Global insurers signal coverage pullback for climate risks. Buyers enticed out in China after mortgage rule relaxation.
Kia ora,
Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.
I'm David Chaston and this is the international edition from Interest.co.nz.
And today we lead with news it will be worth keeping an eye on Chinese housing sales in September.
But first we should note that the rest of the world has basically had its feet up overnight, and there is little new data, or events to report.
China has nothing to say (because it won't say anything unless it is 'good'), and the US and Canada are making the most of their long weekend holiday. Europe has nothing special to report, and Japan seems out to lunch too.
Probably best you just skim the data updates below and move on to other stuff today!
If you really want to know, we can report that the Swiss GDP grew +0.5% in Q2 from a year ago, unchanged from Q1. But that has no implications for New Zealand of course.
Or we can report that German exports fell -0.9% in July from June to be -1% delow of the same month a year go.
Or we can report that major Chinese retailers are shutting down stores at a faster pace as they are unable to lure back customers who switched to online shopping during pandemic lockdowns.
Or that President Xi is skipping the G20 meeting in India, a break from his habit of attending every G20 leaders’ summit since taking power in 2012. The possible reasons are many, including focusing on economic problems at home, to trying to avoid being held accountable for a growing number of border disputes with its neighbours (and not the least, with host India). Accountability is something Xi doesn't do - he expects it of others, doesn't like it for himself.
In Australia, maybe you are interested that company profits fell -13% in the June quarter from the March quarter? Or are down -12% from year ago levels? (No evidence of 'greedflation' there.) No? Didn't think so.
Maybe you have come across something more interesting overseas that might affect New Zealand? If so, note it in the comment section below.
Actually, here is something that we should really keep an eye on. In the US, a set of major insurers are cutting natural disaster cover, especially in areas that need it most. Warren Buffet's Berkshire Hathaway, which also offers reinsurance, wrote that increased climate disasters mean “it is possible that policy terms and conditions could be updated or revised to reflect changes in such risk.” (It is a significant change of view by Warren Buffett.) The companies pulling back, or saying they will, are large and influential, and their influence will be felt here. Berkshire Hathaway is active in New Zealand and Australia. Further, life insurance companies are reassessing whether they should have as much invested in mortgage portfolios - also due to climate risks embedded in the mortgages of those portfolios. Climate uninsurability is a real thing right now.
And perhaps this is also worth noting. The relaxation of mortgage standards in China has in fact brought out the buyers - in some major cities at least, and in the first weekend of the relaxation. And shares in Chinese property firms have jumped after developer Country Garden reportedly secured an extension to a key debt payment deadline. Major home builders including Country Garden and Evergrande saw their shares rise in Hong Kong yesterday.
The UST 10yr yield will start today up +3 bps at 4.21%.
The price of gold will start today at just under US$1938/oz and down -US$2 from yesterday.
And oil prices are holding at just on US$85.50/bbl in the US. The international Brent price is firmish at just over US$88.50/bbl.
The Kiwi dollar starts today unchanged from yesterday, still at 59.4 USc. Against the Aussie we are -¼c lower at 91.9 AUc. Against the euro we are also down about the same at 55 euro cents. That all means the TWI-5 has slipped -15 bps to 68.6.
The bitcoin price is up a mere +US$10 today from this time yesterday, and is now at US$25,895. Volatility over the past 24 hours has been low at just on +/- 0.7%.
You can find links to the articles mentioned today in our show notes.
You can get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston. And we will do this again tomorrow.