2018: The More Things Change

Transcription

1 RESEARCH Markets Outlook 15 January : The More Things Change Govt/RBNZ changes no sweat for broad eco view Tuesday s QSBO to exhibit post-election grump CPI track stifled by Stats NZ re-weighting But housing inflation looks to be re-heating Recent rain warmly welcomed by farmers NZD up on solidifying global optimism We still pitch OCR increases starting H In spite of all that has changed, and is changing, we haven t really altered our forecasts of the NZ economy, from a broad perspective. As such, they remain relatively upbeat. The new government s policies will probably affect the composition of growth more than its overall rate, while supporting inflation from the bottom up. We also see the personnel and mandate changes afoot at the Reserve Bank as scant cause to amend our broad macro view. So we still envisage pressure will come on the RBNZ to start lifting its policy rate later on this year. From a GDP perspective, we forecast real growth of 2.9% for calendar 2018 and the same for This is after estimated growth of 2.9% for 2017 and expansions in 2015 and 2016 of 3.5% and 4.0% respectively each 1.0% stronger after Statistics NZ s recent annual revisions. 2.9% growth in prospect should be enough to hold the unemployment rate below 5%, as net inward migration is slow to abate. However, there will probably be some near-term chop to get through. Specifically, we think the NZ economy, ran a bit slow late last year and will continue to do so in the March quarter of this year. This relates to the recent election cycle and result, especially with respect to the business sector. Steady As She Goes Ann avg NZ Real GDP % growth Before annual revisions by Stats NZ After annual revisions by Stats NZ BNZ forecasts -2 Jun-88 Jun-91 Jun-94 Jun-97 Jun-00 Jun-03 Jun-06 Jun-09 Jun-12 Jun-15 Jun-18 Quarterly Source: Statistics NZ, BNZ Expect A Sag net % who are positive Source: ANZ, NZIER, BNZ Business Activity ANZ business survey, 12 month outlook QSBO, 3 month outlook Monthly A cautionary tone is certainly what we anticipate for tomorrow s NZIER Quarterly Survey of Business Survey (QSBO). Indeed, we expect it to sag quite a bit, in line with what the monthly ANZ business survey has done since September. The only question is, by how much? But unless the QSBO is predominantly negative, we ll largely look through it as having elements of over-reaction to the new centre-left government. In the least, the QSBO might hold up better than the ANZ survey given 1) it doesn t directly survey farmers (and agriculture provided the biggest drag in December s ANZ business survey) and 2) the QSBO has a relatively nearerterm focus than the ANZ survey does. And a look at November s PMI and PSI readings suggest economic activity was holding together just fine, just after the election. We ll get an update on the PMI this Friday. As for the QSBO s inflation gauges, however, these appear prone to remain firm, even strengthen a bit (if the ANZ survey is any guide). Even so, it s not clear that the headline CPI track itself will sustain pressure on the RBNZ to hike its cash rate. To be sure, we expect annual CPI inflation of 1.9% for Q4 (lower than the 2.0% we previously anticipated, as a consequence of the new CPI weights that Statistics NZ announced last Friday meaning a higher weight on falling food prices and a lower weight on rebounding fuel prices). In its November Monetary Policy Statement (MPS) the RBNZ forecast annual CPI inflation of 1.8% for Q As it turned out, this morning s December Food Price Index had no impact on our CPI track. It fell 0.8%, exactly as we expected. bnz.co.nz/research Page 1

