ASB Securities Morning Brief for Wednesday, 27 May 2015
Wednesday, 27 May 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, led by Tower, after the general insurer lifted its dividend. Dual-listed stocks such as Fletcher Building and A2 Milk Co advanced as stocks on the ASX gained. The NZX 50 Index rose 0.02 points, or 0.874%, to 5795.855. Within the index, 20 stocks rose, 27 fell and three were unchanged. Turnover was $104 million... Read more

The New Zealand dollar was little changed as investors awaited US data after markets in the world's biggest economy were closed for a holiday on Monday. The kiwi traded at 73.17USc at 5pm in Wellington from 73.05USc at 8am and 73.06USc yesterday. The trade-weighted index increased to 76.16 from 75.98 yesterday... Read more

Falling global dairy prices are starting to leave their mark on the country's balance sheet, with the trade deficit for the year to April 2015 blowing out to its largest level in five years. Statistics New Zealand says total exports in April were down $240 million on the same month last year, to $4.2 billion... Read more

FMA gives NZX clean bill of health for its regulation of markets... Read more

NZIER bucks trend of major bank economists, saying the RBNZ has no choice but to keep the OCR stable for another two years... Read more

Tackling Auckland’s housing issues. Action on infrastructure investment and building product regulation could help address Auckland’s housing market issues, according to one commentator.... Read more

Renting has a negative impact on children - study... Read more

Prime Minister John Key says axing the $1000 kickstart grant to new KiwiSaver members in the Budget "will not make a blind bit of difference to the number of people who join". He said that was the formal advice from Inland Revenue... Read more

Call for education to top FAA review checklist. Any moves to require a higher level of education for financial advisers in the review of the FAA are likely not to go far enough, says Massey University’s director of financial planning.... Read more

Commission, designations, qualifications on review hitlist. Regulation of financial advisers in New Zealand should have three key goals, the Ministry of Business, Innovation and Employment says: To give consumers the information they need to find and choose a financial adviser, to make advice accessible and to give the public confidence in the professionalism of advisers... Read more

Commerce and Consumer Affairs Minister Paul Goldsmith released an Issues Paper for public consultation today, as part of a review aimed at improving financial advice legislation.... Read more

IrrigationNZ said the $25 million in extra funding for irrigation projects announced in the Budget would help boost development of water storage and infrastructure, particularly in drought-prone east coast regions. Primary Industries Minister Nathan Guy said last week irrigation projects would receive a funding kick-start for five years from 2016/17 through the Irrigation Acceleration Fund (IAF)... Read more

Saudi sheep farm cost taxpayers millions more than first thought... Read more

Saudis threatened to sue Government for $20-$30m. Saudi businessmen who had been thwarted from exporting live sheep for slaughter to the Middle East had wanted to sue the Government for $20 to $30 million compensation, according to just released Cabinet papers. But instead of being a "party to such discussions" the Government decided to spend at least $11.5 million on a Saudi agribusiness hub... Read more

F&P Healthcare tipped to beat its own forecast with record result... Read more

Green Cross Health, formerly known as PharmacyBrands, posted a 4.1 percent decline in annual profit as its staff costs increased. Profit attributable to shareholders fell to $14.4 million in the year ended March 31, from $15 million a year earlier, the Auckland based company said in a statement. Shares of Green Cross fell 3.6 percent to $2.40 and have advanced 17 percent since the start of the year. ... Read more

Solid Energy progresses West Coast mine site changes. After considering feedback from staff members at the Stockton and Spring Creek mine sites, Solid Energy has today told employees it will go ahead with the proposals outlined earlier in the month to change the sites’ work and staffing levels.... Read more

Orion Health reports $61M full-year loss, beats prospectus on recurring revenue... Read more

Tower shares rose to a month-high after the general insurer hiked its interim dividend and confirmed an on-market share buyback after lifting first-half earnings 36 percent on rising premiums and fewer claims. The stock jumped as high as $2.22 and was recently up 4.3 percent at $2.20 after the Auckland-based insurer reported underlying profit of $17.9 million in the six months ended March 31 from $13.1 million a year earlier... Read more

NPT has posted a 16 per cent drop in annual profit, reflecting a bigger uplift in the year-earlier period from a revaluation of properties. Net profit fell to $6.4 million, or 3.94c a share, in the 12 months ended March 31, from $7.6 million, or 4.71c, a year earlier. Shares in NPT closed unchanged yesterday at 65c.... Read more

Canterbury quake hangover leaves Tower in the red. Higher premium prices and lower claim payouts fail to cover Tower for Canterbury quake claims cost blowout; Dividends up & share buyback too ... Read more

Auckland Airport chief executive Adrian Littlewood says his company is working hard to develop systems and technology to defer infrastructure investment and enhance passenger experiences. The company has plans to build a second runway around 2025 but the timing will depend on demand... Read more

Chorus, the regulated telecommunications network operator, has called on the government to enact changes to the Resource Management Act to speed fibre rollout to multi unit properties and those with shared driveways, which currently takes six times longer than for stand alone homes. Chorus shares fell 0.6 percent to $3.15, and have gained 19 percent this year.... Read more

Sky TV grabs rights to 2018, 2022 World Cup soccer rights... Read more

Sky TV programming costs likely to rise vs revenue in 2016... Read more

New TV streaming services like Neon and Netflix have increased congestion on broadband services for the second month in a row, according to the measurements by TrueNet. Increased demand for video downloads - especially where multiple devices are running off a broadband service - can reduce speeds and that has become more apparent at peak viewing times... Read more

SkyCity wins big over land. Land sold by TVNZ to SkyCity for $10 million to help build a convention centre has been valued at $28 million, less than two years later.... Read more

The Government and its partner Sky City have unveiled the final design for the revamped International Convention Centre. At 32,000 square metres, it is smaller than originally planned with a capacity for fewer people but Economic Development Minister Steven Joyce says the NZICC will bring in the same economic and employment benefits to Auckland.... Read more

Bank of India opens Waikato branch... Read more

New Zealand advisers won't dodge bullet: Rickerby. New Zealand financial advisers should be prepared for commission cuts such as those happening in Australia, one adviser who works on both sides of the Tasman says.... Read more

Scott Technology lays off 13 staff, moves to more temp workers, EPMU says... Read more

NZ employees rate work-life balance as top priority, while job seekers eye cash, survey shows... Read more

Fishermen leave 'slave boats', fight for payment. Fishing boats facing legal disputes with foreign workers should be barred from working in New Zealand waters, advocates say.... Read more

Funding has been confirmed for a class action lawsuit against the makers of defective plaster cladding. The legal action, which will claim damages of more than $100 million, is being funded by Harbour Litigation Funding Limited... Read more

Christchurch property investor Lilly Cooper ordered to pay sister and brother-in-law more than half a million dollars... Read more

New Zealand Herald Editorial: Backtrack on super puts Little in a bind.... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has posted a second substantial day of gains as financial stocks rallied after ratings company Moody’s gave the thumbs up to recent moves by the banks to tighten investment lending. A bounce in commodity prices also buoyed mining stocks, while speculation of a Chinese investment saw investors rushing to buy Australia’s third-largest iron ore miner, Fortescue. At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index was 51.9 points, or 0.91 per cent, higher at 5773.4, while the broader All Ordinaries index was up 50.5 points, or 0.88 per cent, at 5770.4.... Read more

The Australian dollar is sliding lower in lacklustre trade against a strengthening US dollar. The Australian dollar was worth US78.23c at noon (AEST), down from US78.31c yesterday.... Read more

The Federal Budget's focus on small business may have come just in time, with a new survey showing the sector holds growing concerns about the state of the Australian economy. The Sensis Business Index for the March quarter, which gauges the confidence levels of small and medium businesses, found that 49 per cent of businesses surveyed felt confident, compared to 22 per cent which felt concerned. The net balance of the results, a score of +27, is unchanged from the previous quarter... Read more

Consumers need to see jobs budget working. Economists are warning that voters will want to see an improvement in the jobless rate if the post-budget boost to confidence is to be maintained and lift spending. Treasurer Joe Hockey may have seen a modest rise in his approval rating since the budget, but already confidence has come off the boil after the solid gains in the past couple of weeks... Read more

Tax reform is doomed, say KPMG bosses... Read more

Banks are becoming less free and easy with their investor home loans, and that could cool the property market a little and give the RBA less reason to lift interest rates. Many banks, including the big four, have tightened their guidelines for lending to housing investors, either making loans tougher to get or more expensive... Read more

Ratings agency Moody's has welcomed tighter home lending standards from Australia's big four banks, saying they help limit growing risks in the housing market. A fortnight ago, Moody's warned of "imbalances" in the Australian housing market, largely due to the overwhelming dominance of investors (particularly in Sydney), which skewed risks "towards the downside."... Read more

Australia dumbs down as government bets on baristas over brains. Australia is betting on plumbers and coffee-shop owners over scientists and researchers to drive the nation's next wave of economic growth.... Read more

Mincor has announced 50 redundancies as part of a restructure of its Kambalda nickel operations in response to a soft price for the commodity. Managing director David Moore said he deeply regretted the job losses, but that after four years of falling nickel prices, changes were required to safeguard the future of the company.... Read more

South Boulder Mines’ directors increase stakes through rights issue... Read more

Energy provider AGL has unveiled plans to sell off more than $1 billion worth of assets and cut costs by $200 million within two years, sending its share price to its highest level in eight years.... Read more

Mungana Goldmines has been granted a trading halt by the ASX pending details of a capital raising.... Read more

Fortescue Metals Group shares have surged more than 10 per cent on Chinese whispers of a major foreign buy-in and a lift in the iron ore price. Australia's Foreign Investment Review Board (FIRB) is considering applications about a possible investment in Fortescue involving Chinese state-owned steel producer Baosteel and Chinese conglomerate CITIC. Shares in the Pilbara iron ore miner closed 23 cents, or 10.6 per cent, higher at $2.40 on Tuesday... Read more

Indonesian-focussed Lion Energy has been granted a trading halt by the ASX, pending an update on testing of the Lofin-2 appraisal well in the Seram (Non Bula) production sharing contract, Indonesia... Read more

Shareholders have issued a stinging rebuke to embattled oil and gas junior Tap Oil's board and management with a big protest vote against the re-election of non-executive director Doug Schwebel and a first-strike against the remuneration report. Tap shares were steady at 34 cents at 1pm.... Read more

Aristocrat Leisure lifts first-half profit 35pc... Read more

AGL unveils asset sales, spending cuts targets... Read more

UBS Australia is splitting off its wealth management business but advising clients not to be concerned. The management buyout led by current senior UBS Wealth Management employees and headed by the current chief of the Australian wealth unit Mike Chisholm will create a new business to be called Crestone Wealth Management... Read more

Online exchange company OzForex has posted a strong lift in full-year profit and revenue, raising its dividend payout in the process. OzForex today posted a net profit of $24.3 million for the 12 months to the end of March, representing a 52 per cent increase on the previous full-year result of $16m... Read more

Anteo Diagnostics has completed a $1 million placement at $0.08 per share to fund continuing development of its nanoglue technology in the battery sector.... Read more

McGrath Estate Agents is aiming to raise $100 million ahead of a listing on the stock exchange later this year, according to sources.... Read more

Devine Group ditches sales talks... Read more

The chief executive of Perth internet provider iiNet expects the number of Australians visiting pirate websites to decline over the next few years, with the introduction of online streaming service Netflix - which stretched its network to the limit - highlighting Australia's thirst for "affordable and easily accessible" content... Read more

Chris Smith has been tapped to become chief executive of hearing implants maker Cochlear, taking over from Chris Roberts, as who leaves after more than decade at the helm. Mr Smith will become deputy chief executive on July 1, before taking the top job on September 1... Read more

WA UberX drivers could be exposed to big financial risks despite assurances from the ride-hailing business that they are covered. Uber representatives told prospective drivers, such as Queens Park man Liam Ducey, their insurers would honour claims, only to find that was not the case... Read more

Opinion - Elizabeth Knight: Fortescue won't play prey by giving up control of his iron ore empire. Chinese predators may be circling Andrew Forrest's financially wounded Fortescue Metals Group but the market could have drawn a long bow on Tuesday to bid the shares up 15 per cent on the back of a potential takeover... Read more

Opinion - Callum Pickering: The property boom is on borrowed time... Read more

International Headlines

U.S. Market Report: Stocks were tumbling Tuesday. The Dow was down about 230 points, or 1.3%. The S&P 500 and Nasdaq fell more than 1% too. Still, the market has had much worse days this year. And stocks are still not far from their all-time highs... Read more

North/South Americas Market Report: North and South American markets are broadly lower today with shares in Brazil off the most. The Bovespa is down 1.52% while U.S.'s S&P 500 is off 1.17% and Mexico's IPC is lower by 0.82%... Read more

European Market Report: European markets finished broadly lower today with shares in Germany leading the region. The DAX is down 1.61% while London's FTSE 100 is off 1.18% and France's CAC 40 is lower by 0.66%... Read more

Asian Market Report: Asian markets finished broadly higher today with shares in China leading the region. The Shanghai Composite is up 2.02% while Hong Kong's Hang Seng is up 0.92% and Japan's Nikkei 225 is up 0.12%... Read more

Oil prices gained slightly in subdued Asian trade Tuesday as dealers searched for fresh cues following public holidays in the United States and much of Europe. US benchmark West Texas Intermediate for July delivery gained 15 cents to $59.87 while Brent crude for July rose seven cents to $65.59 in afternoon trade.... Read more

Federal Reserve Vice Chairman Stanley Fischer said policy makers will consider global growth as they begin to raise interest rates, and that they could increase borrowing costs more gradually should the world economy falter... Read more

Weight-loss and nutrition company Herbalife is at the centre of the biggest war on Wall Street. Billionaire hedge fund manager Bill Ackman has accused the company of being a pyramid scheme and criminal enterprise, and has taken out a $1 billion bet against Herbalife shares, which means he makes money if the stock price falls... Read more

Charter Communications confirmed Tuesday its $55 billion acquisition of Time Warner Cable, a merger that would create a powerful cable and broadband Internet contender in an industry long lacking competition. According to previous reports, Charter agreed to pay about $195 a share for Time Warner Cable — $100 in cash and the rest in stock. The price is 14 percent higher than Time Warner Cable’s closing stock price Friday and nearly 50 percent above Charter’s bid for Time Warner Cable in early 2014.... Read more

Cable company Discovery Communications did not have a good 2014. The stock lost nearly a quarter of its value. But despite that, Discovery's David Zaslav is the highest-paid CEO in corporate America. His total compensation was worth $156.1 million last year -- up from $33 million in 2013... Read more

Greece and creditors play down fears of imminent default... Read more

UK retail sales bounding ahead, says CBI... Read more

Amazon, the global online retailer, is changing the way it records sales in a move that could see it paying more tax. Transactions carried out in European markets were previously recorded in Luxembourg, with which Amazon had a low-tax agreement... Read more

Amazon pays $16 million tax in Germany, while making $11.9 billion sales... Read more

Irish airline Ryanair has reported a big increase in full-year profits. Net profit for the year to the end of March rose 66% to €867m (£614m; $948m), slightly ahead of analysts' expectations... Read more

Investment firm founder fined record £75m by FCA after Keydata collapse. Stewart Ford, who through Keydata created a £2.8bn financial empire selling ‘death bonds’, appealing against the fine by the City regulator... Read more

The first criminal trial linked to the manipulation of a key interest rate, known as Libor, has begun in London. Former City trader Tom Hayes, 35, of Fleet in Hampshire, has been accused of acting in a "thoroughly dishonest and manipulative manner" in his alleged attempts to rig the Libor rates, the court heard... Read more

The Coca-Cola Company has decided to discontinue sales of Coca-Cola Light in Russia and brings to the domestic market another low-calorie drink – the international brand Coca-Cola Zero. The company hopes that this will increase Russian sales of the entire Coca-Cola brand, which effectively failed to grow during the past year for the first time since 2010... Read more

France’s state-controlled energy giant EDF faces a showdown with trade unions in an attempt to tackle pay and privileges for senior staff, as the government gears up for a clash over the 35-hour week... Read more

It's official: Chinese stocks have surged over 100%... Read more

China's yuan no longer undervalued, says IMF... Read more

Tokyo Gas wants to build a gas pipeline that would connect Russia's Sakhalin Island with the Japan. A company consultant believes piped gas would cost half as much as the liquefied natural gas (LNG) that is being imported from Russia at the moment... Read more

Samsung Group announced Tuesday the merger of two major affiliates, as the South Korean business giant accelerates restructuring efforts ahead of a generational power transfer within the founding Lee family. The all stock deal, approved by the boards of both companies, would see Samsung's de facto holding company Cheil Industries -- which has interests from fashion to theme parks -- acquire general trade and construction affiliate Samsung C&T.... Read more

Malaysia Airlines’ passengers have been assured “tickets sold will be honoured” despite the appointment of an administrator, and thousands of likely job losses in coming months. A statement issued today announced administrator Dato’ Mohammad Faiz Azmi had been appointed to “transfer selected assets and liabilities” from Malaysia Airlines to a new company effective from September 1... Read more

Modi’s First Year: Reality Sets In. A year after Indian voters handed Narendra Modi a once-in-a-generation mandate for change and economic revival, messy realities are sinking in... Read more

Opinion - Brian Fung: Charter just bought Time Warner Cable. Here’s what customers can look forward to next.... Read more

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