Bernard Hickey is back on the Wakeup Call: Pink Batts probe; Shell wins Meridian auction; Vodafone towers up for sale; Auckland stuck for one more week; Rate hike on agenda

Summary: Heads up to shareholders in Fletcher Building, Infratil and Meridian Energy for regulatory and deal news this morning that might move their shares. Currency and interest rate watchers can look out on news on Auckland’s last week of lockdown and debate about the size of the Reserve Bank’s expected rate hike on Wednesday.

Now it’s building materials' turn. First it was the fuel market, which led to a restructure of pricing arrangements for wholesale fuel and hit Z Energy. And then the groceries sector, which may now be in line for a just-as-disruptive wholesale carve-up that Foodstuffs and Woolworths are worried about. Now it is the building materials’ market’s turn. Commerce Minister David Clark formally announced yesterday the launch of the Commerce Commission’s third market study into a sector dominated by Fletcher Building and Carter Holt Harvey.

Pink Batts probe Clark specifically mentioned insulation, where Fletcher has more than 90% of the market. This study was promised by Labour in its 2020 election campaign. BusinessDesk’s Brent Melville has the detail here. The policy wonks and analysts are welcome to fill their boots with the cabinet paper, the terms of reference and the formal minute of the decision here.

In Australasian M&A action Meridian Energy is expected to announce this morning that Shell and Australia’s Infrastructure Capital Group have won the A$1 billion auction for Meridian Energy’s Australian businesses, The Australian reported this morning. The assets include Powershop Australia’s 140,000 retail electricity customers and renewable power generation of 294 megawatts. Shell and ICG beat Italy’s Enel, Spain’s Iberdrola, Australia’s Ampol and Engie. 

Sale and leaseback? Elsewhere in deal news, Brookfield and Morrison & Co are understood to have hired investment bank Barrenjoey Capital Partners to sell Vodafone NZ’s telecoms towers, The Australian also reports. Infratil said earlier this month it was looking to “release capital” from Vodafone’s network assets. Spark is looking to do the same. See more from BusinessDesk’s Jenny Ruth here on Infratil’s strategy.

Watch out in the week ahead for: PM Jacinda Ardern is expected to say at her 4pm post-cabinet news conference today Auckland will remain at level three (step two) for the last week before the big ‘traffic lights’ decision next Monday. She has hosed down talk in recent days of a one-week move to level three (step three), which would allow some limited opening of hospitality and an early restart for hairdressers.

Quarter or a half? Interest rate markets and the yield-sensitive parts of the NZX will be on tenterhooks for the Reserve Bank’s last interest rate decision of the year on Wednesday at 2pm. Markets are pricing in a 40% chance of a 50 basis point hike to 1%, while all the bank economists are sticking with their 25 basis point hike predictions, albeit with the caveats that a full 50 point move is possible. 

In overseas markets and economics news: Global stocks fell as much as 0.5% on Friday night and Saturday morning after Austria and Germany announced emergency plans to lock down unvaccinated citizens to deal with big new waves of covid infections. The moves sparked riots over the weekend and fears of slower European economic growth. 

Still printing. The European Central Bank also dampened down speculation about higher interest rates by reiterating it still saw inflation as transitory and would keep stimulating. US markets are closed this week for Thanksgiving. Watch out for US personal consumption expenditure inflation figures on Wednesday night and ECB minutes on Thursday night.

From BusinessDesk’s correspondents today: 

  • Jenny Ruth takes a closer look at how the Reserve Bank might reverse its Quantitative Easing programme;
  • Rebecca Howard reports on LIC’s moves to breed the perfect cow that burps and farts the least amount methane; 
  • Brent Melville cites data showing almost half of Auckland’s retail and hospitality businesses didn’t pay their rent on time last month; and,
  • Michael Andrew profiles 28-year-old employment lawyer Ashleigh Fechney