2 Getting There Respite With The New Year Rains Annual % change 6.0 Consumers Price Index Forecasts Target peak RBNZ November MPS 2.0 Target mid-point Target low BNZ Source: RBNZ, Statistics NZ, BNZ Quarterly But also be aware that our CPI inflation forecasts undershoot those of the Bank s, starting Q2 this year and into early In particular, we expect 1.5% for the year to June 2018, whereas the November MPS forecast 2.1%. Of course, the medium-term view on CPI inflation, and trends in core inflation, should over-ride this, in recommending a start to normalising the Official Cash Rate from its record low. Threats of serious disinflation have surely passed. Nonetheless, if we re closer to the truth on headline CPI inflation for the next while, then the Reserve Bank might find further excuse to delay any tightening it envisages. This is especially if GDP growth proves a bit under par over the immediate term, as we also think is the likelihood. November s MPS expected GDP growth of 0.9% for Q and 1.2% for Q We are looking for 0.5% for each. Commodity price updates for this week come in the form of Wednesday morning s Global Dairy Trade auction and the afternoon s ANZ commodity export prices for December. While December s indices appear mixed, we are leaning to a further increase for the auction (after the 2.2% bounce in prices at the 3 January event). Whole-milk powder futures are up, as are oil prices, while the US dollar is down. Also, Fonterra recently announced a reduction in its tonnage on offer. Having said this, the country has had decent rains over recent weeks well most of it anyway. This has alleviated the threat from the very dry conditions that prevailed into the end of Certainly, a lot of farmers will be breathing easier (although it seems the hydro lakes down south could still do with more rain). As well as the weather, we ll be looking out for December s housing statistics from the Real Estate Institute. We expect these to be published by the end of the week. Chances are that they will show a resilient market, with signs that inflation is far from dead and buried, along with turnover that s recovering post the election. We caught whiff of this from the Aucklandcentric Barfoot and Thompson results for December, the Quotable Value NZ report for the month and various other housing data and anecdote. In keeping with this, November s building consents obviously rebounded with some gusto (in figures published last week), as apartments righted themselves from a sag in October. Indeed, apartments, along with townhouses, units and retirement village units, are driving residential consents now, while those for standalone houses are tending to level off (after a strong run). For more indication on late-2017 activity, we expect tomorrow s electronic card transactions to increase 0.2% for December. This would, following their 1.2% spike the month before, suggest a solid increase in Q4 retail sales, after their go-slow in Q3. It s also worth noting that global growth indicators continue to go from strength to strength, and in a much more synchronised fashion. This carries on from a recovered pace in 2017, after a very patchy and slow But while this has helped put some starch in global inflation, it has not pressed it to any strong pace as of yet. The ongoing improvement in global sentiment this year, including in world equity markets, has coincided with a bit of a run-up in the currency so far, albeit most pronounced against a weakening US dollar. Since we adjourned just before Christmas the NZ TWI has crept up to 75.0, bnz.co.nz/research Page 2

3 from around We expect it to peter off as the year progresses. However, for the moment, the exchange rate reinforces the cap we see on local CPI inflation, relative to RBNZ expectations. The November MPS expected the TWI to flat-line at As for NZ interest rate markets, they still have a stronger, and sooner, view on OCR hikes than the November MPS signalled. The market fully prices a 25bp hike by November and another two by the end of 2019, marking the policy rate at 2.50% by then. We see the OCR at a more-normal 3.00% by the end of next year. This is with a first hike in August, although we appreciate the risk of delay to this starting point. Upside, Over Time % Cash Rate Forecasts Source: RBNZ, BNZ Quarterly BNZ Nov 2017 RBNZ MPS craig_ebert@bnz.co.nz bnz.co.nz/research Page 3

4 Global Watch Australian labour data expected robust US has Fed speaker and bank reporting season China GDP growth expected at solid 6.7% Australia Aussie data flow picks up this week with Employment data on Thursday. There is also plenty of second-tier data, with the pick being Monthly Consumer Confidence on Wednesday. Other second-tier pieces include the MI Inflation Gauge on Monday, Housing Finance on Wednesday and Inflation Expectations on Thursday. As for the second-tier data, Monthly Consumer Confidence on Wednesday could be interesting to see whether the more buoyant mood from consumers continued into The strong labour market has no doubt helped to lift confidence and unemployment expectations amongst consumers are now at their lowest since May It is also worth noting here the previous divergence between Consumer and Business confidence has now almost closed. Labour Market To Get Even Stronger In 2018 For Employment, Australia s longest run of job creation since 1994 is set to continue with the market expecting +15k jobs m/m in December. NAB sees upside risks to this given solid job advertising trends on SEEK and by our own NAB Business Survey in November and are forecasting a bumper +35k employment print. For the unemployment rate, NAB and the market expect this to be unchanged at 5.4%. Sample rotation also seems to favor a strong print this month with the outgoing 1/8 of the sample having a lower tendency to be employed compared to the sample as a whole (employment to population ratio 61.8% compared to total sample 62.1%). If the incoming 1/8 is more in line with the existing sample then rotation alone could potentially add 10-15k jobs in the month. Consumers Becoming More Bouyant A Very Strong Labour Market In 2017 MI suggests inflation was building in Dec While NAB expects an unchanged unemployment rate for this month, the trend is firmly lower in Trend employment growth currently exceeds the level needed to keep the unemployment rate unchanged and at +22k is enough for it drop 0.1 every 2-3 months. The most recent employment indicators suggest it could fall below the RBA s 5% NAIRU in 2018 Job Vacancies this week were very strong. Our view of a continuing strong labour market is part of the reason why NAB sees the RBA hiking rates twice in the second half of bnz.co.nz/research Page 4

