Taking Stock 10 September 2026

THE hideous losses to be endured by investors who bought into the Du Val and Bernie Whimp nightmares can be sheeted home not just to investor naivety, entrepreneurial idiocy and market volatility.

The enabler of these losses was very poor investor protection with successive governments trivialising the threat of poor law.

To be fair, the lawmakers probably assumed that the regulators would construct sound practices to decide who is a "fit and proper" entity to make financial offers to the public.

New Zealand has drifted far from best practice in creating processes to exclude people whose suitability to raise money from the public is somewhat lower than a dachshund's belly.

Historically the Reserve Bank has conceded that it sought to avoid expensive and time-consuming encounters with the High Court, should banished directors appeal against a "fit and proper" decision. I suspect the minimal incidence of barring entrepreneurs for being unfit or improper never prompted the lawmakers to investigate the poor processes of regulators.

But the main reason so many people lost what looks like more than $200 million from these unwise investment offers is the abject failure to prevent inexperienced people from investing in "wholesale" projects.

The law intended that only experienced, skilled investors, well able to make risky decisions, should be certificated as eligible to invest.

The law might have aimed to cater for people like me, who have had many years investing in a wide range of high-risk, high-return ventures WITHOUT the protection from regulators, where one hopes that some wise people may be able to spot high risk, to prevent disasters.

People with investment experience can be assumed to assess risk and to embrace it only with money that, if lost, can be afforded. I guess there was an assumption that those people would be sufficiently well-off to digest the odd horrid investment outcome.

The law absurdly allowed self-certification, as well as, more logically, certification by an investment specialist. It also allowed certification by people generally untrained and inexperienced in investment risk analysis, like lawyers, accountants and quite conceivably saddlers, bootmakers and candlestick makers.

Lawyers and accountants vary in useful experience. For example, a lawyer specialising in matrimonial disputes, family court hearings, or disputes between neighbours may have next to no useful wisdom in investment risk analysis.

Likewise, many accountants are busy enough without assessing financial markets or doing due diligence on entrepreneurs or opportunists.

So I contend the concept of self-certification, or certification by people chosen solely because of their occupation, is the second-largest reason for the failures and the consequent losses, ranked behind the ignorance of the entrepreneurs.

If the lawmakers had consulted with people like me, who are every day focused on risk, and on assessing the client's suitability to take on risk, they might have created more useful law.

So here is a very simple cost-free solution that might greatly reduce future pain for investors floundering around chasing yield. Give my solution on an A4 form to those who are chosen to "certify" that a potential investor is capable of assessing the potential risk and affording a potential loss.

The form should be compulsorily used by the certifiers. If the certifier does not use the guidelines intelligently or diligently, the certifier should for the first offence be fined and named. For example, the fellow who certified a high percentage of Whimp's "wholesale" investors, probably for a $100 fee per investor, should be fined a large sum, named and shamed. Many investors have identified as rank beginners, not wise, experienced investors.

The form could simply ask how much investment capital was owned by the potential investor, how much she/he intended to invest, and the largest amounts the investor had previously invested in securities not listed and regulated on a stock exchange.

The form would require detail of such investments.

The certifier would certify, and the investor would be required to sign the form saying she/he was satisfied that the certifier had conducted the prescribed conversation, and that the investor had answered honestly.

Imagine the completed form: 

a) John Quay. Aged 65. Lives in Mangere. b) One million of financial investments. c) $50,000 for the Du Val property scheme. d) Previously invested $20,000 in each of two Auguste property syndicates, and $50,000 in a Waipawa haymaking venture. Decision: Not excessive sum for Du Val. Has relevant investment history. Approved.

Now imagine: 

a) Don Quay. Aged 65. Living in Mangere. b) $200,000 from recent sale of a dairy (or Lotto prize, or inheritance) c) $50,000 (worse still $200,000)d) I invest in KiwiSaver (total $50,000) Decision: Not a wholesale investor. Go to an experienced adviser. Do not proceed with the $50,000 investment.

I would stake money that most certifications would be much more honestly granted if this form was used and if a fine, name and shame was applied to anyone who ticked the Don Quay's certification application.

Fix the law! Don’t ask a lawyer to create the law. Ask me!

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THE looming election in New Zealand occurs at a time when, globally, voters are becoming angrier, more emotional, and more selfish. The AfD party in a state of what was East Germany is clear evidence of voter madness. Have they forgotten what life was like when the Berlin Wall was intact?

In most countries, instant fixes are sought. Virtually no energy is allocated to long-term strategic solutions.

Recall that the world's combined debt, around US$350 trillion, is renewable at significantly higher rates from a bond market that quite naturally prices its available money at the highest achievable rate for the risk.

Think of Pauline Hanson's success in Australia, or the AfD's increasing dominance in Germany, as evidence of bizarre investor voting.

Very few countries have made much progress in growing the wealth of their needier people, improving infrastructure, and directing their economy towards modern high-margin activities. Very few have low levels of debt.

Very few have successfully addressed the need to house its people. Incremental, planned strategies seem to be mystery to those leaders who look to borrow or nationalise to satisfy voters;

This item in Taking Stock will outline how one country, Malta, has differentiated itself.

The Maltese government has had extraordinary success, at the cost of a rising phenomenon - corruption at government level. (Surely the courts will eventually address this.)

Astonishingly, or perhaps not, the people of Malta have ignored the corruption and voted back into power the very party that had created the progress but exploited the opportunity for political backhanders.

Malta’s debt to GDP is around 40%.

First, the bald facts:

Population Growth - up 100,000 in the past five years (20%) through importing labour to serve the tourism and construction industry.

GDP Growth - averaged 6.7% over past five years, making Malta the fastest growing economy in Europe for the past three years, projected to retain this status for the next three years. Average growth of 10 years, 6.6% (74% in ten years).

Household Median Wealth - now the third highest in Europe, Euro 503,000 per head (Germany Euro 324,000). 

Home Ownership - 85% live in their own homes (NZ - 66%), European average 65% (25% of Maltese properties still are mortgaged, NZ 68%).

Disposable Wealth - 72% of Malta's people can afford an overseas holiday each year, for at least one week.

Infrastructure – Improved quickly to accommodate a million-person increase in tourism over the past two years, to four million, in a country of 600,000.

Unemployment - Malta 3.5% (11,963 people looking for work in July 2026). In July 2026 (Finland 9.9%, Spain 9.87%, France 8.3%, Germany 6.4%, UK 4.9%, Norway 4.2%, Netherlands 4.0%, New Zealand 5.6%).

Murder Rate - Malta 0.7 murders per 100,000 (lowest in Europe). Australia 1.0, Brazil 19, Canada 2, Chile 6, Colombia 25, Denmark 1, France 2, Greenland 5, Haiti 41, India 3, Jamaica 49, Liechtenstein 5, Mexico 25, New Zealand 1, Philippines 4, Saudi Arabia 1, Singapore 0, South Africa 44, Venezuela 13, USA 6, World 5.

Road Deaths - Malta 4 per 100,000 people. (The following data is not current, not available in 2026): Australia 4.5, Brazil 15.7, Canada 4.7, Chile 7.7, Colombia 15.5, Denmark 2.6, France 4.9, India 12.6, Jamaica 17.8, Mexico 12.0, New Zealand 7.3, Philippines 12.0, Saudi Arabia 18.5, Singapore 2.1, South Africa 22.2, Venezuela 13.2, USA 14.2.

How has Malta done what the next NZ government should be doing as election date looms?

It has a plan based on what sectors generate jobs, high margins and attract capital?

It investigates how the laws need changing? Much faster consent (at the risk of corruption).

It asks how does it attract wealth to the country? (Law, tax rates, incentives).

How does it use education to link with economic and occupational opportunities? (Fabulous university offers. Pay students, no fees, graduates bonded for three years).

How does it build necessary infrastructure? (Increasing capacity of the grid, road improvements. Import skilled and unskilled labour).

The cost has been visible; the public is ignoring political corruption that comes with the shortcuts. The public is grumpy about traffic in some confined areas. (Public transport - electric buses - are excellent, taxis are inexpensive.)

The courts mercifully hear cases brought against politicians. Currently the former Labour Government Prime Minister, Joseph Muscat, faces criminal charges of corruption.

But, no argument, Malta has been transformed. The people of Malta receive wonderful pensions, the health system is gold standard, pensioners receive discounts on rates, petrol and electricity. 

Around 85% of the people live in their own homes.

Malta owned the whole of the housing stock when it first became a republic, around 1970. It leased for very long terms these houses. The lease could be transferred to family. Gradually it offered tenants the option of buying. It priced the houses as a multiple of the earnings of the head of the household.

Literally, one home would be priced at 50,000 Euros while the one next door - identical - would cost 200,000 Euros, because the household head had a better-paying job. Today, the houses have soared in price, based on the land value, and the simple consenting process for those who sell to developers who put up eight floors of modern apartments. Malta's high household mean wealth is largely down to household ownership.

The weather there is just about perfect. We cannot emulate that.

But would the benefits of what Malta has done persuade an electorate here that NZ should send a government deputation to Malta and ask how the dickens they achieved this? (The deputation might never come back!)

I am fairly sure the progress has not been delayed while extremists are allowed to use fictitious claims to gain publicity and to gain public visibility.

Lizards abound. They reproduce. Some may die. Most scuttle off to safe ground.

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Christchurch & Auckland Seminars

Following our recent investor seminar at Southward Car Museum in Paraparaumu in July, we are pleased to confirm that we will be holding our last two seminars in Christchurch and Auckland.

The seminars are open to both existing clients, friends, family and other investors.

The Christchurch seminar will be held at Burnside Bowling Club at 11:00am on Thursday, 17 September.

The Auckland seminar will be held at Fairway Events Centre, North Shore, at 11:00am on Wednesday, 23 September.

We will discuss the current investment environment, recent developments across New Zealand and international markets, risk management, and some of the companies and sectors we are currently watching closely. We will also discuss signals of distress, aiming to caution risk-takers.

If you would like to attend either of these seminars, please contact us by email to reserve a place.

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Bond issues

The BNZ Bank announced a new five-year senior fixed rate note. This offer opened on Monday, and closed at 10am today. Thank you to investors that took part in this offer.

Metlifecare may open a new senior secured bond in late September. We expect the bond to have a term of between 5 and 7 years, with an interest rate of at least 5.50% per annum.

Contact Energy is expected to issue a new subordinated capital bond in October. We expect the bond to have a term of around 6 years, with an interest rate of at least 5.50% per annum.

Investors who may be interested in these potential bonds are welcome to contact us with their CSN and an indication of the amount they may wish to invest. We will then contact them once the final terms and further details are available.

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Travel

Our advisors have an extensive travel schedule coming up over the next quarter, including the following dates:

16 September – Christchurch – Chris Lee

18 September - Christchurch (FULL) – Chris Lee

22 September – Lower Hutt – David & Gavin

24 September – Ellerslie, Auckland – Chris Lee

25 September – Ellerslie, Auckland (AM only) – Chris Lee

25 September – Palmerston North – David & Gavin

5 October – Napier (Havelock North) – Edward Lee

5 October – Nelson – Chris Lee

6 October – Napier (Mission Estate) – Edward Lee

6 October – Blenheim – Chris Lee

9 October – Wellington – Gavin Parkes

21 October – Auckland (Albany) – Edward Lee

22 October – Auckland (Ellerslie) – Edward Lee

On top of these areas, we will also visit Christchurch, Wellington and Lower Hutt in November. Dates to be confirmed.

Please contact us if you would like us to visit your area or would like an appointment.

Chris Lee

Chris Lee & Partners