Black Monday

[Balance]

Hey Balance, I've been a bit stretched for time lately, but had skimmed some of your posts regarding negative interest rates around the world. Was that negative nominal rates? What countries is that applying to? Cheers in advance. I note, that I think Adrian Orr mentioned it may happen in NZ too (but again, I think that was just from skimming a headline - so not sure if I interpreted correctly).

Countries currently with negative interest rates - Japan, Germany, ECB, Denmark, Sweden and Switzerland. They are nominal interest rates. If inflation is factored in, then some countries with zero or close to zero interest rates (eg. US, Australia, Spain, Italy and NZ for that matter) are already in real negative interest rates territory.

Adrian Orr has mentioned as a possibility while Westpac Bank predicts it will happen in NZ by year end.

Think of what that means to the billions of dollars in bank deposits in NZ?

As someone

[Cyclical]

If inflation is factored in, then some countries with zero or close to zero interest rates (eg. US, Australia, Spain, Italy and NZ for that matter) are already in real negative interest rates territory.

Of course we could be in for a period of deflation...

[Balance]

Chinese companies seem to be on the hunt for bargain depressed assets as witnessed in them building a stake by chinese tech giant Tencent of 5% in APT (Afterpay) across ASX and PGW here by BAIC....what more to come??

Listening to our good ole Winston on Q+A last night, he did mention that they're working at fast pace on a legislation to stop any opportunistic acquisitions of NZ companies by foreign entities, similar to what AUS govt has done recently.

Winston & Australia are hoping the Chinese will move in to rescue their distressed and failed companies?

I certainly would not rate PGW at $2.75 as bargain depressed assets!

And as the Chinese historically typically buys property, the foreign ban and OIA requirement means that they cannot already.

So WTH is Winston on about? Politicking to his senile and ignorant electoral base as per usual.

[Balance]

Of course we could be in for a period of deflation...

True but :

1. Negative interest rates have been around since 2016,

2. Inflation have been benign but still positive for the countries with negative interest rates.

In any case, the issue is how depositors will react when they are faced with having to pay banks for the privilege of depositing money with them!

What will they do with their money instead?

[see weed]

Western commentators (economists, media and politicians) still have little idea about why China keeps surprising them with its economic ability to grow resiliently over the last 30 years.

Simplistically, the average Chinese saves 40c out of every $1 earned vs the average Westerner spending $1.50 for every $1 earned. And they are prepared to tighten their belts when things get tough.

I must have a bit of Chinese in me. My partner and I, from 1995 two 1997 saved $100,000 in two years. Our combined income was approx $60,000 per year. And we had about 90% deposit on the house we bought in 1997 for 340k which has gone up about 500% since then.

[Balance]

I must have a bit of Chinese in me. My partner and I, from 1995 two 1997 saved $100,000 in two years. Our combined income was approx $60,000 per year. And we had about 90% deposit on the house we bought in 1997 for 340k which has gone up about 500% since then.

Well done, see weed!

You must look back with huge pride at the sacrifices you made then to save hard and build up your asset & wealth base. 💪

Can’t help but compare and contrast with the latte & avocado crowd these days who moan and whinge about not been able to go on holidays whenever they want, drive the latest SUVs etc etc. 🤬

[Cyclical]

So WTH is Winston on about? Politicking to his senile and ignorant electoral base as per usual.

Yep, and it's going to get more painful in the coming months. Usual scaremongering BS to appeal to the 5%. As much as I can't stand him and Jonesy, I think I would be slightly happier with another Labour/NZF coalition than a Labour landslide.

[BigBob]

In any case, the issue is how depositors will react when they are faced with having to pay banks for the privilege of depositing money with them!

What will they do with their money instead?

Don't forget that it is not necessarily all savers that are affected. Different banks have different rules...

In Denmark for example, negative nominal rates do not apply to retail customers in some banks, in some banks it is for balances over a certain amount (normally well above $100k) and in some banks certain types of accounts are exempt...

[BWH]

Yep, and it's going to get more painful in the coming months. Usual scaremongering BS to appeal to the 5%. As much as I can't stand him and Jonesy, I think I would be slightly happier with another Labour/NZF coalition than a Labour landslide.

Or worse, a Labour/Green coalition! If nothing else Winston has been a useful handbrake to some of their loonier ideas.

[Bjauck]

Hope it’s rushed through while Winnie has some clout

Otherwise as the other parties are endeared to China it’ll never happen.

Yep it may be a question of last company remaining on the NZX, please turn off the light.