5 Other second-tier data pieces include the MI Monthly Inflation Guage on Monday, Housing Finance on Wednesday (0.0% m/m expected) and Inflation Expectations on Thursday. The Inflation Gauge may be worth paying attention to ahead of the official ABS Q4 CPI on Wednesday 31 January the Gauge suggests inflation pressures were building in Q4. Market focus A new section in the What to Watch that looks at one interesting market development that is set to intrigue analysts in the week ahead. As analysts we ll be watching whether there is a decisive break in US Treasury yields that signals the end of the bond bull market and the beginning of a bear market. The 10-year Treasury is sitting at 2.57% - bang on line with its ten year average. A Bear Market For Bonds? Not Yet Clear latest moves in yields following the stronger than expected core CPI print. Datawise the main pieces are Industrial Production on Wednesday (0.3% expected) and the Uni Mich. Consumer Sentiment Report on Friday (97.0 expected). There are also a number of regional manufacturing indices, including the NY Empire on Tuesday and the Philly Fed on Wednesday. The Fed also releases its Beige Book on Wednesday, while Fed speak continues with non-voters Harker, Rosengren, Evans and voter Mester on the circuit. Bank profit reporting season continues with Citigroup (Tuesday), Goldman s, BoAML (Wednesday) and Morgan Stanley (Thursday). Finally, Friday 19 looms as the deadline for a possible government shutdown likely to be averted with a temporary funding agreement. Canada A likely rate hike by the Bank of Canada on Wednesday a main focal point for markets. Around 78% of economists expect a hike and markets are 85% priced having moving sharply on last week s employment data where the unemployment rate fell to 5.7% - the lowest since 1974 and well below most estimates of the NAIRU. Given the rapid improvement in the economy in 2017, three hikes in total are priced for Eurozone A quiet week ahead with only the final version of the CPI on Wednesday. Europe also has Trade Balance data on Monday. Key ECB speakers include Weidmann on Saturday, Nowotny on Wednesday and Coeure on Friday. For markets, the Euro will be the focus as it makes three year highs. China Q4 GDP on Thursday would normally be the main item, though there may be less of a reaction to it following Premier Li s comments that GDP growth was about 6.9% in 2017 note consensus which predates the comments sits at 6.8% for the YTD. Given that, more interest is likely to be on the monthly trio of Retail Sales, Fixed Assets and Industrial Production all expected to be similar to last month s growth rates. US A quiet week start to the week with Monday being a Federal Holiday (Martin Luther King; bond/equity markets are closed). While quiet, markets will be digesting the UK An important week with CPI on Tuesday and Retail Sales on Friday. For CPI the market is looking for the y/y rate to have finally peaked and is forecasting Headline at 3.0% y/y and Core at 2.6% y/y. Japan An industrial focus with Machine Tool Orders Monday, Core Machine Orders on Wednesday and Industrial Production on Thursday tapas.strickland@nab.com.au bnz.co.nz/research Page 5

