Capital Markets report: Megatrends shaping the markets

Living through a global pandemic has seen existing trends in capital markets accelerated.
When considering the global megatrends in capital markets over the past year, few new trends have emerged.

Many of the key trends that were gaining traction prior to or during the pandemic have dramatically accelerated into 2021.

Here is a look at some of the most interesting ones:

A green and ethical recovery

One of the big trends remains the push towards socially responsible investing.

This gained momentum during the pandemic as Covid-19 highlighted how connected humans and society are to each other and to the world around them. Many leading investment firms now consider ESG (environmental, social and governance) performance important to consider alongside traditional financial metrics as a fundamental way of creating value and mitigating risk.

Last year, a study from Morgan Stanley’s Institute for Sustainable Investing showed that US sustainable investment funds focused on ESG factors outperformed traditional funds and reduced investment risk during the pandemic.

Morningstar data shows global sustainable fund assets grew 18 per cent in the first quarter of 2021 compared to the previous quarter to almost $2 trillion, supported by strong inflows from Europe.

Further bolstering this trend is the increased attention combatting climate change is being given by governments around the world. Take for instance the United States, where last month President Joe Biden pledged to cut US greenhouse gas emissions in half by 2030 — more than double the commitment made under the 2015 Paris Climate Agreement by the Obama Administration. He has also begun rolling back some of President Trump’s initiatives that side-lined ESG investment.

This shift is bringing with it dramatic change in many areas that will continue to shape investment activity — with many attractive opportunities in energy, transport, agriculture, and infrastructure.

Earlier this month, Bill Gates-led fund Breakthrough Energy Ventures invested in Ecocem Materials, an Ireland-based firm developing low-carbon cement — a material that currently contributes some 8 per cent of global carbon pollution.

Investors are expecting to see the number of attractive opportunities to become more and more frequent.

The events of last year have also heightened the awareness of inequality — women, minority populations and those on lower wages were most impacted by the pandemic.

There is a growing demand to understand how businesses operate, treat employees and customers, and whether they are engaged ethically with their global supply chains.

Boards and management will be increasingly required to address questions from investors and customers about social purpose, inequality, diversity, pay ratios and executive remuneration.

Technology adoption set to continue

One of the most omnipresent trends over the past year has been the leap forward in the digitisation of the economy. The lockdowns, social distancing, and the inability to travel and shop in traditional ways have acted as catalysts for the digital adoption by businesses and customers.

Capital markets are no exception. The same broad trends are accelerating a push towards digital as well as a new wave of innovation at a pace that was previously only seen in consumer-facing financial services.

While most trading technology architectures remain cumbersome, a recent report by the World Economic Forum suggests distributed ledger technology (DLT) — of which blockchain is the most well-known example — is reaching an inflection point. They say it has the potential to reshape capital markets by simplifying operations for leading players and expanding access to markets for small businesses and retail investors.

The use of DLT is growing in acceptability, due to growing institutional and regulatory comfort with the technology, the potential for central bank digital currencies in several jurisdictions, and commercial dynamics including cost pressures and client service expectations.

As an example, the UK Chancellor Rishi Sunak last month set out proposals to enhance the UK’s competitive advantage in fintech — from regulatory support and reforms to help firms grow, to the establishment of a Central Bank Digital Currency (CBDC) taskforce to coordinate the exploration of a potential UK CBDC.

“If we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre,” he said.

In more practical ways, technology adoption across the industry saw acceptability in the industry for remote and flexible working.

Regulators have had to support this and adapt to ensure money laundering, anti-fraud, data privacy and conduct regulations continue to be equivalent whether working from the office or working from home.

But there are still concerns around market abuse and cybersecurity that come with remote working, and whether this trend will persevere long-term following the relaxation of lockdowns around the world remains to be seen.

New Zealand demonstrated that the lack of personal contact after so long working remotely, along with Zoom fatigue, saw most working in capital markets return to the office.

However, the inability to entirely wind back the new remote working culture has made flexible working a likely requirement for capital markets of the future.

Rise of unpredictable retail investors

The past year saw a surge in amateur investors engaged with the stock market. During the level four lockdown, for the first time ever, amateur investors were more active than professional investors in New Zealand.

