Category: Business

Source: Radio New Zealand

Mercury Energy has powered up its new geothermal generator near Taupō, which is now delivering electricity generation to the national grid.

Built at a cost of $220 million, the new unit is expected to be fully operational by March.

Mercury said the unit will add a further 46 megawatts of renewable energy – enough to power about 55,000 homes – ahead of winter, lifting the station’s installed capacity from 86 MW to 132 MW.

At full capacity, Mercury said the Ngā Tamariki power station would generate around 1120 gigawatt hours of electricity a year, enough to supply about 158,000 average homes – more than all residential homes in Christchurch.

The station is powered by nine geothermal wells drilled more than 3000 metres below the surface, where temperatures reach up to 290 degrees Celsius.

Mercury chief executive Stew Hamilton said the expansion is part of a $1 billion investment in three renewable generation developments planned by the company.

“These include the Ngā Tamariki expansion, stage two of the Kaiwera Downs wind farm in Southland, and the Kaiwaikawe wind farm in Northland.”

The Ngā Tamariki geothermal station is owned by Mercury. However, the resource has been developed in partnership with Tauhara North 2 Trust and with mana whenua Ngāti Tahu Ngāti Whaoa.

The trust jointly owns the resource consents, receives a revenue stream from the station, and holds options to take an equity stake.

Investigations into geothermal development at Ngā Tamariki date back to 1986, with the power station first commissioned in 2013.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

More than half a million people visited Auckland’s Ikea in its first month of business.

Ikea said the Sylvia Park shop was the top-performing in the Ingka Group anywhere in the world for food sales.

The busiest day was Sunday, 7 December, when almost 30,000 people visited.

There were also 1.9 million website users in the first month.

Ikea sold almost 50,000 of its Frakta blue bag, 40,000 white Oftast plates and 29,480 white Oftast bowls.

New Zealand shoppers also bought more than 54,000 hot dogs and more than 21,000 cinnamon buns as well as 28,000 servings of meatballs and mashed potatoes.

University of Auckland marketing expert Shahper Richter said some of the activity was due to the novelty of a new shopping option.

“Ikea isn’t a normal retailer, it’s destination shopping. The showroom acts like a decision-aid, the food makes it feel like a cheap outing, and Smaaland [a supervised play area] is a quiet superpower.

“Free childcare reduces the friction for families, which drives longer stays and repeat visits. Crowds will settle from opening-month levels, but I’d expect it to remain a major drawcard because it creates habits, not just hype.”

Retail consultant Chris Wilkinson, from First Retail Group, said it had been the country’s most anticipated retail opening.

“They hit the market at a key time for spending, pre-Christmas, and it benefited from owning every media channel for weeks leading up to and following the opening.

“Now the store has got through the fascination and novelty factor, we’re likely to see the serious shoppers venture in – those who will be looking for inspiration and want the space to enjoy the experience of those curated room spaces and unique products, that the initial frenzy would not have enabled.

“These are the people who tend to spend more, so I would anticipate this will propel the second wave of concentrated activity. This should carry on this year as locals and visitors make a visit part of their leisure itinerary. I say that because a visit there is a purposeful move – it’s not a place you simply pop into – due to its scale, and the intentional need for shoppers to navigate the large store and room settings and likely distractions of the food offer.

“So, I think that the novelty will be sustained for quite some time as they strategically launch new products and consumer chatter through socials continue to keep the brand top of mind.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

The big interest rate question this year will likely be when interest rates start to rise materially again – but borrowers might want to fix their home loans soon, forecasters warn.

Rates have generally been falling since 2024. Reserve Bank data shows the average two-year special rate has dropped from about 7 percent at the peak to just over 4.5 percent at the end of last year.

The main banks are now advertising two-year specials of 4.69 percent or 4.75 percent.

When the Reserve Bank indicated in its latest official cash rate update that it did not necessarily expect to cut rates further, it prompted wholesale markets to lift and some fixed rates to shift higher.

