Press Release – iPredict

Key Points: • Act dead by next election • Maurice Williamson’s position strengthens but John Banks could be stood down as a minister within days • By-election expected in Epsom in 2012 • Market doubts John Key’s statements on knowledge of Dotcom … Key Points:

Act dead by next election Maurice Williamson’s position strengthens but John Banks could be stood down as a minister within days By-election expected in Epsom in 2012 Market doubts John Key’s statements on knowledge of Dotcom Rising chance of NZ OCR cut Julia Gillard to lose Australian Labor leadership before next Federal ElectionNuclear test expected in North Korea this year and regime appears safe until at least 2020National/NZ First Government still favoured for 2014 Dotcom scandal destroys Act The Kim Dotcom scandal appears almost certain to have killed the Act party. The party leader, John Banks, is expected to stand down as a Minister before 8 May and be sacked or resign as a Minister before the Budget on 24 May. Mr Banks is also expected to leave Parliament this year, with a by-election forecast in the Epsom electorate in 2012. iPredict will launch stocks this afternoon forecasting the result of an Epsom by-election. At the next General Election, Act is no longer expected to win any electorate seats and, with a forecast vote of just 1.5%, won’t be making in Parliament. Others who have become embroiled in the scandal include Land Information Minister Maurice Williamson and while early trading suggested he might also stand down as a minister, he is now looking much more secure. However, the scandal threatens to embroil Prime Minister John Key, with the market expecting evidence to emerge contradicting his statements of when he first became aware of Kim Dotcom’s presence in New Zealand. Mr Key, however, continues to be expected to lead the Government after the next election, with the market continuing to forecast a National/NZ First Government after the election expected to be in 2014. Australian politics scandals bad news for Labor Across the Tasman, Australian Prime Minister Julia Gillard appears doomed. She is now expected to depart (66% probability) as the Labor leader before the next Federal election while Liberal Party challenger Tony Abbott is expected to stay as leader of his party (63% probability). First preference expectations remain Labor 35.4%; Liberal 31.0%; Greens 11.9%; Queensland Liberal National 10%; Australian National 8.5% and Family First 4.7%. On a two-party preferred basis, the Coalition is forecast to win 51.7% of the vote and Labor 48.3%. Overall, the Coalition has an 80% probability of forming the next Federal Government. Trading now indicates that the next Federal election will be in Q2 of 2013. International Economics World growth expectations for 2012 are steady at 3.26%. Chinese growth expectations are 1.94% for Q2 2012, 2.07% in Q3 2012, and 2.05% in Q4 2012. There is a 22% probability that at least one Euro member will depart the single currency in 2012, and a 40% probability the US Senate will formally approve a resolution of ratification of the Trans Pacific Partnership by July 2015 Early trading suggests the Australian economy will grow by 0.34% in the March 2012 quarter, 0.42% in June quarter, 0.42% in the September quarter, and 0.42% in the December quarter. Inflation is expected to be 1.56% for the March quarter, 2.00% in the June 2012 quarter, 2.00% in the September 2012 quarter and 2.13% in the December 2012 quarter, while unemployment forecasts are 5.19% for April 2012, 5.18% for May 2012 and 5.16% for June 2012. The country’s Cash Rate is not expected to be changed by the end of the year. New Zealand Economics Forecast Fonterra payouts have reduced for the next three of four years with the payout now expected to be NZ$6.74 per kilogram of milk solids in 2011/12 (down 1c compared with last week), NZ$5.82 in 2012/13 (down 11c), NZ$741 in 2013/14 (down 1c), and remains steady at NZ$7.50 in 2014/15. New stock has been launched for the Fonterra payout in 2015/16, and iPredict will report on it once trading volumes have increased. New Zealand growth prospects have remained unchanged this week with growth expected to be 0.4% for the March 2012 quarter, 0.6% for the June 2012 quarter, 0.5% for the September 2012 quarter and 0.5% for the December 2012 quarter. Last week iPredict forecast that unemployment for the March quarter would be 6.4%, while Reuters survey of economists were pegging it at 6.3%. Information this morning has unemployment for the March quarter at 6.7%. From a snapshot earlier this morning, unemployment is expected to be 6.3% for the June 2012 quarter, 6.2% for the September 2012 quarter and 6.2% for the December 2012 quarter. Inflationary expectations have remained unchanged over the past week. Inflation is forecast to be 1.3% for the June 2012 quarter, 1.4% for the September 2012 quarter, and 1.5% for the December 2012 quarter. 