Services like Sharesies and Hatch have created accessible platforms for retail investors to engage in share trading without needing to go through traditional fund managers. Their rapid growth in interest has been attributed to the pandemic keeping people idle at home, low interest rates limiting savings returns and many people being shut out of the property market.

But recent months have seen another factor come into play — the rise of social media-driven traders. The most well-known example is video game retailer GameStop Corp, where amateur investors worked together to drive its stock price up 1500 per cent over two weeks to take on Wall Street investors who had betted against it. This wasn’t a one-off, with other stocks including BlackBerry and Nokia targeted.

These investors are unpredictable and bullish and have rattled sophisticated professional investors. As a result, the chair of the US Securities and Exchange Commission, Gary Gensler, is considering new rules for apps that “gamify” trading and use visual graphics to reward an investor’s decision to trade.

“The SEC must remain attuned to rapidly-changing technologies with an eye to freshening up our rules,” says Gensler. “If we don’t address this now, the investing public, those saving for retirement, and education, may shoulder the burden later.”

Opinion: Covid-19 provides impetus for fundamental change (NZ Herald)

 

Opinion: Covid-19 provides impetus for fundamental change (NZ Herald)

It has been three years since Prime Minister Jacinda Ardern called climate change “my generation’s nuclear-free moment”.

While the previous Government was unable to declare a climate emergency in the last term — believed to be because Labour’s coalition partner New Zealand First blocked it — she has now made it a priority with a declaration of a climate emergency.

Since Covid swept the world, it has done a lot to emphasise the social and economic inequalities that exist globally. The harsh reality of the lockdown exposed that, even in New Zealand, women and low wage workers were most impacted by job losses and reduced work hours.

Similarly, the relationship between climate change and inequality will see those who are disadvantaged suffer disproportionately from the adverse effects of global warming. The need for action to achieve New Zealand’s vision of a thriving, climate-resilient, low emissions future is widely understood.

The same areas that New Zealand used to successfully respond to the Covid-19 outbreak are needed to address global warming: listening to scientists, public policy and international co-operation.

When US President-elect Joe Biden spoke with Ardern for the first time since the US election last month, he spoke positively about her handling of the pandemic and said he looks forward to working closely with her on common challenges, including tackling climate change. Biden has named ex-US Secretary of State John Kerry — one of the leading architects of the Paris climate agreement — as his climate envoy.

“America will soon have a government that treats the climate crisis as the urgent national security threat it is,” said Kerry.

This break from the Trump administration’s climate policy will put our Government to the test, and necessitate that our ambition reflects our action.

Speaking recently at the Institute of Financial Professionals in New Zealand (Infinz) conference, Climate Change Commission chair Dr Rod Carr said the commission’s current programme of work is to produce the first emissions budget out to 2035 — and to the extent that we are not on track to achieve our domestic targets and global obligations, advise on a reduction plan that will reduce those emissions having regard to a wide range of impacts.

“It is important to understand that climate action is now mainstream conversation, and understand what is to be done, by who, and by when,” he said.

New Zealand emits about 80 million tonnes of carbon dioxide-equivalent greenhouse gases every year, and under the international accounting rules sequesters about 10 million tonnes, largely through forestry. Nearly half of those emissions come from agriculture.

The challenge for New Zealand, says Carr, will be that although our form of pastoral agriculture may be one of the most efficient ways of producing meat and milk protein in pastoral agriculture, there may now and in the future be ways of producing meat and milk proteins with an even smaller greenhouse gas footprint.

Of the remainder of our greenhouse gas emissions, transport makes up about 40 per cent. It is a growing contributor, with household transport emissions increasing by 15 per cent between 2011 and 2017.

Carr says this will be one of the major challenges that will go to the heart of both the allocation of capital by private vehicle owners, fleet operators and government infrastructure providers.

“Converting ground transportation to low or no emissions is a 100 plus billion-dollar investment challenge over the next 30 years,” he says. “Known technologies exist. They largely require electrification, and that electrification needs to be provided from renewable energy sources, unless it is to continue to contribute to greenhouse gas emissions.”

Navigating our economic recovery from Covid-19, while finding solutions for our climate change challenges will require a substantial and coordinated response. This will mean making sure capital is deployed to support the new age, new technologies, and new and necessary ways in which we conduct business.

Covid-19 exposed major weaknesses in our society. But it has also given us the impetus to make fundamental changes that will address inequality and fuel an economic recovery that is long-lasting and sustainable. Without a handbrake on the Government — and with a renewed impetus from international leadership to deliver — now is the time to make sure New Zealand isn’t left behind.

Mood of the boardroom: Resurgence pops plans for transtasman bubble (NZ Herald)

Support for transtasman travel but only when safe, reports  Tim McCready

The transtasman bubble proposal should be progressed once the Covid-19 flareup in Australia is under control. That is the message from New Zealand’s top CEOs in the Herald’s Mood of the Boardroom survey.

The result was overwhelming — 94 per cent of respondents are in favour, 5 per cent are unsure. Just 1 per cent of respondents say we shouldn’t continue to progress the initiative.

CEOs placed myriad caveats — “only when safe”, “define ‘under control’”, “risk must be minimal before relaxing”.

“It’s something we should keep a watching brief on,” says a tech entrepreneur. “Nothing in Australia gives me confidence in their capabilities to contain.”

Deloitte CEO Thomas Pippos asks: “The question is what does under control mean? At one stage Victoria was considered under control.”

“The latest outbreaks seem to show this is less likely and riskier than first envisaged,” says Chapman Tripp chief executive partner Nick Wells.

Some CEOs say we shouldn’t be progressing until there is no community transmission on both sides of the Tasman.

“We need zero community transmission in each country and rapid tracing technology that crosses borders to even be considered,” says a dairy industry boss.  “Rapid testing may have a role to play when and if it becomes available.”

But others are amenable to travel with cases present in the community — so long as steps are taken to ensure the risk remains low.

“Progress on pandemic management and the use of technology can both be used to provide a quarantine-free system for travel with selected countries,” says Beca CEO Greg Lowe. “We just need to get on with solving the technical challenges so we can implement when the health settings are right.  No one wants to be unsafe, but we do need to have a plan.”

Australian Prime Minister Scott Morrison has said Australia is working on a “hotspot” model that would not necessarily require zero transmission.  He said this could also extend to Covid-free parts of New Zealand.

Morrison said all states and territories except for Western Australia had agreed to an update of the roadmap to recovery, with the goal to reopen their borders by Christmas. It will focus on testing regimes, data sharing and interstate borders — rather than issues like hospitality venue capacity.

Jacinda Ardern has said that — so far — Australia’s hotspot model will not be reciprocated holus-bolus. “Ultimately, for the hotspot arrangement, it doesn’t change the work that we’re doing on the bubble which is focused on putting New Zealand and Australia in the position to have quarantine-free on both sides of the Tasman. Right now though, neither country is in a position to offer that in its entirety because it’s just not safe.  “If a New Zealander chooses to go to Australia because there is no quarantine, they will know that they’ll be covering the cost of their quarantine on return to New Zealand.”

Back in May when a travel bubble with Australia looked promising, the Trans-Tasman Safe Border Group was established, co-ordinated by the Australia New Zealand Leadership Forum.

The group — made up of 11 government agencies, six airports, two airlines, health experts and airline, airport and border agency representatives from both Australia and New Zealand — submitted a blueprint for transtasman travel to both governments with the objective of removing the need for quarantine.

Auckland Airport CEO Adrian Littlewood was part of the effort, and said at the time “New Zealand and Australia have a great opportunity to really set some potential standards for travel restarting around the world.”

Its original aim was to have the bubble operational and flying by the July school holidays.

Prior to the Covid crisis, New Zealand was the most popular outbound travel destination for Australians, with 1.5 million visitors arriving from Australia in 2019, accounting for 40 per cent of all foreign visitors to New Zealand. Australia was the most popular outbound travel destination for Kiwis. New Zealand is Australia’s second largest source market for visitors, with 1.4 million visitors in 2019, accounting for 15 per cent of total visitors to Australia.

Unsurprisingly, a travel industry CEO is supportive: “It absolutely should be progressed — our economies and social structures are too intertwined.”

Chairman of the New Zealand Initiative Roger Partridge says the open border will be significant: “We all have an interest in Australia succeeding and expanding our ‘domestic’ marketplace for tourism by an extra 20 million people.”

Precinct Properties chair Craig Stobo reckons the industry should be innovative in its thinking. “We had 1.5 million Aussies come last year … tourism will have to go for a high-margin value proposition — not a low value volume growth strategy as we have done in the past,” he says.