Reserve Bank governor Anna Breman indicated that the market may have moved too far.

BNZ chief economist Mike Jones said interest rates would likely be on hold for now.

“There seems to be a growing risk that interest-rate hikes, although they are a way off, might come a little bit earlier than our expectations,” he said.

“Formally, that’s still the first lift in the OCR coming in February of 2027, but from what we’ve seen from the data recently, there’s a risk it could be late 2026. That’s something the markets are now already pricing.”

He said wholesale markets had now priced in a full 25-basis-point hike by the end of the year, so retail rates may not move a lot, even if that proved true.

“I think we’re in a position we can probably draw a line under the downtrend in mortgage rates, but we can’t see mortgage rates jumping a whole lot any time soon either.

“It does seem to us like we’re in for a period of consolidation, I think, in mortgage rates… but it’s also watching and waiting nervously for what we see offshore in particular, because it is quite a heightened environment for geopolitical risk and risks generally.”

ASB economists said the OCR and mortgage rates were now lower than they had expected in forecasts made early last year. They expected short-term rates to stay at their current levels this year, before rising as the economy improved.

Longer-term fixed rates of more than two years could increase more over 2026.

“Major global central banks have also been cutting policy rates over 2025, at different paces,” they said. “That has impacted global interest rate markets, including markets where New Zealand banks compete for funding.

“Longer-term NZ mortgage rates eased over 2024 to reflect the combination of the global and local outlook. Our view now is that longer-term rates are under upward pressure, reflecting longer-term inflation expectations and global central bank actions.

“In addition, it is very significant that wholesale interest rates rose in immediate response to the RBNZ’s November OCR cut, after the RBNZ in effect downplayed the prospects of any further OCR cuts.

“In early 2026, the wholesale interest rates that influence term mortgage rates for one-year terms and onwards are past their lows for the easing cycle, and that’s put upward pressure on both longer-term mortgage rates and term deposit rates.”

Infometrics chief forecaster Gareth Kiernan said he expected the OCR to stay at 2.25 percent until November, but inflation was still likely to come in higher than the bank anticipated this week.

“There are questions about how quickly that headline inflation rate might moderate and, if that’s the case, well, maybe the Reserve Bank does need to raise a little bit sooner rather than later, but at this stage, we’re still sticking to the end of the year.”

He said it would make sense for most people to think about fixing their home loan rates for longer.

“There doesn’t seem to be a lot of evidence that those retail rates will be coming down any further now. Previously, I think I talked about you’ve probably got until the middle of this year before you start to see upward pressure, but obviously, the market has turned a little bit quicker.

“It’s just a question now, for me, whether, if you’re going to go at three or four or five years, whether you’ve maybe missed the boat a little bit on some of those.”

Reserve Bank data shows three-year special rates hit a trough of about 4.8 percent in November, before increasing. The main banks are all now advertising rates more than 5 percent.

At Squirrel, David Cunningham expected little movement. He said banks were competing hard with things like cash back, rather than trying to tempt borrowers with new lower rates.

Jones said BNZ had also reduced its expectations for house-price rises this year.

“They were already pretty modest at 4 percent for the calendar year, but we’ve tapered them back a little to 2 percent. From what we’re seeing, particularly on the supply side, we think some of those risks we’ve been talking about for a while, about kind of sideways for longer, seem to be crystalising.

“It’s a market that looks pretty well balanced at the moment. It has been for most of the last 12 months, where you’ve got a bit of extra demand, you’ve got a faster pace of sales, but that’s been matched off pretty well by the supply side and new listings.

“We basically just think that market – all that sort of balanced type of conditions – will remain in play for longer.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

The government is loaning $3.1 million to help build an industrial hub near Gore.

The money, from the Regional Infrastructure Fund, was announced on Wednesday by Associate Minister for Regional Development Mark Patterson.

He said the 43-hectare development would ease a critical shortage of large industrial sites in the Gore District.

