Jul 22, 2016 | Investment Advice

International News (Issue 409) – 22 July 2016

International News – 22 July 2016

There were a few notable moves this week to cover.

The RBNZ decision to place loan-to-value restrictions on Kiwi mortgages is truly interesting and a genuine glimpse into the future of Australian mortgage lending. I covered this point in the Australian news section, so I don’t profess to go over this again here.

Softbank in Japan announced the speculative and surprise bid for UK chipmaker ARM Holdings in a deal worth US$32bn.

What’s interesting about this bid is that Softbank aren’t a chipmaker, that the deal comes after a 30% de-valuation of the British Pound against the Japanese Yen and lastly and, most interestingly, because ARM is widely considered as the heir to Intel’s crown and arguably the most developed maker of chips for ‘the internet of things’.

I’m sure many of you have seen or read about ‘the internet of things’ which is a broad concept that outlines the future connectivity of all manner of household goods and services. This bid is a $30bn+ wager on the future success of this theme.

In China, I was interested to see the NDRC (National Development & Reform Commission) announce railway development targets for the years 2020 and 2025 that demonstrated a continued slowing in the pace of growth.

I find this interesting given the steel density of railway construction and the knock on effect these targets will have for steel production.

Peak steel production is now and this is precisely why we hold reservations over iron ore prices and the Australian mining sector.

For next week, the big event will be the Bank of Japan meeting and the prospect of additional monetary and fiscal easing.

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