Most CEOs agree quarantine-free travel across the Tasman is unlikely to happen soon.

“With the rate of community transmission and the time it will take to get this under control, we should not expect or depend on this opening up in the next three months,” says marketing boss Anne Walsh.

Capital Markets: Lessons and trends from the pandemic (NZ Herald)

We’ll be feeling the impact of Covid-19 for  a long time to come, in many different ways

Covid-19 has shaken capital markets globally, and the long-term impact will not be known for a long time.

Disruptive events tend to accelerate trends that are already in place, and Covid-19 will bring wide-ranging implications and deliver lessons into the future for organisations and individuals within the capital markets sector. Here’s some to chew on:

Digitisation, automation and cybersecurity

The most visible trend accelerated by Covid-19 is the leap forward in the digitisation of the economy. Westpac chief economist Dominick Stephens says there will be no going back: “that may be the last straw for some firms and a huge opportunity for others, but digitisation is a positive for the economy overall.”

Digitisation has long been mooted as a mega trend that will disrupt the capital markets sector, but the pandemic has necessitated a swift response. The past several months have exposed the requirement for firms to make a large number of decisions with increased speed and agility. Many expect the disruption to force firms in the capital markets sector to look at new operating models that are more automated and increasingly data-driven to address revenue challenges and drive down costs. This will include leveraging artificial intelligence, the cloud, machine learning and analytics to drive efficiency, improve productivity and improve competitiveness.

Increased competition from fintech firms has been eating away the market share from traditional players. Prior to Covid-19, industry giants in the capital markets were making moves to acquire and collaborate with fintech start-ups. This is expected to continue at pace, as they acknowledge openly the need for innovation to bolster their capability and agility.

However, the rapid digital transformation and changes in the way business is conducted has also brought with it a significant increase in fraudulent activity which will ensure cybersecurity remains an important consideration for capital markets. Cybersecurity firm McAfee’s quarterly report says there has been a surge of cybercrime exploiting the pandemic through Covid-19 themed malicious apps, phishing campaigns and malware. The US Federal Bureau of Investigation said it had received as many cyber-attack reports by the second week of June as it had in all of 2019.

Impacts on people, ways of working and the gender pay gap

The pandemic changed the way employees around the world worked and engaged with their workplaces and proved that remote and flexible working is possible — even in capital markets where some firms have been reluctant to embrace the trend. While most workers in New Zealand have now returned to their workplaces, many agree there were values that became more pronounced during lockdown that we should try to hold on to. Organisations are now considering how they can be more flexible, agile and have a heightened awareness of employee wellbeing. At the same time, they want to ensure that the quality of work and productivity remains high.

A recent EY article questions whether this flexibility, reprioritisation of goals and consideration of what is important could help to close the gender pay gap. Firms in the capital markets are continuing to face requirements to become more diverse. In Europe, France is demanding a 40 per cent quota of women on boards. The UK has had more than 350 financial services firms sign up to the UK Government’s Women in Finance charter, where they set targets for gender diversity. But despite this, the World Economic Forum’s Global Gender Gap Report 2020 revealed that gender parity will not be attained for 100 years.

EY notes the “wholesale levelling of the playing field” has the potential to challenge HR, talent and recruitment and lower long-standing barriers including those for parents with children or those with other caring responsibilities.

Cashless society edges ever closer

The arrival of a cashless society has been long-anticipated, but the events of this year have no doubt accelerated its arrival. Kiwis have embraced mobility and connectivity, and Covid-19 has seen us become more comfortable with e-commerce, Auckland Transport go cashless, and many stores encouraging cashless payment for hygiene reasons — with the contactless eftpos limit temporarily raised from $80 to $200.

The Bank for International Settlements released a bulletin in April, noting that Covid-19 has fanned public health concerns around the use of cash. It said that looking ahead, developments could speed up the adoption of digital payments around the world, including central bank digital currencies.

In China, digital payment platforms are already widespread, including Alibaba’s Alipay and Tencent’s WeChat Pay — so much so that in many stores cash is not accepted. Taking this a step further, China is launching a pilot programme of its digital yuan in four major cities. The currency is backed by China’s central bank, the People’s Bank of China, and is pegged to the national currency. Commentators say the objective of the digital yuan is to increase its circulation and become a global currency like the US dollar, and that the timing of the launch — when the rest of the world is dealing with the global pandemic — provides China with an unusual opportunity to beat private competitors such as Facebook’s Libra currency.