6 Fixed Interest Market Reuters: BNZL, BNZM Bloomberg:BNZ So far this year, New Zealand has largely been tracking what s been going on in offshore fixed interest markets. US Treasury yields breached the psychologically important 2.50% level last week, their highest level since March and within proximity of 3 year highs. NZ longer-term rates have risen in sympathy with those offshore while the 2 year swap rate has been reasonably sticky around 2.20%. The rise in US yields to start the year has been driven by a combination of factors. Stronger global growth has seen expectations grow that central banks will dial back emergency monetary policy settings. The ECB minutes highlighted the central bank might change its guidance around QE in the coming months probably to end QE in September while the BoJ s reduction in its longer-term purchases of JGBs caused some to speculate the BoJ may likewise reduce stimulus this year (we are doubtful of the latter). Meanwhile, higher commodity prices and a better than expected US core CPI release on Friday have seen market expectations of inflation pick up somewhat. The market-implied probability of a March hike now sits above 80% with close to 2½ rate rises priced for New Zealand longer-term rates have risen in sympathy with those offshore. The 10 year NZ swap rate is up 7bps so far this year while the 10 year NZGB is up around 12bps. The spread between NZ and US government bond yields has stabilised near the tightest levels seen since the mid-1990s. As we discussed last week, we expect longer-term NZGB yields to rise this year alongside those of US Treasuries, in part to retain demand from foreign investors. We would see any declines in NZ rates towards their year-to-date lows as an opportunity to lighten up on duration and for corporates to put hedges in place. The DMO resumes NZGB tenders this Thursday after a month-long pause, with $200m 2025 maturity bonds to be issued. The seasonal pause in issuance from the DMO alongside the maturity of the Dec17 NZGB in mid- December contributed to a sharp decline in NZGB yields and widening of swap spreads into year-end. These moves have partially retraced this year (the 2023 NZGB is up 15bps in yield), although with a number of NZGBs trading special in repo implying the market is short the 2025 tender should go reasonably well. While NZGB supply has been on hold so far this year, there have been a number of Kauri bond issues from supranationals to fill the supply void. Asian Development Bank, IADB and NIB have together issued over $1bn so far this year, all in the 5 year maturity. The short-end of the NZ swap curve has remained subdued, despite the relatively large moves seen offshore and in NZGBs. The 2 year swap rate has traded a 7bp range in 2018 and is currently at 2.21%, close to where it ended last year. While the market has firmed up its pricing of rate rises by the Fed, it remains sceptical the RBNZ will be tightening in the first half of this year. Looking to the week ahead, the local data calendar is reasonably sparse, with the highlight being the QSBO released tomorrow. The next major economic data release in NZ is CPI, which comes out on 25 th January; we expect a 0.4% increase for the quarter which would take the annual rate to 1.9%. We expect the 2 year swap rate to remain range-bound between 2.15% % until then. Offshore, there isn t much major economic data either although it s possible the market could still challenge the 2017 highs in the 10-year US Treasury yield of 2.63%. The major event offshore is the Bank of Canada s rate decision, where it is expected to raise rates for a third time this cycle. With the rate rise almost fully-priced, the market s focus will be on the accompanying statement and any comments from the Governor about the potential for further rate rises this year. There s no automatic readacross from BoC hikes to the RBNZ, but it does reinforce the backdrop of an improving global economy and more central banks shifting towards tightening monetary policy. NZ-US bond spreads at tightest level since 1990s % NZ-US 10 year NZ-US 5 year OCR-Fed funds rate spread % Source: Bloomberg Current Rates/Spreads and Recent Ranges Current Last 3-weeks range* NZ 90d bank bills (%) NZ 2yr swap (%) NZ 5yr swap (%) NZ 10yr swap (%) s10s swap curve (bps) NZ 10yr swap-govt (bps) NZ 10yr govt (%) US 10yr govt (%) NZ-US 10yr (bps) NZ-AU 2yr swap (bps) NZ-AU 10yr govt (bps) *Indicative range over last 3 weeks nick.smyth@bnz.co.nz bnz.co.nz/research Page 6

