nbsp;600&nbsp;climbed +1.3% after the European Central Bank kept rates unchanged and effectively eased off the brakes on its bond buying programmes even as it raised its inflation forecast for next year from +1.7% in September to +3.2%. The ECB will wind down its&nbsp;Pandemic Emergency Purchase Programme as scheduled, but will instead increase bond buying&nbsp;in its&nbsp;Asset Purchase Programme ​​​​​​​in order to provide continued support to the&nbsp;Eurozone's&nbsp;Omicron-affected economy.&nbsp;Swiss&nbsp;pharma&nbsp;company&nbsp;Novartis&nbsp;(+5.6%) launched a share buyback. London’s&nbsp;FTSE 100&nbsp;gained +1.4% as the Bank of England surprised investors by raising its interest rates to 0.25% from 0.1% to try and curb high inflation. Banks such as&nbsp;Lloyds&nbsp;(+5.0%),&nbsp;Barclays&nbsp;(+4.1%) and&nbsp;HSBC&nbsp;(+3.8%) all&nbsp;benefitted&nbsp;from the&nbsp;BoE&nbsp;announcement. ​​​​​​​Boohoo&nbsp;(-22.3%)&nbsp;lived up to its name, warning that 2021–22 earnings may come in below expectations.


Asian investors take the Fed's announcement in their stride


Asian shares closed flat or in the green after the Fed’s interest rate hike announcement. China’s Shanghai Composite and CSI 300 gained +0.8% and 0.6% respectively. Japan’s Nikkei 225 increased +2.1%, South Korea’s KOSPI rose +0.6% and Hong Kong’s Hang Seng climbed +0.2%. The ASX 200 slid -0.4%, weighed down by CSL (-8.2%) as trading resumed after it completed an A$6.3b equity raise, the biggest in ASX history, to fund its acquisition of Vifor Pharma. Six of the eleven sectors closed in the red, while tech increased +2.1%, tracking Wednesday's +2.7% gain in the US. Mesoblast recovered +10.9% after saying it would conduct another phase three trial of its drug for back pain, following feedback from the US FDA. Miner IGO gained +1.4% after confirming a A$1.1b bid for Western Areas (+5.6%). The NZX 50 lost -0.7%, with Sanford falling -3.4%. Chorus tumbled -2.2% after the Commerce Commission issued its final determination on how much revenue the company can earn from its broadband fibre network.


WTI Crude, gold and iron all up +2%​​​​​​​


WTI crude&nbsp;increased +2.0% to US$72.93/bbl,&nbsp;gold&nbsp;gained +2.0% to US$1,799.10/oz and&nbsp;iron ore&nbsp;also rose +2.0%&nbsp;to US$109.22/MT.


Morning News Summary: BoE Hikes, ECB Continues QE — Stocks Like It

<h2>Retail Sector</h2>
<p><strong>The response post GST changes</strong></p>
<p>As of 1 December 2019, the threshold at which GST is payable on imported goods was reduced to NZ$0. Following this change we analysed a number of international online retailers to understand what the potential upside is for New Zealand based retailers.</p>
<p><strong>Mixed responses from retailers</strong></p>
<ul>
<li>Many large Australian and UK retailers serving New Zealand have carried the GST cost burden with no change to the headline price (retailer pays)</li>
<li>A handful of retailers appear to have made no change and are either carrying the GST cost burden or are non-compliant</li>
<li>Only one example of active price response, with Australian market place The Iconic adding +15% to its “pick up” price (consumer pays)</li>
<li>At least one example, Amazon, of an international retailer halting service of New Zealand</li>
</ul>
<p>Whilst this analysis is limited by a small sample set, a majority of sites surveyed appear to capture the GST change within the ticket price, which may limit the potential benefit to New Zealand retailers, in our opinion. However we still see the change as a marginal positive for retailers, given (1) consumer perception that they are now paying more (2) some retailers are passing on the tax lift into ticket prices, and (3) a handful of retailers have paused service to NZ.</p>
<p><strong>Figure 1.&nbsp; Review of online retail sites post GST changes</strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.0.2&amp;permmsgid=msg-f:1651947305714551407&amp;th=16ece55278c78a6f&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8m9WZ09jjxfgaebFiz04gqO2-jtqxKh26MLzNwC6WGOEkgEbCS0R-PoN4AK5Q5tPOvkAN_6cKWobgVOE7eP3QrOa22YpHGoH2VQYK3DovH3hAsxpsiySdAg-0&amp;disp=emb" width="900" height="186" class="editor-image img-responsive" data-image-whitelisted=""></figure>
<p>Source: Various retail websites&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <wbr>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<wbr>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<wbr>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<wbr>&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
<p><strong>Amazon: Possible catalyst for a physical entry into the New Zealand market</strong></p>
<p>Amazon has stopped serving New Zealand from its international sites. In the past, changes to the de minims level for taxes and duties has been a catalyst for physical (fulfilment centre) entry into a market. Amazon’s first round of fulfilment centres in the US were focussed on low population states with low slates taxes that were close to highly populated areas. For example, Amazon opened fulfilment centres in New Hampshire and Delaware, both of which are close to major East Coast cities and have zero sales tax. Amazon’s announcement to enter the Australian market coincided with the Australian Government’s proposal to reduce its de minis threshold to $0.</p>
<p>With warehouses in Perth, Sydney, and Melbourne and New Zealand currently not serviceable from its Australian site, we believe the possibility of a fulfilment centre capable of providing an Amazon Prime service to New Zealand has increased. Refer to our attached research report&nbsp;Amazon — From A(ustralia) to (New) Z(ealand)&nbsp;for a detailed analysis of the implications of an Amazon entry into New Zealand.</p>
<p><strong>Guy Hooper&nbsp;</strong><br><em>Analyst, Equities</em><br>Forsyth Barr Limited&nbsp;</p>
<p>P: +64 4 495 5255 | TF: 0800 367 227&nbsp;<br>Level 22 , 157 Lambton Quay, Wellington</p>