“It is expected to create up to 50 jobs during construction and attract industries such as fertiliser distribution, farm equipment services, warehousing, and retail.”

Ngāi Tahu iwi authority Hokonui Rūnanga and Robertson Transport Limited were leading the $13.6m project.

“Importantly, this development will provide Hokonui Rūnanga with a sustainable income stream through long-term leases, enabling it to fund vital health and social services for the community,” Patterson said.

Construction was due to start midway through this year.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Last year was a record-breaking year for the do-it-yourself (DIY) Sharesies investment platform, with investors well-positioned for further investments in 2026.

Investor confidence jumped to a three-year high in the last three months of 2025, with the index peaking at 62 in October, before market volatility dampened enthusiasm to end the quarter at 45.

The index ranked the confidence of more than 930,000 Sharesies customers in New Zealand and Australia from zero to 100.

“Record trading in October was followed by subdued sentiment in November and returning stability in December,” Sharesies head of data and analytics Jordan Cunningham said.

Sharesies savings accounts saw an uptick in deposits in November, compared with the buying of shares in October.

However, the share market picked up again following the Reserve Bank’s interest rate cut in late November.

Still, net deposits for 2025 hit a record $1.7 billion at the end of December, compared with $815 million the year before.

“There were several weeks in December where the total amount of deposits were double that of withdrawals,” Cunningham said.

“We’re still really seeing those positive indications of strong net buying over selling and that strong growth in the net deposits.

“This suggests investors were positioning themselves for the year ahead.”

She said an ongoing trend was a declining investor preference for NZX companies, with Fisher & Paykel Healthcare, Meridian Energy and Infratil down in the ranking.

“That has been driven by the increasing focus on US.markets. We have still seen growth in investing in the NZX, but it really hasn’t kept pace with the growth we’ve seen in US markets.

“Almost 80 percent of our trading volumes now are on US [markets], compared with about 10-15 percent in NZX.

“It’s really hard for even those blue chip NZX companies to keep pace with the growth that we’re seeing [in the US], both in trading volumes and also a price.”

By contrast, she said gold-themed, exchange-traded funds saw strong net buying during the quarter.

“Tough to know what’s going to continue, given the global uncertainty that we face really.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

The big interest rate question this year will likely be when interest rates start to rise materially again – but borrowers might want to fix their home loans soon, forecasters warn.

Rates have generally been falling since 2024. Reserve Bank data shows the average two-year special rate has dropped from about 7 percent at the peak to just over 4.5 percent at the end of last year.

The main banks are now advertising two-year specials of 4.69 percent or 4.75 percent.

When the Reserve Bank indicated in its latest official cash rate update that it did not necessarily expect to cut rates further, it prompted wholesale markets to lift and some fixed rates to shift higher.

Reserve Bank governor Anna Breman indicated that the market may have moved too far.

BNZ chief economist Mike Jones said interest rates would likely be on hold for now.

“There seems to be a growing risk that interest-rate hikes, although they are a way off, might come a little bit earlier than our expectations,” he said.

“Formally, that’s still the first lift in the OCR coming in February of 2027, but from what we’ve seen from the data recently, there’s a risk it could be late 2026. That’s something the markets are now already pricing.”

He said wholesale markets had now priced in a full 25-basis-point hike by the end of the year, so retail rates may not move a lot, even if that proved true.

“I think we’re in a position we can probably draw a line under the downtrend in mortgage rates, but we can’t see mortgage rates jumping a whole lot any time soon either.

“It does seem to us like we’re in for a period of consolidation, I think, in mortgage rates… but it’s also watching and waiting nervously for what we see offshore in particular, because it is quite a heightened environment for geopolitical risk and risks generally.”

ASB economists said the OCR and mortgage rates were now lower than they had expected in forecasts made early last year. They expected short-term rates to stay at their current levels this year, before rising as the economy improved.

Longer-term fixed rates of more than two years could increase more over 2026.