7 Foreign Exchange Markets Reuters pg BNZWFWDS Bloomberg pg BNZ9 The NZD ended last year on a strong note and has begun 2018 in a similar fashion. Over the past month, the NZD has been one of the best performing major currencies (+4%), beaten only by the Scandinavian currencies. The backdrop for this move has been a step-up in risk appetite, with our index reaching its highest level since mid Investors appear optimistic about the economic outlook ahead, with indicators pointing to the best global growth conditions in more than six years, supporting commodity currencies like the NZD. The NZD s recent strong recovery represents a bit of a catch-up from last year s overall underperformance. Last year the NZD traded mostly below our short term fair value model estimate. The strong rally over the past month sees the NZD up through fair value, albeit only just, less than 1% above the current model estimate of Net speculative positioning data shows that a short squeeze might have contributed to some NZD strength. Positioning late last year and early this year was notably short, providing a low hurdle for an NZD recovery. Data through to the week ending 9 January shows some closing of short positions, but overall positioning remains unusually short. Technical indicators put the first area of resistance at while the relative strength indicator already suggests that the NZD is well into over-bought territory. Our view is that the NZD recovery is likely to soon run out of steam. Our fundamental view on the NZD hasn t changed. From the current level the balance of risk is skewed to the downside for the NZD, notwithstanding the possibility of a further near-term short squeeze. The year ahead is expected to show global growth flattening out, a less favourable terms of trade environment for the NZD and global policy rates heading higher. These fundamental forces represent headwinds for the NZD in the year ahead. In the week ahead the local economic dataflow begins for the year. On paper, tomorrow s quarterly survey of business opinion is the key release, but the expected plunge in many indicators should be ignored, simply reflecting the survey picking up the formation of the new government since the previous quarterly survey some negative headlines for sure, but not particularly meaningful. Reduced dairy volumes (owing to drought conditions in some areas) offered at the GDT dairy auction should help support dairy prices. The first auction early in the New Year when most were still on holiday showed a modest recovery in pricing after the slump towards the end of last year. On the global scene we ll be interested in whether the Bank of Canada hikes rates for the third time this cycle (Thursday morning NZT). The market is pricing an 85% chance of a 25bp hike but just as important will be the commentary which will help guide expectations for further possible moves. A dovish hike, for example, wouldn t necessarily support the CAD. Ultimately we see the global policy rate environment as negative for the NZD to the extent that rising global rates dent the outlook for global growth and risk appetite. The US economic scene is fairly quiet, while elsewhere China s data dump of real activity indicators and Australian employment data both due Thursday offer some scope for action in commodity currencies. Last Friday we saw renewed strength in EUR and GBP resulting in these NZD crosses falling 1.5% on the day. For the year ahead EUR and GBP are our preferred currencies, and this sees these NZD crosses fall through the year, with mid-year targets of EUR 0.56 and GBP Risk Appetite Up to a Multi-Year High 90% 80% 70% 60% 50% 40% 30% 20% 10% Source: BNZ, Bloomberg jason.k.wong@bnz.co.nz BNZ Risk Appetite Index Cross Rates and Model Estimates Current Last 3-weeks range* NZD/USD NZD/AUD NZD/GBP NZD/EUR NZD/JPY *Indicative range over last 3 weeks, rounded figures BNZ Short-term Fair Value Models Model Est. Actual/FV NZD/USD % NZD/AUD % bnz.co.nz/research Page 7

8 Technicals NZD/USD Outlook: Trading range ST Resistance: (ahead of ) ST Support: (ahead of ) The strong NZD recovery since mid-december has seen previous resistance levels broken one by one. We see the next area of resistance around There is weak support around the 200-day moving average of NZD/USD Daily Source: Bloomberg NZD/AUD Outlook: Trading range ST Resistance: (ahead of ) ST Support: (ahead of ) Resistance is at which matches both the 200-day moving average and resistance levels in place since September. The first area of weak support kicks in around NZD/AUD Daily Source: Bloomberg NZ 5-year Swap Rate Outlook: Neutral ST Resistance: 2.73 ST Support: 2.45 Market breaking higher. Break confirmed should we close above NZ 5-yr Swap Daily Source: Bloomberg NZ 2-year - 5-year Swap Spread (yield curve) Outlook: Neutral ST Resistance: +53 ST Support: +46 Ranges becoming quite tight. Trade a break of trendlines. pete_mason@bnz.co.nz NZ 2yr 5yrSwap Spread Daily Source: Bloomberg bnz.co.nz/research Page 8

9 Key Upcoming Events Forecast Median Last Forecast Median Last Monday 15 January NZ, Food Price Index, December -0.4% NZ, (pending) REINZ Housing Data, December Aus, Inflation Gauge (Melbourne Institute), Dec y/y +2.7% Euro, Trade Balance, November s.a b b US, Leading Indicator, December +0.4% US, Holiday (obs), Martin L King Jnr Tuesday 16 January NZ, QSBO, Q3 +18 NZ, Electronic Card Transactions, Dec +0.2% +0.5% +1.4% Jpn, Tertiary Industry Index, November +0.3% +0.3% Germ, CPI, Dec y/y 2nd est +1.7% +1.7%P UK, CPI, December y/y +3.0% +3.1% US, Empire Manufacturing, January Wednesday 17 January NZ, ANZ Commodity Prices (world), December -0.9% NZ, Dairy Auction, GDT Price Index +2.2% Aus, Housing Finance, November -1.0% flat -0.6% Aus, Consumer Sentiment - Wpac, January Jpn, Machinery Orders, November -1.2% +5.0% Euro, CPI, Dec y/y 1st est +1.4% +1.4%P US, NAHB Housing Index, January Wednesday 17 January continued US, Industrial Production, December +0.4% +0.2% US, Fed's Evans/Kaplan/Mester Speak, Monetary Policy US, Beige Book Thursday 18 January Aus, Unemployment Rate, December 5.4% 5.4% 5.4% Aus, Employment, December +35k +15k +62k China, GDP, Q3 y/y +6.7% +6.8% China, Property Prices, December Euro, ECB's Weidmann/Coeure Speak US, Housing Starts, December 1,290k 1,297k US, Philly Fed Index, January Can, BOC Policy Announcement 1.25% 1.00% Friday 19 January NZ, BNZ PMI (Manufacturing), December 57.7 China, Industrial Production, Dec y/y +6.1% +6.1% China, Retail Sales, Dec y/y +10.2% +10.2% Germ, PPI, Dec y/y +2.3% +2.5% UK, Retail Sales vol., December -0.9% +1.1% US, Mich Cons Confidence, January 1st est Monday 22 January NZ, Holiday - partial, Wellington Anniv. Historical Data Today Week Ago Month Ago Year Ago Today Week Ago Month Ago Year Ago CASH & BANK BILLS Call mth mth mth mth SWAP RATES 2 years years years years years GOVERNMENT STOCK 03/ / / / / / / / FOREIGN EXCHANGE NZD/USD NZD/AUD NZD/JPY NZD/EUR NZD/GBP NZD/CAD TWI GLOBAL CREDIT INDICES (ITRXX) Australia 5Y Nth America 5Y Europe 5Y bnz.co.nz/research Page 9

10 Contact Details Stephen Toplis Head of Research Craig Ebert Senior Economist Doug Steel Senior Economist Jason Wong Senior Markets Strategist Nick Smyth Interest Rates Strategist Main Offices Wellington Level 4, Spark Central Willis Street Private Bag Wellington Mail Centre Lower Hutt 5045 New Zealand Toll Free: Auckland 80 Queen Street Private Bag Auckland 1142 New Zealand Toll Free: Christchurch 111 Cashel Street Christchurch 8011 New Zealand Toll Free: National Australia Bank Peter Jolly Global Head of Research Alan Oster Group Chief Economist Ray Attrill Head of FX Strategy Skye Masters Head of Fixed Income Research Wellington Foreign Exchange Fixed Income/Derivatives Sydney Foreign Exchange Fixed Income/Derivatives New York Foreign Exchange Fixed Income/Derivatives Hong Kong Foreign Exchange Fixed Income/Derivatives London Foreign Exchange Fixed Income/Derivatives ANALYST DISCLAIMER: The person or persons named as the author(s) of this report hereby certify that the views expressed in the research report accurately reflect their personal views about the subject securities and issuers and other subject matters discussed. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the research report. Research analysts responsible for this report receive compensation based upon, among other factors, the overall profitability of the Markets Division of National Australia Bank Limited, a member of the National Australia Bank Group ( NAB ). The views of the author(s) do not necessarily reflect the views of NAB and are subject to change without notice. NAB may receive fees for banking services provided to an issuer of securities mentioned in this report. NAB, its affiliates and their respective officers, and employees, including persons involved in the preparation or issuance of this report (subject to the policies of NAB), may also from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as advisors, brokers or commercial bankers in relation to the securities (or related securities and financial instruments), of companies mentioned in this report. NAB or its affiliates may engage in these transactions in a manner that is inconsistent with or contrary to any recommendations made in this report. NEW ZEALAND DISCLAIMER: This publication has been provided for general information only. Although every effort has been made to ensure this publication is accurate the contents should not be relied upon or used as a basis for entering into any products described in this publication. Bank of New Zealand strongly recommends readers seek independent legal/financial advice prior to acting in relation to any of the matters discussed in this publication. Neither Bank of New Zealand nor any person involved in this publication accepts any liability for any loss or damage whatsoever may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this publication. US DISCLAIMER: If this document is distributed in the United States, such distribution is by nabsecurities, LLC. This document is not intended as an offer or solicitation for the purchase or sale of any securities, financial instrument or product or to provide financial services. It is not the intention of nabsecurities to create legal relations on the basis of information provided herein. National Australia Bank Limited is not a registered bank in New Zealand. bnz.co.nz/research Page 10