91 unleaded petrol is expected to cost $2.18 per litre at the end of May and the end of June. Overall, the Reserve Bank of New Zealand is not expected to change the Official Cash Rate (OCR) this year but there is a growing probability of 45% that it will cut the OCR by year’s end. Current account deficit expectations are 4.28% to March 2012, 5.05% in June 2012, 5.45% in September 2012, 5.88% to December 2012 and 5.96% to March 2013. Contracts have been extended out to December 2013 for GDP growth, unemployment, Inflation, and the current account deficit. Commentary on these stocks will be included as trading increases on the NZ Economics page. There is now only a 48% probability New Zealand and South Korea will sign a Free Trade Agreement before 1 December 2014. International Politics French President Nicolas Sarkozy is heading for a thumping defeat, with an 87% probability Francois Hollande will beat him in the French presidential run-off election next month. Traders forecast he will win by a margin of 7.76%. Across the Channel, London Mayor Boris Johnson has a 91% chance of winning the 2012 Mayoral Election, with 53% of the first choice vote. In national politics, the Conservative/Liberal Democrat coalition is expected to survive 2012 (83% probability). In the United States, Mitt Romney is now expected to win all remaining Republican Caucuses and Primaries, after Rick Santorum withdrew from the race, and has 97% probability of being his party’s candidate for President. Barack Obama has a 99% probability of being the Democrat’s nominee. On election day, the Democrats are expected to win California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Maine (state), Maine’s Congressional District 1, Maine’s Congressional District 2, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin. The Republicans are expected to win Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska (state), Nebraska’s Congressional District 1, Nebraska’s Congressional District 2, Nebraska’s Congressional District 3, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. Across the country, the Democrats are expected to win 55% of the share of the Electoral College vote, and 52% of the popular vote, with the Republicans winning 45% of the Electoral College vote and 45% of the popular vote. President Obama has a 68% probability of being re-elected despite early trading suggesting that the US Supreme Court will rule his signature health reform policy, the individual mandate, unconstitutional. In China, Wen Jiabao is now expected to remain Premier of the People’s Republic through to 1 January 2013. Yang Jiechi is expected to remain Minister of Foreign Affairs and Chen Deming to remain Commerce and Trade Minister. However, Zhou Xiaochuan is expected to be replaced as Governor of the People’s Bank of China by year’s end, as is Xie Xuren as Minister of Finance. In the Middle East, Syrian dictator Bashar al-Assad is expected to remain in power until at least 1 December 2012 while the probability Israel will launch an airstrike against Iran in 2012 is now 28%, up from 26% last week Despite last week’s rocket launch failure North Korean dictator Kim Jong-un looks safe until at least 2020, and there is a 55% probability his regime will detonate an atomic device in 2012. There is a 35% chance that North Korea will carry out a border incident in 2012, a 16% chance that the Korean peninsula will remain nuclear-test and conflict free in 2012, a 6% chance that North Korea will bomb South Korea in 2012, a 6% chance that North Korea will use nuclear weapons against South Korea in 2012, and just a 2% chance that North Korea will invade South Korea in 2012 A new indexed contract, currently offering trades from $0.59, asks how great the maximum 21st Century sea-level rise will be according to the next assessment report by the United Nations’ Intergovernmental Panel on Climate Change. Other NZ Issues After average daily trading of over 750 stocks, the “split” purchasing age of alcohol looks likely to be introduced as a result of the upcoming Alcohol Reform Bill with 85% probability. Other options including increasing the age to 20, and maintaining it at 18 look unlikely at 11% and 9% respectively. Pengxin Group’s bid for Crafar farms is predicted to become unconditional between 28 April and 2 June 2012. However the market believes that a judicial review will be filed against the April Crafar Farm decision, and that the Court of Appeal will hear an appeal on the decision by 1 October 2012. The SkyCity deal is expected to be formally announced by 14 May, with traders predicting the government to allow SkyCity to have more than 425 pokies. The online predictions market also suggests that the Bridgecorp directors not yet sentenced, Rob Roest and Peter Steigrad, will receive 5 years, and 3 years 4 months respectively. ACC Minister Judith Collins is now expected to file defamation proceedings against Labour MPs Trevor Mallard and Andrew Little before 12 May (84% probability she will) and the market gives her only a 22% probability of winning damages within five years. Efforts by the US Government to extradite Kim Dotcom from New Zealand are not expected to succeed until 2014 at the earliest, while the Swedish Government is also expected to face problems with extradition with its case againsts Wikileaks founder Julian Assange who is not expected to be head for Sweden by July. The market predicts that both an employee of the Ports of Auckland Ltd (other than Ricahrd Pearson, Rob Campbell, Wayne Thompson or Tony Gibson) and a contractor working for the port will be found to have leaked Cecil Walker’s details to blogger Whaleoil Despite recent media, early trading suggests that a Bill imposing plain packaging on cigarettes will not be given Royal Assent by 1 January 2013. Georgie Pie still looks no closer to being re-introduced in New Zealand. There is only a 27% probability it will be re-launched in New Zealand by Christmas 2012, a 34% probability that it will be re-launched by Christmas 2013 and a 43% probability it will be re-launched by Christmas 2014. Excise duties are expected to be increased on tobacco and alcohol in 2012/13, although the market suggests petrol excise won’t be increased. At MFAT, John Allen looks secure in his role with a 74% chance that he will stay on as CEO. However early trading on MFAT appropriations for 2012/13, suggests there could be cuts of up to 5.00%. Traders no longer believe that the New Zealand Police will experience cuts in their appropriations for the 2012/13 budget. No Commission of Inquiry is expected into the 2007 police raids on suspected terror activities in the Urewera district, nor are the ‘Urewera Four’ expected to be re-tried. The Defence Force isn’t expected to announce an outsourcing of their payroll administration before 2013. The Auckland Council is no longer expected to add a new bin for glass collection, and the market doesn’t believe there will be an increase in the waste levy rate Detailed New Zealand Election Forecasts Party vote forecasts for the next New Zealand General Election are now: National 42.6% (down from 43.5%); Labour 32.3% (down from 33.6%); Greens 11.1% (up from 10.3%); NZ First 5.1% (steady); Conservative 3.1% (up from 2.7%), Act 1.5% (down from 1.7%); Maori Party 1.4% (steady); Mana Party 1.3% (steady) and UnitedFuture 0.9% (steady). Act is no longer expected to win an electorate seat, Mana is expected to win one and the Maori Party two. Based on these results, Parliament would consist of: National 54 MPs; Labour 41 MPs; the Greens 14 MPs; New Zealand First 7 MPs; the Maori and the Mana Party 2 MPs each. There would be 120 MPs, requiring 61 to govern. The National Party would have 54 MPs while the Labour/Green/Mana partnership would have 57 MPs, making Winston Peters, with his 7 MPs the kingmaker in the next Government. With the market now expecting a National Prime Minister after the 2014 General Election, it appears Winston Peters will do a deal with National. With the market forecasting that on balance, NZ First would use its position to support a National-led government Miscellaneous iPredict is owned by Victoria University of Wellington. Details on the company and its stocks can be found at www.ipredict.co.nz. The weekly snapshot is taken at a random time each week. This week’s was taken on the morning of Monday 3 May ENDS

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