“Major global central banks have also been cutting policy rates over 2025, at different paces,” they said. “That has impacted global interest rate markets, including markets where New Zealand banks compete for funding.

“Longer-term NZ mortgage rates eased over 2024 to reflect the combination of the global and local outlook. Our view now is that longer-term rates are under upward pressure, reflecting longer-term inflation expectations and global central bank actions.

“In addition, it is very significant that wholesale interest rates rose in immediate response to the RBNZ’s November OCR cut, after the RBNZ in effect downplayed the prospects of any further OCR cuts.

“In early 2026, the wholesale interest rates that influence term mortgage rates for one-year terms and onwards are past their lows for the easing cycle, and that’s put upward pressure on both longer-term mortgage rates and term deposit rates.”

Infometrics chief forecaster Gareth Kiernan said he expected the OCR to stay at 2.25 percent until November, but inflation was still likely to come in higher than the bank anticipated this week.

“There are questions about how quickly that headline inflation rate might moderate and, if that’s the case, well, maybe the Reserve Bank does need to raise a little bit sooner rather than later, but at this stage, we’re still sticking to the end of the year.”

He said it would make sense for most people to think about fixing their home loan rates for longer.

“There doesn’t seem to be a lot of evidence that those retail rates will be coming down any further now. Previously, I think I talked about you’ve probably got until the middle of this year before you start to see upward pressure, but obviously, the market has turned a little bit quicker.

“It’s just a question now, for me, whether, if you’re going to go at three or four or five years, whether you’ve maybe missed the boat a little bit on some of those.”

Reserve Bank data shows three-year special rates hit a trough of about 4.8 percent in November, before increasing. The main banks are all now advertising rates more than 5 percent.

At Squirrel, David Cunningham expected little movement. He said banks were competing hard with things like cash back, rather than trying to tempt borrowers with new lower rates.

Jones said BNZ had also reduced its expectations for house-price rises this year.

“They were already pretty modest at 4 percent for the calendar year, but we’ve tapered them back a little to 2 percent. From what we’re seeing, particularly on the supply side, we think some of those risks we’ve been talking about for a while, about kind of sideways for longer, seem to be crystalising.

“It’s a market that looks pretty well balanced at the moment. It has been for most of the last 12 months, where you’ve got a bit of extra demand, you’ve got a faster pace of sales, but that’s been matched off pretty well by the supply side and new listings.

“We basically just think that market – all that sort of balanced type of conditions – will remain in play for longer.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Six months after announcing a potential sale was on the cards, Fletcher Building revealed on Tuesday that a binding agreement had been reached, and its construction division would be sold to French giant Vinci.

The market reaction was generally positive — for years the construction division had been problematic for Fletcher Building, and the source of some high-profile cost blowouts and delays.

Fletcher Building is set to receive $316 million from the sale (potentially rising to $334m), which includes Brian Perry Civil, Higgins and Fletcher Construction Major Projects, but excludes its South Pacific operations.

Generate Wealth investment specialist Greg Smith said the sale was “broadly positive”.

“They’re exiting a structurally low-margin, high-risk construction business that you could arguably say has destroyed value for more than a decade,” he said.

“It’s really only consumed capital over the past 10-15 years, it’s absorbed cash, and it’s generated write-downs and volatility.”

Smith said the construction arm delivered some large projects that had left some “nasty surprises”, notably the NZ International Convention Centre.

In a note, Forsyth Barr senior analyst Rohan Koreman-Smith acknowledged the construction division’s troubles, and also viewed the sale as a positive.

“The construction division has been a significant drag of FBU’s cash flow, with major cost overruns in several key projects (including the NZ International Convention Centre) resulting in $1.6bn of significant items over the last decade,” he said.

Craigs Investment Partners investment director Mark Lister said Fletcher was receiving a “good price” for the business.

“More importantly, it’s the right strategic move,” he said. “It will help the company pay down debt and that needs to come down a little bit further.”

Lister said it moved Fletcher a step closer to resuming dividend payments, while sorting out its balance sheet.

The industry impact

Smith said the arrival of Vinci would mean a new player with the ability to scale in the New Zealand construction market.

“[They are] possibly one that has a more sophisticated approach to pricing projects and pricing risks, and, of course, deeper pockets as well,” he said.

“They will be a very attractive bidder potentially for a number of projects that many players would be interested in bidding for … including the Warkworth to Te Hana expressway.”

Lister did not think there would be any obvious impact on the industry.

“It’s not going to be a negative, we don’t lose this player, it will just change ownership,” he said.

“[Vinci is] a very global business … and it’s listed on the Paris stock exchange, so this is a big company that knows what they’re doing.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

The Commerce Commission says it has received an application from discount fuel retailers NPD and Gull to merge their national operations.

The merger would create a network of 240 fuel stations, making it the third-largest behind Z Energy and BP.

The companies announced their proposed merger on Christmas Day, saying each site would retain its distinctive brand – Gull sites are most common in the North Island, and NPD in the South Island.

The South Island-based Sheridan family would own 50 percent of the merged company, with Barry Sheridan, the current NPD owner and chief executive, set to become group CEO.

Australian private equity firm Allegro Funds, which owns Gull, would hold the remaining 50 percent.

The Commission said it will only grant clearance if it is satisfied the merger will not substantially lessen competition in the New Zealand market, either now or in the future.

It said it’s investigation of the proposed merger is at a preliminary stage based on the material that it has received from both companies, but other issues could yet emerge as its investigation progresses.

Interested parties have until 3 February 2026 to submit comments on the proposed merger.

The Commission has set a 16th March 2026 deadline to either approve, or decline the merger.

The Automobile Association believed a proposed merger between two fuel companies should drive down pump prices.

AA principal policy advisor Terry Collins had previously said both companies had a low-cost business model.

“What that means is that the savings are passed onto customers. When Gull first arrived with that model in New Zealand it became known as the Gull effect because it dropped the prices and competitors had to match it,” he said.

“Now you’ve got two strong companies with a similar model seeking to merge their business and utilise their assets a lot more efficiently. If they do that, then we’ll obviously see lower prices as they pass them on, but how much savings they can make and pass on is yet to be seen.”

Collins believed merging would be a smart business move for both companies.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

• Services sector expanded in December
• PSI survey posts best result since February 2024
• New orders, sales and inventories rise; employment still falling
• Proportion of negative comments falls for fourth consecutive month.

Services sector activity leapt higher in December, expanding for the first time in nearly two years and raising hopes the worst of the economic downturn may have passed.

The BNZ-BusinessNZ Performance of Services Index (PSI) jumped 4.3 points to 51.5 in December, although it remained below its long‑term average of 52.8.

A reading above 50 indicates the sector, which accounts for nearly three‑quarters of the economy, is expanding.

The sector had not been in expansion since February 2024.

BusinessNZ chief executive Katherine Rich said the December result ended the longest run of contraction in the survey’s history, stretching to 21 months.

Three of the five sub‑indices expanded, led by new orders/business (52.5), which reversed four consecutive months of contraction.

This was followed by activity/sales (52.2) and stocks/inventories (51.9).

Employment (49.6) improved sharply but remained in slight contraction.

The proportion of negative comments fell to 50.4 percent as respondents continued to feel constrained by weak demand and confidence, high living and operating costs, and Christmas‑related shutdowns.

On the flip side, positive comments pointed to seasonal Christmas and summer demand, improving consumer confidence driven by lower interest rates, stronger tourism, new contracts and bookings, and early signs of broader economic recovery and investment activity.

BNZ senior economist Doug Steel was cautiously upbeat, noting the PSI was not strong when viewed in isolation, but the direction of travel was encouraging.

Combined with other recent data, he said, the picture became considerably more positive.

“When the PSI is joined with the large jump in last week’s PMI, the combined index (PCI) signals firmly positive GDP growth into the end of 2025 and establishes forward momentum heading into the new year.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand