NZ sharemarket rallies past 13,000 points after Reserve Bank rate cut
The Kiwi dollar fell after the decision, while in the interest rate markets, the two-year swap rate fell by 15 basis points to 2.97% and 10-year bond yields dropped by nine basis points to 4.41%.
Hamilton Hindin Greene investment adviser Jeremy Sullivan said the market was buoyed by the Reserve Bank's decision.
'It's primarily the oath for future cuts to 2.5% by the year's end, the market is pretty happy with it,' Sullivan said.
'Members within the committee who see it justified to cut further heavily lean on the next one, giving more credence for 50 more basis points to come off this year.'
The results season continued with full-year results from Spark and Fletcher Building.
Spark chairwoman Justine Smyth said the last year was 'one of the most challenging periods in Spark's history' as its full-year reported net profit fell 17.7% to $260m.
The telco's revenue dropped 2.5% to $3.75 billion, and its total capital expenditure was down 17.2% to $429m.
Sullivan echoed those sentiments, calling it a 'challenging year' for the business.
'It had a lower customer spend, although it did deliver on its guidance maintained ahead of earnings. I would say that a cut in the dividend is expected.'
Spark's share price rallied 3.63% or 9c to $2.57 after 6.6 million shares changed hands, the highest volume of the day, with turnover worth $16.9m.
Elsewhere, Fletcher Building released its full-year results, putting a net loss of $419m down to tough market conditions.
'The main message is another tough year after several tough years,' said Sullivan.
'A wee shining light was that the convention centre is on track for handover in 2025. Although the lack of colour on the sale of the construction business was a bit disappointing.'
Revenue for the business fell 9% to $7b, but a highlight was its net debt of $999m, an improvement from $1.77b last June.
Fletcher's share price rose 0.33% or 1c to $3.08 with 1.3 million shares changing hands on turnover worth $4.1m.
Other big movers on Wednesday included Fisher & Paykel Healthcare, with its share price lifting 70c to $37.65 on turnover worth $16.2m.
Meanwhile, Mainfreight's share price fell 60c or 1.01% to $59 on turnover worth $21.6m.
Wall Street's stocks finished mostly lower on Tuesday, dragged down by tech companies retreating from record highs, while a Home Depot earnings report lifted retailers.
The broad-based S&P 500 Index fell 0.6% to 6411.37, while the tech-focused Nasdaq Composite Index fell 1.5% to 21,314.95.
The Dow Jones Industrial Average rose a marginal 10.5 points to 44,922.27, pulling back after hitting a record high on the back of Home Depot's quarterly report.
Shares of the home improvement company rose 3.2% after slightly missing analyst expectations but maintaining its full-year forecast.
Target, Walmart and Lowe's reports are due later in the week with all eyes on potential impacts on consumers from US President Donald Trump's tariffs.
– Additional reporting AFP
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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NZ Herald
an hour ago
- NZ Herald
Student loan debt hits $16 billion, most overseas borrowers aren't paying it back on time
There are Kiwi expats who took out loans as young students, often only 18 years old, and who did not understand the responsibilities and obligations, one tax barrister believes. As the debt mounts with interest, some will bury their heads in the sand. Others had settled in new home countries and forgotten they even had the debt, he says. Dave Ananth, special counsel at law firm Stace Hammond, says he has had clients so distressed by out-of-control debt, they became suicidal or had their marriages break apart – 'I've heard it many times.' Breakdown of who owes what and who's falling behind At the end of March, there were 626,728 borrowers with a student loan. More than 18% of those borrowers have overdue payments, amounting to 116,286 people. And most of those with overdue payments are overseas. More than $4b has been lent to Kiwis now overseas, and nearly $12b has been lent to New Zealanders still in the country, making the total balance just over $16b. Just over 18% of student loan debtors are abroad, with 114,347 overseas-based borrowers listed in the latest dataset from the Inland Revenue Department (IRD). Of those, 85,911 were overdue on repayments. This means more than 75% of overseas-based borrowers have overdue payments. And those tens of thousands of overseas debtors collectively owe repayments worth $2.3b, meaning they hold 92% of the overdue student loan balance. A breakdown of overdue loan repayments splits the debt between penalties and interest, and the principal loan. And more than half of overseas-based borrowers' debt is just interest and penalties: $1b worth of interest and penalties, and $1.3b of assessed principal. New Zealand-based debtors, meanwhile, are overdue on $18 million, 7% of the total $2.5b worth of overdue payments. And of the 512,381 borrowers in the country, 30,375, or 26%, had overdue payments. About 39% of domestic-based borrowers' debt is made up of penalties and interest. How do loan repayments work while overseas? Anyone outside New Zealand for more than six months is categorised as overseas-based. Interest will be charged on the loan from the day the borrower leaves the country. And loan repayments from overseas-based borrowers are based on the loan balance at the time the borrower left the country. In the year to April 2026, the annual interest rate was 4.9%. A late payment interest rate, applied to the outstanding payment for every day it goes unpaid, is set at 8.9%. Rates are set every April. Minimum annual repayments are set progressively, so borrowers with a balance of between $1000 and $15,000 must repay $1000; a balance of up to $30,000 will see $2000 required in repayments; up to $45,000 will require $3000; up to $60,000 requires $4000, and any loan over $60,000 will need $5000 worth of repayments. There are several reasons the IRD would consider keeping a loan interest-free while the borrower is overseas. Borrowers can apply through their MyIR account online and will need to provide evidence of their situation. The IRD did not respond to a request for comment, instead pointing the Herald to information available on its website. 'I'm scared of opening IRD letters': Kiwi expat A 29-year-old Kiwi expat in Berlin, Germany told the Herald the weight of his loan repayments was difficult to handle while he was doing odd jobs on his overseas experience (OE). 'I'm scared of opening the online letters from IRD to see how much I owe on my student loan while overseas,' the man, who wanted to remain anonymous, said. 'It's stressful enough having to learn a new language and find a job in a foreign country, let alone leaving your home and familiarity. 'Obviously, student loans should be paid back – and mine will be repaid as my income returns to normal.' A 49-year-old woman was arrested last Monday while trying to leave the country at Christchurch International Airport. Te Amo Matangi, who has called Australia home for the last 21 years, had a balance of $13,000 balloon to $58,000 in interest and penalties. As she tried leaving the country, a ticket scan triggered an alert and a police officer seized her passport, informed her she had a warrant out for her arrest then took her into custody. 'I don't think that I needed to be put in jail, and that's what the police officers were reiterating as well,' Matangi said. 'I just feel like [the IRD] is really trying to make a statement.' She urged other Kiwis living overseas to take the time with the IRD in order to not make the same mistake. IRD says crackdown is changing borrowers' attitudes The coalition Government poured $29m a year into the IRD for compliance and collection work in Budget 2024. In this year's Budget, the Government allocated a further $35m for compliance and collection. The IRD says this funding has driven its jump in collecting repayments from overseas-based borrowers. In the nine months from July last year, the IRD collected $207m from overseas debtors. That figure was 43% higher than the amount collected in the same period the previous year. 'As a result of the work we've been doing, we're also starting to see a more positive attitude by new borrowers, most of whom are meeting their payment obligations,' the IRD said. The IRD's customer segment lead, Jane Elley, said in May: 'We've contacted more than 12,000 borrowers, 1320 have entered repayment plans, and 960 people have fully repaid their overdue amounts. 'Three hundred and four overseas-based borrowers own property here, and during the first six months of our increased compliance work, they paid up $1.7m. 'For defaulters within this group who have refused to engage and resolve their default, further legal enforcement action will be taken, which may include NZ-based bankruptcy or charging orders over their properties,' Elley said. 'There were also 151 overseas-based borrowers with NZ-based investments, and between July and December last year, we received payments totalling $84,000 from some of them. Again, there could be legal action ahead, including taking deductions from their investments or bank accounts receiving interest income.' The IRD can apply to the courts for a warrant to arrest overseas debtors who 'knowingly default' on their repayments, Elley said. She said Customs and airlines helped the IRD keep track of debtors by handing over information and alerting it to travel information or border crossings. 'We apply to the District Court and the police make the actual arrest. Once arrested and taken before the courts, a judge can order the defaulter to make reasonable efforts to arrange repayment to Inland Revenue,' Elley said. Nation of Debt series Monday: NZ nears trillion-dollar debt burden Tuesday: Are higher taxes inevitable? Wednesday: Consumer debt dips but 470,000 Kiwis behind on payments Raphael Franks is an Auckland-based reporter covering business, breaking news and local stories from Tāmaki Makaurau. He joined the Herald as a Te Rito cadet in 2022. Sign up to The Daily H, a free newsletter curated by our editors and delivered straight to your inbox every weekday.
NZ Herald
an hour ago
- NZ Herald
Spark boss on ‘green shoots' after telco's ‘most challenging year'
READ MORE: Spark follows Air NZ in deal with Indian outsourcer, Luxon visits offshoring specialist 'An operating model change in 2025 led to a significant increase in the number of people that left our business,' Hodson said. 'We do operate in an industry that is constantly changing. So I can't say that there'll never be further change, but of the size that we saw in FY25, that is unlikely.' Green shoots? 'The past year has been one of the most challenging periods in Spark's history, as we navigated economic headwinds, materially lower customer spending, and ongoing structural change in some of our markets,' chairwoman Justine Smyth said in Spark's results filing. Is Hodson seeing any improvement in FY2026, which got under way on August 1? 'It's still a pretty tough economy,' she said. 'I know OCR is out today and that might lead to some further reduction [there was a 25 basis point cut]. We are seeing a couple of small green shoots within that, but ... I think it's still a pretty interesting time ahead as we go into this next year." Craigs Investment Partners analyst Mo Singh noted that on a conference call yesterday, Hodson had said that Spark had increased consumer and small business mobile plans by $2 to $5 a month. In the first three weeks at least, there had been low churn (net customer losses). Singh, who saw the result as being in line with expectations, said consumer and small business mobile business had been relatively stable in FY2025, while revenue from Government and corporate customers had been under pressure. Government department spending had stabilised, but big companies were still under pressure. Why sell the fast-growing data centres? Data centres were one of the few bright points of Spark's full-year result as revenue from the segment grew 11.1% to $50 million. Why did it recently announce a deal to offload the top-performer, or at least a 75% stake in the data centre division? 'It's really important to have that business well-funded. We've got a significant pipeline of growth in the next five to seven years.' The telco earlier laid out plans to spend up to $1 billion on expanding the capacity of its data centre business from 23 megawatts today to 130MW, which would put it toe-to-toe with the Big Tech contenders. 'What we get here is we realise some value now,' Hodson said. 'We also get to participate in that longer-term value, and our DC [data centre] business is funded to grow, which is a really important opportunity for us.' Profit hit Spark yesterday reported another big fall in profit, with reported net profit down 17.7% to $260 million – or a 33.6% fall to $227m, adjusting for one-offs and a '$26m impact of the government change to tax depreciation rules' on commercial buildings. Shares closed up 3.2% to $2.56. The profit crunch was within revised-down guidance and close to analysts' consensus expectations. And the telco predicted a more stable FY2026 after its recent accelerated cost-cutting – which hit $85m in the second half – and asset sales. FY2026 dividend will be lower The full-year dividend was 25 cents per share – in line with revised-down guidance (from the original 27.5cps) and ahead of the analyst consensus 24cps. Spark said 100% of FY2026 free cash flow (a forecast $290-$330m) would be paid out in its dividend, which a Spark spokeswoman said translated to 15 to 17cps. Craigs had been expecting a dip, but to 18cps. The telco also revealed a new five-year strategy, dubbed 'SPK-30″, which it said would deliver a 'capital management reset that refocuses Spark on its core connectivity business'. SPK-30 was outlined in very broad strokes yesterday. 'The strategy includes four key focus areas – growing core connectivity, simplifying and optimising beyond the core, and delivering a better network and better customer experiences. 'These priorities are enabled by a focus on people and culture, embedding technologies such as AI across Spark, disciplined financial management, and an enduring commitment to sustainability,' the telco said in an NZX filing. Spark also said a 'process has commenced to introduce new investors' to Mattr, its digital identity spinout that recently won a key contract for a new digital wallet and ID system that people will use to interact with government departments. In-line operating earnings, flat guidance Reported ebitdai was $1.053b, just a whisker shy of the analyst consensus of $1.054b. FY2026 guidance was for operating earnings of $1.02-$1.08b or $1.01-$1.07b excluding its now spun-out data centre business. Revenue fell 2.5% to $3.75b. Total capital expenditure fell 17.2% to $429m. Spark said 'business as usual' capex would fall to $380-$420m in FY2026 – excluding $50-$70m in 'strategic capex' for data centre expansion, which will now be shared with a new majority owner. Mobile down sharply in Govt, corporate Mobile service revenue declined 2.3% to $987m, 'driven by price competition in enterprise and Government and consumer prepaid,' Spark said in an NZX filing. Small business and consumer numbers grew in the second half, the telco said. Mobile revenue from consumer and small-to-medium business customers was down 0.9% from $869m to $861m for the full year. On a conference call, CEO Jolie Hodson said the telco was three weeks into $2 to $5 per month increases for the segment with 'low churn'. At the top end of town, there was continued pain, with mobile revenue from enterprise and Government falling 17% from $120m to $100m. Spark said total FY2025 mobile market growth was 1.2%, which it said was lower than market researcher IDC's 3% pick. One bright spot: Growth picked up to 1.9% in the second half. Continued weakness in IT services IT services revenue continued to be a pain point, falling 7.7% to $144m. Broadband revenue fell 0.8% to $608m. Cloud revenue grew 4.4% to $235m 'as public cloud uptake continued to increase'. Data centre growth, sale Data centres revenue grew 11.1% to $50m. On August 12, Spark said it had sold 75% of its data centre operations to Australian Pacific Equity Partners in a deal that values the business at $705m. The telco will get $486m cash, with a further $98m – for a total $584m – in FY2027 if performance targets are hit. The proceeds will go to paying debt, the company said in an NZX filing. Spark had net debt of $2.74b as of December 31, 2024 and $2.13b as of June 30, 2025. An artist render of the 40 megawatt data centre Spark will build on the Dairy Flat Surf Park development. The 10MW first stage will take about 18 months to construct. Image / Spark The Sydney-based Pacific Equity Partners (PEP) has more than A$14 billion ($15.4b) in funds under management. Its largely non-tech portfolio includes financial services and healthcare companies, Singapore Post's Australian operation and fleet leasing. It has also owned and sold major New Zealand businesses, including the chicken company Tegel and biscuit maker Griffins. Hutchison sale Spark banked a windfall $47m on June 23 as Hong Kong conglomerate CK Hutchison bought out its ASX-listed subsidiary, Hutchison Telecommunications Australia – in which Spark owned a 10% stake (dating from its Telecom days and a never-realised plan for a 3G partnership). The cash proceeds arrived in July, but will help with the FY2026 outlook delivered with results. Spark also realised $309m net of transaction costs as it sold its remaining 17% stake in Connexa, the company set up when it spun out its passive cell tower network assets. After a slow first half, Spark's drive to save $80m-$100m in costs gained steam in the second half. In April, it announced an expanded contract with Indian outsourcing and offshoring giant Infosys, and in May, 180 network operations roles were outsourced to Nokia (once a marquee handset brand and now a global giant in mobile networking infrastructure that runs outsourcing centres in two cities in India for global clients, as well as local operations). Spark has said it will launch a mobile-to-satellite service in the New Year, via a United States operator – who is unnamed, but there are strong indications its name rhymes with Farlink and has a famous South African-American billionaire as its CEO. Spark's Auckland staff moved into the newly constructed Fifty Albert tower in the New Year. Photo / NZ Herald How the competition is faring Rival One NZ, now 100% owned by Infratil, reported ebitdaf (earnings before interest, taxes, depreciation, amortisation and fair value adjustments) for the year to March 31 of $604.0m from last year's $545.5m, 'despite a challenging economic backdrop' on revenue that fell from $1.996b to $1.921b. Last November, privately held 2degrees said its operating earnings increased by 16% (excluding one-off gains from the FY2023 70% sale of its cell tower network) to $339m in the year to June as revenue rose by 7% to $1.34 billion in the year to June 30, 2024. The firm is expected to post its FY2025 numbers later this year. Chris Keall is an Auckland-based member of the Herald's business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
RNZ News
an hour ago
- RNZ News
Retailers upbeat following OCR cut, but experts say next six months will be crucial
Talk of lower interest rates has retailers feeling more positive about the economy. Photo: Yiting Lin / RNZ Shopkeepers might have high hopes for an economic turnaround and better sales, but the data indicates otherwise. Retail NZ chief executive Carolyn Young said Wednesday's cut to the official cash rate was unlikely to see shoppers flooding retail stores just yet. The Reserve Bank cut its cash rate by 25 basis points to a three-year low of 3 percent, and left the door open for further reductions . Young said the group's latest quarterly report from April to June, showed 62 percent of retailers did not meet their sales targets. But she said talk of lower interest rates had them feeling more positive about the economy. "Businesses are optimistic that we are through the worst of it, but their trading levels aren't showing that they are. Optimism is based on emotion and trading sales figures are based on fact." She said the next six months would be crucial for businesses facing closure and hoped to see the Reserve Bank deliver on more aggressive cuts. Retail NZ chief executive Carolyn Young. Photo: Supplied Previous OCR drops have not delivered the hoped-for economic boost, she said. "We're not seeing growth, we're not seeing many green shoots, we're seeing businesses that are still being challenged. Businesses closing, laying off staff, doing restructures. We know a lot of retailers are still trading at a loss. "It's a really difficult economic environment. Consumer confidence needs to be higher in order for retail to survive." Young said there was always a lag between rate changes and spending habits, and right now, people were focused on paying for the essentials. Meanwhile, Kelvin Davidson, chief property economist at Cotality was not expecting any big changes in the housing market following the lowered OCR . He said despite significant falls in the rate over the past year, the housing market had remained flat. "The influence of low mortgage rates is already out there, yet the housing market isn't really responding. "I think what were seeing on the other side of the ledger is restraint from the weak economy and weak labour market, people have lost jobs and even if you've kept the job there's that spillover impact on confidence." Davidson said until there was a shift in the economy and employment rates, the housing market was unlikely to change, and he expected it would remain subdued for the next 6-9 months. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
