NZ
Auckland Council has voted to sell a 7% stake in Auckland Airport which will leave them with a ~11% share in AIA. LIkely to be several interested parties in the stake – imagine it will be snapped up quickly – without Sydney Airport, where else do you allocate those $?
Noting also a lot of negative sentiment re: AIA’s price hikes – Qantas and Air NZ leading the charge – we think the whole airline story is overheated – price gouging cannot continue forever nor can airport valuations (~40x earnings). Prefer the story being sold at Tourism Holdings (THL) – trading at ~11x fwd earnings, 6% divvy and ~35c per share est. EPS. More room to run in the tourism story for NZ – but be selective with how you allocate we think..
Taking a look at credit card data for NZ below – some soft data suggests credit card spending is down on a three-monthly basis but remains elevated when compared on a two-year stack to pre-2020 (look at that uptick in Christmas shopping every year!) Nothing to get excited about here – we suspect the proof will be in the last few months of this year when spending is typically elevated.
The Greens’ Tax Policy
One of the things we are fascinated by is economic policy written by NZ’s left. The Greens are ostensibly NZ’s most left wing party (in parliament, anyway) and yet parts of their recent announced tax policy feel distinctly neo-liberal – a universal income which Milton Friedman first proposed in 1962 (Friedman’s philosophy was responsible for “Rogernomics”). The Green’s UI is surprisingly low at $385 per week for a single person – we can’t say we think this is meaningfully different from current policies in place at Work & Income.
The Greens’ tax policy gets more nebulous when it moves to a wealth tax – 2.5% on individuals with assets over $1M. This feels like an indirect tax on real estate to us (real estate being the ‘sacred cow’ of NZ politics) and we see a few problems: i) more people will shift assets to indirect vehicles – i.e. a trust, or company, or offshore trust and ii) asset rich but cash poor individuals (farmers) will be forced to sell up if their tax burden becomes too onerous. We think it skirts around that core issue – housing – which will remain an issue as long as NZ’s housing stock remains in deficit and in high demand. Noting also a tax hike to 35% for people earning $75k + and 45% (!) to people earning over $180k – again, we imagine this will incentivize people to work in more tax efficient ways rather than garner any tax. (Munger: Show me the incentive, and I will show you the outcome).
Yet the biggest issue, we think, it’s that tax on assets – if you’re living in a $2.5M house in Ponsonby, and your income is superannuation, how will you pay that?
Week Ahead
Monday: NZ Credit Card Spending Data
Tuesday: US CPI (Inflation) Data, Australia: Westpac Consumer Confidence, NZ Net Migration
Wednesday: US PPI (Producer Inflation) Data, NZ Housing Data (REINZ Sales)
Thursday: US Fed Interest Rate Decision, and Jobless claims data, NZ 2023 First Quarter GDP data
Friday: Eurozone CPI (Inflation) Data, Bank of Japan Interest Rate Decision