Retail Sector
The response post GST changes
As of 1 December 2019, the threshold at which GST is payable on imported goods was reduced to NZ$0. Following this change we analysed a number of international online retailers to understand what the potential upside is for New Zealand based retailers.
Mixed responses from retailers

Many large Australian and UK retailers serving New Zealand have carried the GST cost burden with no change to the headline price (retailer pays)
A handful of retailers appear to have made no change and are either carrying the GST cost burden or are non-compliant
Only one example of active price response, with Australian market place The Iconic adding +15% to its “pick up” price (consumer pays)
At least one example, Amazon, of an international retailer halting service of New Zealand

Whilst this analysis is limited by a small sample set, a majority of sites surveyed appear to capture the GST change within the ticket price, which may limit the potential benefit to New Zealand retailers, in our opinion. However we still see the change as a marginal positive for retailers, given (1) consumer perception that they are now paying more (2) some retailers are passing on the tax lift into ticket prices, and (3) a handful of retailers have paused service to NZ.
Figure 1.&nbsp; Review of online retail sites post GST changes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Source: Various retail websites&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Amazon: Possible catalyst for a physical entry into the New Zealand market
Amazon has stopped serving New Zealand from its international sites. In the past, changes to the de minims level for taxes and duties has been a catalyst for physical (fulfilment centre) entry into a market. Amazon’s first round of fulfilment centres in the US were focussed on low population states with low slates taxes that were close to highly populated areas. For example, Amazon opened fulfilment centres in New Hampshire and Delaware, both of which are close to major East Coast cities and have zero sales tax. Amazon’s announcement to enter the Australian market coincided with the Australian Government’s proposal to reduce its de minis threshold to $0.
With warehouses in Perth, Sydney, and Melbourne and New Zealand currently not serviceable from its Australian site, we believe the possibility of a fulfilment centre capable of providing an Amazon Prime service to New Zealand has increased. Refer to our attached research report&nbsp;Amazon — From A(ustralia) to (New) Z(ealand)&nbsp;for a detailed analysis of the implications of an Amazon entry into New Zealand.
Guy Hooper&nbsp; Analyst, Equities Forsyth Barr Limited&nbsp;
P: +64 4 495 5255 | TF: 0800 367 227&nbsp; Level 22 , 157 Lambton Quay, Wellington

Retail Sector: The Response Post GST Changes

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Morning News Summary: BoE Hikes, ECB Continues QE — Stocks Like It

Morning News SummaryBoE Hikes, ECB Continues QE — Stocks Like It Equity markets traded mixed on Thursday after three major central banks pulled...

Forsyth Barr

Retail Sector: The Response Post GST Changes

Retail Sector The response post GST changes As of 1 December 2019, the threshold at which GST is payable on imported goods was reduced to NZ$0....

Forsyth Barr

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