Surge in sustainable investing

During lockdown, many appreciated the return of birdsong to inner-city neighbourhoods and the quiet that came from the severely reduced traffic. Satellites mapping air pollution revealed a significant drop in nitrogen dioxide concentrations across Europe and China, coinciding with the strict quarantine measures.

Analysts are predicting Covid-19 to be a major turning point for ESG investing, or strategies that consider environmental, social and governance performance as increasingly important alongside financial metrics. The pandemic has highlighted how connected humans and society are to nature, plainly demonstrating how a fracture in one part of the ecosystem can compromise the entire system.

A survey of 50 global institutions by J.P. Morgan, representing US$12.9 trillion in assets under management, asked how they expect Covid-19 to impact the future of ESG investing. Some 71 per cent of respondents say it was “rather likely”,   “likely”, or “very likely” that a low probability — high impact risk like Covid-19 would increase awareness and actions globally to tackle high impact — high probability risks such as those related to climate change and biodiversity losses.

 

China Business Summit 2020: Panel – Building a bridge to China (video)

Building a bridge to China: Panel discussion at the 2020 China Business Summit

E-commerce clearly came into its own during the Covid-19 crisis. But will the trend accelerate? And what will it take to reinstate safe travel between New Zealand and China in the Covid-19 era? Those were the questions we asked experts about and talked about the strategies the tourism and education sectors were to employ to keep the Kiwi brand upper mind until air links could be restored. We also learned about how the ‘Southern Link’ initiative between China-NZ-Latam was proving its worth.

  • Adrienne Young-Cooper, Acting Chair, Queenstown Airport
  • Lisa Li, Managing Director, China Travel Service
  • Rachel Maidment, Executive Director, NZ China Council
  • Pier Smulders, Country Manager, New Zealand at Alibaba
  • Professor Jenny Dixon, Deputy Vice-Chancellor (Strategic Engagement), University of Auckland

Moderated by Tim McCready

APEC 2021: A look back at what could have been. (LinkedIn)

With the recent announcement that New Zealand will no longer host world leaders for APEC Leaders’ Week next year, but will instead take the Summit digital, I took a look through the news archives to see what we are going to miss out on.

When NZ hosted APEC last in 1999:

👮🏻‍♂️ NZ security guards mistook Hillary Clinton’s mother for part of the public crowd and pushed her aside – twice.

🏉 Clinton told Sir Edmund Hillary – then aged 80 – that he might be ready for a new challenge: “I hear the All Blacks may need a new fullback.”

🛍️ Suburban shopping centres were busier than ever as the public were encouraged to avoid the city centre.

📰 International media published some bizarre stories about New Zealand and our culture.

THE POWER OF APEC

As Auckland was preparing to host APEC in 1999, the news was dominated by East Timor and its recent vote in favour of independence. The aftermath of the referendum saw mass violence, killings and destruction targeted at the East Timorese.

APEC 1999 was due to be held just days later, with Indonesia present. This introduced a challenge for New Zealand: APEC has strict rules around it that govern what can and cannot be discussed – APEC is about the economy and not about foreign policy.

At the time, New Zealand Prime Minister Jenny Shipley said: “You only get leaders of economies to come if they know that their foreign policy won’t be objected to scrutiny or interfered with. But having said that, the power of APEC, where you’ve got leaders and foreign ministers together physically in a country was always potentially going to be useful.”

Making a tough call

It was decided that an emergency meeting of foreign minister would take place in Auckland before APEC officially began. Shipley had to phone Indonesian President B.J. Habibie to let him know the plan, and said it was a difficult phone call.

“I had a number of officials in the room with me and I held the phone out at one stage where I was being yelled at. But the thing that changed was that not only Western-aligned economies within APEC but also Singapore and others in the region felt that this was something that had to be progressed.”

As Foreign Minister Don McKinnon noted, bringing leaders to one location forced them to take a position on Indonesia’s behaviour they could otherwise have simply avoided.

As a result, after lobbying from Australian Prime Minister John Howard, the United States announced it would no longer support the IMF bailout of Indonesia unless their army withdrew and allowed peacekeepers in. Within hours Indonesia changed their stance, and an Australian-led peacekeeping force left for East Timor just eight days later along with support from New Zealand troops.

THE STAR OF THE SUMMIT

US President Bill Clinton’s appearance at APEC 1999 marked just the second time a US President visited New Zealand (Lyndon BJohnson visited in 1966 and met with Prime Minister Keith Holyoake). Clinton was warmly received by the public, using his innate ability to charm the crowds during walkabouts.

It was reported Clinton was so fascinated by Māori culture at Auckland Museum that he asked Shipley if she would arrange for the museum’s shop to open for business because he wanted to “buy it out”. With shop staff off duty for the gathering of leaders, it fell on the museum director to open the store for the President. Clinton and the United States National Security Adviser, Sandy Berger, were reputed to have spent “a lot of money” during their 25-minute unscheduled shopping spree, with Clinton sporting one of his purchases – a circular greenstone pendant – around his neck during his time in Auckland.

On another shopping trip, he took daughter Chelsea Clinton on a two-hour trip to Parnell and Queen Street where they bought a handmade clay ocarina (wind instrument), a black pottery cat, a $400 crystal vase, two $49 oil bottles and a $27 vanilla-scented candle.

 

Clinton attracted thousands to the streets to catch a glimpse of him – and not just in Auckland. A crowd of 5000 came to the International Antarctic Centre in Christchurch; hundreds

waited for three hours outside a lakefront Queenstown restaurant to spot the popular president.

For one of his appearances, Clinton shared the stage with Sir Edmund Hillary. He told the audience he was thrilled to share the stage with the adventurer and said he was “referred to in our family as my second-favourite Hillary.” He suggested that Sir Edmund – then aged 80 – might be ready for a new challenge: “I hear the All Blacks may need a new fullback.”

Speaking about the upcoming America’s Cup challenge, Clinton remarked: “We even let you borrow the America’s Cup from time to time. We hope to reverse our generosity shortly.”

SUPERPOWERS MEET

New Zealand’s hosting of APEC also marked the start of a thawing rela

tionship between the US and China – with both superpowers reopening talks while in Auckland after the US bombed China’s Embassy in Belgrade.

Another big meeting was between Clinton and Russian Prime Minister Vladimir Putin – it was the first time they had met as leaders.

In a briefing to reporters following the meeting, it was said Clinton warned Putin that corruption could “eat the heart out of Russian society.” Those comments followed reports that Russian mobsters siphoned millions of dollars out of Moscow and laundered it through the Bank of New York. It was said Putin agreed that Russia had problems and suggested a cooperative approach.

Throughout the summit, many large offices in the city centre were operating on skeleton staff, heeding pleas for the public to stay out of the city if possible. Streets and schools in Auckland, Manukau and North Shore cities were closed and many city workers were given a day off. For those that needed to come into the city centre, many travelled earlier than normal resulting in lower than usual peak traffic volumes.

This resulted in the outer suburbs of Auckland being busier than usual, while the city centre ground to a halt – impeded by presidents, protests and police.

“They should have APEC every day,” Lynnmall Deka store manager Struan Abernethy told the media – standing in the toy department and surrounded by the buzz of family shoppers. “It’s the busiest Monday we’ve had for a long time!”

A FORUM FOR FREE TRADE

One of the key themes of New Zealand’s 1999 year of hosting was lifting the support from the public for free trade – although the success of this was limited.

US Trade Representative Charlene Barshefsky outlined the problem with a warning that public opposition was the greatest threat to the world’s multilateral trading system.

“Unless that public support is regenerated, I think the World Trade Organisation is going to face tough sledding in the years ahead,” she said.

Clinton also warned of the need to put “a human face” on the global economy.

Trade Minister Lockwood Smith said the commitment to a new global round was the meeting’s biggest achievement, but export subsidies were the single biggest trade issue for NZ. While the benefits were some years off, it was important to get the world to put the abolition of the subsidies on the agenda.

United States

Shipley joked during the Summit that she had fed President Clinton as much lamb as possible during lunches and dinners – including Manawatu lamb loins and Canterbury lamb noisettes. “I’ve eaten it all,” he joked when asked about lamb tariffs.

Clinton said the United States was the “champion of free trade,” despite his decision to impose tariffs on New Zealand lamb. He said these were “appropriate” given that the recommendation from the International Trade Commission had been made under United States law.

But he said he would study the “very interesting idea” of a free trade agreement between Australia, New Zealand, Chile, Singapore and the United States.

Singapore & Chile

In bilateral conversations, New Zealand announced a free trade agreement with Singapore and a scoping study of a similar deal with Chile.

Business leaders from Chile and New Zealand also met during the APEC summit to discuss the prospect of a free trade agreement between the two countries.

One of those leaders was Carter Holt Harvey chief executive Chris Liddell (now assistant to President Trump and deputy chief of staff for policy coordination in the White House). He and other leaders cautioned at the time that business deals between New Zealand and Chile have had hiccups – including an investment dispute between Carter Holt Harvey and Chilean conglomerate Copec.

CEO SUMMIT

250 executives attended the CEO Summit, including around 60 of New Zealand’s most eminent businesspeople. International delegates included General Motors chairman Jack Smith and Raymond Cesca – who was responsible for handling world trade for McDonald’s.

New Zealand’s delegates to the CEO Summit included just four women – Wilson & Horton corporate affairs manager Fran O’Sullivan (who was also the CEO Summit’s deputy chair), professional director Rosanne Meo, Wellington Regional Chamber of Commerce CEO Claire Johnstone and education publisher Wendy Pye.

The chair of the Summit, John Maasland, said businesspeople were keen to work closely with APEC political leaders to increase the pace of reform and make sure a gap between developed and developing countries did not widen.

Attendees called for critical trade issues to be tackled quickly, including speeding up planned moves to achieve free and open trade and investment throughout the world by 2010 for developed countries and by 2020 in developing economies. They also called for economic governance, development of greater transparency and accountability in the financial sector and a regional approach to building infrastructure in APEC economies.

The attendees recognised that APEC politicians would need a lot of courage if they were to deliver the policies that corporations want – but if that courage was not shown, then free trade would flounder, economies would contract and people would suffer.

“We are certain that the benefits to all APEC communities will become increasingly evident if these specific actions are taken speedily and forcefully,” Maasland said.

The chief executives said their near-term challenge was to make sure the things they had talked about in Auckland over the past two days were turned into some firm policies that could be delivered in the following year’s APEC meeting in Brunei.

UNEXPECTED GLOBAL HEADLINES

There was some disappointment that New Zealand didn’t get the level of promotion that it had hoped for in international media – it was the East Timor developments that dominated the headlines. But some of the international media mentions New Zealand received included:

  • The Los Angeles Times told its readers that New Zealand was “an island nation”
  • The Los Angeles Times also ran a piece on its website explaining what a hongi is – alongside a photo of Clinton greeting Sir Hugh Kawharu: “the gesture is called a hongi, a native welcoming gesture”
  • The Newsweek website mentioned plans for the leaders’ banquet: “In New Zealand, where sheep outnumber people 15 to 1, folks know how to party. Five top chefs have been dispatched across fjords and throughout the forests to find the best ingredients for a massive feast”
  • The Boston Globe reported on New Zealand security guards mistaking Clinton’s mother-in-law, Dorothy Rodham, for part of the public crowd – twice pushing her aside during the President’s shopping walkabout. “The confusion didn’t stop Clinton from going on a buying binge. At one point he stopped in a store called Out Of New Zealand and bought an ocarina, a small traditional flute made of clay.”
  • The Boston Globe also reported that New Zealand would be the first country in the world to celebrate the millennium.

SHIPLEY OUT, CLARK IN

Following the APEC Summit, a TV3/CM Research poll saw her rise from 14 per cent to 20 per cent as preferred Prime Minister – two points ahead of then-Labour leader Helen Clark.

In the same poll, 38% said they had a better opinion of Shipley after APEC, with 8% saying they now had a worse opinion of her.

However, the National party’s support didn’t shift significantly post-APEC. The poll saw its support rise only one percentage point to 33 per cent. Labour polled 39 per cent (compared to 40 per cent one month earlier). Support for Alliance was down one to 6 per cent, support for New Zealand First remained at 7 per cent, Act’s support lifted one to 7 per cent, support for the Greens fell from 2.6 per cent to 2.4 per cent.

The 1999 New Zealand general election was held on 27 November 1999 – two months following APEC. The National party, led by Shipley, was defeated, replaced by a coalition of Helen Clark’s Labour party and Alliance – who led New Zealand until 2008.