The head of New Zealand’s biggest bank says he’s surprised by the lack of mortgage defaults but expects it will get worse.
The chairman of the country’s biggest Australian-owned bank, ANZ, thinks New Zealanders should welcome foreign money flowing into our economy because it doesn’t always assume influence.
Sir John Key told Markets with Madison a move from BlackRock this week to garner more investment in our renewable electricity efforts made sensebecause it aligned with the environmental interests of the global asset manager and other institutional investors.
However, he was surprised by the backlash towards BlackRock and its aim to achieve returns here.
“I find it remarkable when people are so worried about foreign capital. Who do they think is going to fund this stuff? And why would you care?”
He said anyone with empathy for the environment should care about lowering emissions, rather than who would fund the infrastructure and technology to achieve it.
“Whether that money comes from an investor who lives in Israel or New York or wherever... I don’t care.”
When asked if New Zealanders could be concerned about the political position foreign funding put us in, Key refuted that money always came with extra conditions.
As an example, the United States administration’s “very aggressive stance” towards China had not deterred it from buying US treasury bonds, he said.
“They [the US] have huge amounts of investment to keep their budget deficit afloat, but they seem to not like them [China] very much.
“Capital isn’t terribly patriotic, it moves to where it thinks the returns are.”
Former Prime Minister and National Party Leader Sir John Key says the "vibe has changed" between New Zealand and its largest trading partner China. He's pictured here with Chinese Premier President Xi Jinping in April, 2013.
BlackRock told Markets with Madisonthis week that it was targeting high single-digit returns on its $2 billion private fund, which could be spent on solar or wind power plants.
“It’s not like you can pick that up and transport it,” Key said. “So, what are the real risks?
“Some people will say I don’t like [that] it comes from China, or I don’t like that it comes from the United States, but, actually, more what they’re worried about is they just don’t like foreign capital.”
Assessing those aforementioned escalating tensions between the US and China, Key said New Zealand had to “tread a very fine line” politically, however, we were not being disingenuous by maintaining ties with them both.
“What would be the point in us divorcing China because the US currently has some concerns with them?”
But, if China invaded Taiwan, that should cause us to reassess that relationship.
For the record, Key put the probability of that happening in his lifetime at “next to zero”, because he didn’t foresee Taiwan breaking away from the mainland.
“I just don’t see it. My view is, let’s live in the here and now, and in the here and now, China’s a big market for us.”
Its economy was slowing, though, and officially entered deflation mode this week, meaning prices for goods were going declining overall.
“I think blind Freddie can tell you that their economy is under pressure at the moment.”
Key advises New Zealand businesses on China. He explained that the statistics did not necessarily paint a bad picture for our exporters because the middle-income market in China was still growing.
“For New Zealand, we’ve still got an incredibly bright future with China, as we do with lots of other countries.”
The former prime minister and National Party leader was however less upbeat about our prospects at home.
He said he worried about the “stripping away” of ambition across New Zealand, particularly younger generations.
“I worry about that national psyche.”
Speaking to Markets with Madison on his 62nd birthday, and blowing out a candle on a carrot cake in celebration, he unsurprisingly said his wish this year was for a change in government come October.
Madison personally paid $8.00 for the cake.
Madison Reidy is the host of New Zealand’s only financial markets show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters
