ASB Securities Morning Brief for Friday, 06 May 2016
Friday, 06 May 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, outperforming equity markets across Asia, as a brokerage gave an upbeat assessment of retirement village operator Metlifecare. Auckland International Airport and Z Energy gained while Kathmandu Holdings fell. The S&P/NZX 50 Index gained 52 points, or 0.8 percent, to 6,876.49. Within the index, 31 stocks rose, ten fell and eight were unchanged. Turnover was $137.4 million... Read more

The New Zealand dollar rose ahead of the Reserve Bank of Australia's monetary policy statement tomorrow, which will help explain this week's cash rate cut, and US non-farm payrolls for April, which may provide clues to the timing of Federal Reserve rate hikes. The kiwi rose to 69.03 US cents as at 5pm in Wellington, from 68.85 cents late yesterday. The local dollar gained to 92.04 Australian cents from 91.81 cents yesterday... Read more

NZX cash trading jumped 47% by volume in April from the same month last year with gains in both equity and debt security transactions. Total trades rose to 142,769 while average daily trades rose 39% to 7138, according to the market operator's shareholder metrics. The total value of securities traded in April rose 55% to $4.1 billion, or an average of $204 million a day... Read more

The government has flagged plans to speed up the overseas investment regime, hiking application fees to allow the Overseas Investment Office to take on more staff and clarifying exemption rules. The changes are the result of a review that started last year and will mean the OIO will be able to assess applications faster while overseas investors will have more certainty, Finance Minister Bill English and Minister for Land Information Louise Upston said in a statement. OIO fees are to increase by between 8.7 percent and 166 percent in mid-2016, allowing the office to increase its staff by 25 percent... Read more

Healthy Homes Bill progresses. Minimum standards for rental properties are set to remain on the public agenda after Labour’s Healthy Homes Bill progresses to Select Committee stage... Read more

Smart research can help tackle Auckland's housing woes, Science and Innovation Minister Steven Joyce says. The Government has launched the last of its 11 wide-ranging National Science Challenges with a new effort aimed at building better homes, towns and cities... Read more

New Zealand’s changing population means investors need to think strategically to best accommodate their future tenants. Not only is New Zealand’s population ageing rapidly, but big changes in the ethnic make-up of the country’s population are taking place too.... Read more

Prime Minister John Key has dismissed Auckland's growth issues as "a sign of success....a quality problem." Citing housing, immigration, transport and hotel capacity, Key challenged a business audience by asking if they would want the opposite scenario and lack of growth... Read more

Drivers of electric vehicles won't have to pay road user charges and will be allowed to drive in bus lanes as part of a new government plan to double EV numbers annually to a target 64,000 by 2021... Read more

Road Transport Forum Chief Executive Ken Shirley has welcomed the announcement today by Transport Minister Simon Bridges that electric powered heavy vehicles be exempt from road user charges (RUCs) until they make up two percent of the heavy vehicle fleet. “We recognise that transport fuels are the low hanging fruit for New Zealand to reduce its carbon emissions and honour the ambitious goals set by our international climate change obligations,” says Shirley... Read more

The select committee considering reforms to the Resource Management Act is hearing a chorus of concern about proposals to limit rights of appeal on resource consents, expansion of ministerial powers, and fears over the potential for "collaborative processes" to add cost and delay to consent processes.... Read more

Shewan Inquiry to have 'material impact on NZ's standing in the world'. Transparency International New Zealand has hit out at the Government's review of the disclosure rules covering foreign trusts registered in NZ, labelling its limited scope extremely surprising and disappointing... Read more

The New Zealand Superannuation Fund said it is happy to remain a holder of shares in Z Energy, which reached a record high today, after Australian media reports suggesting it planned to sell its 10 percent stake in the fuel retailer. Z Energy shares gained 1.3 percent to $7.98, and earlier touched a record high $7.99. The stock has gained 17 percent this year.... Read more

New Zealand Wool Services International Limited’s C.E.O, Mr John Dawson reports that seasonal limited wool supply and a generally weaker New Zealand dollar saw the 4,700 bales in the South Island sale well supported with an 85.6 percent clearance. The weighted currency indicator compared to last sale on 28th April was down 0.69 percent, aiding the local market lift... Read more

Fonterra Cooperative Group cut its forecast farmgate milk price to its Australian dairy farmers for the current season, saying it better reflects the oversupply of milk which is weighing on global dairy commodity prices. It also offered farmers a loan linked to future supply. The dairy processor will pay its Australian farmers A$5 per kilogram of milk solids, down from an earlier forecast of A$5.60/kgMS, the Auckland-based company said in a statement... Read more

Analysts are picking a likely upsurge in the share price of retirement village operator Metlifecare in coming months due to a ramp-up in development, change in leadership, and supportive conditions, despite the company having traded at a discount relative to its industry peers over the past decade. Metlifecare delivered net profit of $125.7 million in the first half of 2016, more than three times higher than the previous year, mainly due to a lift in list prices for resale units in Auckland and Bay of Plenty. It is one of the country’s largest providers with 25 retirement villages throughout the North Island and $2.4 billion in assets... Read more

Bank of New Zealand's charge for bad and doubtful debts jumped 83% in the first half as the local unit of National Australia Bank doubled its provision against its dairy book in the face of a sustained downturn. BNZ's charge for bad and doubtful debts rose to $84 million in the six months ended March 31, from $46 million a year earlier. The charge contributed to a 3.3% decline in cash earnings to $404 million... Read more

Turners raised its full-year profit forecast as all its trading operations maintained strong performance in the last quarter of the financial year. Its shares rose 4.6%. Pretax profit was between $21.3 million and $21.5 million in the year ended March 31, ahead of previous guidance for earnings of more than $20 million, the Auckland-based company said in a statement... Read more

New Zealand’s crowdfunding site PledgeMe has announced its second crowdsourced director in 2016 with Melanie Templeton joining the board. “With over 100 applicants for our board position, we decided to take the opportunity to appoint two new directors” PledgeMe CEO Anna Guenther said... Read more

The Electricity Retailers’ Association of New Zealand (ERANZ) has appointed Jennie Langley as its inaugural Independent Chair. Ms Langley is an experienced professional with governance and operational experience across the primary industries, education, infrastructure and tourism sectors... Read more

GeoOp shareholders have overwhelmingly approved a merger with Australian mobile sales app developer InterfaceIT and welcomed Roger Sharp to the board, where he is to replace Mark Weldon as chairman. Reporters were barred without explanation from the special meeting in Auckland today, which came a day after Weldon's surprise resignation under intense media gaze as chief executive of MediaWorks... Read more

Media have been refused entry to GeoOp’s special meeting underway in Auckland. NBR was stopped by security and was given no reason for the refusal... Read more

NZME has picked up a prestigious award for media business of the year at the 2016 CAANZ Beacons Awards on Wednesday night. The glamorous event was held at the Viaduct Event Centre where just under 1000 of New Zealand's leading media personalities came together to celebrate the industry's best work from the past year... Read more

MediaWorks' brands will be boosted by the resignation of chief executive Mark Weldon , a marketing expert says. Weldon stepped down after a recent string of high-profile staff left the company, including popular broadcasters John Campbell, Hilary Barry and former TV3 head of News Mark Jennings... Read more

Sky TV has won the rights to screen transtasman rugby league matches and tests and has extended its existing NRL deal. In an announcement to the NZX this morning, Sky revealed it has signed a five-year deal from 2018 to screen all league games. The rights to some New Zealand matches have been secured for seven years from 2017... Read more

The government will spend $22.2 million over the next four years to help combat cyber crime. In a pre-budget announcement, Prime Minister John Key told the country's first Cyber Security Summit in Auckland that the government had earmarked $20 million of new operating funding over the next four years and $2.2 million of new capital to set up a national Computer Emergency Response Team to help prevent and act on cyber incidents in partnership with the private sector and other organisations... Read more

Former NZX chief executive Mark Weldon was under pressure from his board over the performance of acquisitions and over his own performance when he stopped funding for Clear Grain Exchange, Wellington's High Court has heard.... Read more

Opinion/Analysis - Sue Chetwin: How to get value for money from your health insurance.... Read more

Opinion - Peter Townsend: The important interdependency of business and the community... Read more

Opinion - David Hargreaves: RBNZ's housing dilemma. The Reserve Bank has some tough decisions to face this coming week on the runaway housing market... Read more

Opinion - James Eyers: Why Australia's banks should care about New Zealand's cows... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket traded in and out of the red before finishing slightly firmer as the two-month iron ore surge continued to unravel and retail sales data reflected the slack state of the domestic economy... Read more

Stronger trade data has helped halt the Australian dollar's recent decline. At 1700 AEST on Thursday, the currency was trading at 75.00 US cents, down from 75.92 cents on Wednesday.... Read more

Philip Lowe will replace Glenn Stevens as the next head of the Reserve Bank of Australia. The deputy governor will step up to the top job when his boss's 10-year term ends on September 17. "He brings a wealth of knowledge and experience to the role of governor," Treasurer Scott Morrison told parliament on Thursday... Read more

Australian retail spending rose 0.4 per cent in March, beating economists' expectations. However, retail sales rose by 0.5 per cent in the quarter, lower than the market forecast of 0.7 per cent... Read more

Australia's trade deficit narrowed unexpectedly to a one year low of $2.2 billion in March on the back of a stronger export performance... Read more

Bill Shorten pledged to deny big business and the wealthy some $65 billion in tax cuts offered in the Government’s “millionaires Budget”. Opposition Leader Bill Shorten told Parliament Labor would limit income tax cuts to those earning less than $180,000 a year, and restrict company tax cuts to small businesses with a turnover under $2 million a year. Vocational education loans would be capped at $8000 a student, to save $6 billion... Read more

Malcolm Turnbull wants Australia’s economy to be agile and strong but the Prime Minister couldn’t back away fast enough from answering one simple question. The Budget released on Tuesday included a plan to reduce the company tax rate down to 25 per cent over 10 years... Read more

The Federal Opposition has used the final Question Time before the election to continue its assault on the Government about the cost of its plan to cut company tax. Prime Minister Malcolm Turnbull has refused to confirm the 10-year cost of the proposal to cut tax for all firms to 25 per cent over a decade... Read more

The cost of visiting your local GP is likely to rise and the availability of bulk billing plummet as the government again goes to the core of Medicare to get funds for other projects. Doctors’ groups are warning more GPs will increase charges to patients because of an extended freeze on Medicare rebates in Tuesday night’s Budget... Read more

Leading WA businesswoman Sharon Warburton will chair the Turnbull Government’s $5 billion loan fund to build infrastructure in northern Australia.... Read more

The Department of Mines and Petroleum has granted approval for the Penny’s Find gold project, paving the way for open-pit mining to begin mid-year. Shares in Empire Resources surged 81 .25 per cent by 9.30am this morning to hit a three-year high of 2.9 cents on news it has won approval, just a day after announcing the City of Kalgoorlie-Boulder has backed plans to divert the Kurnalpi-Pinjin Road around the mine... Read more

Kogi Iron Ltdis heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare.... Read more

Variscan Mines Ltd has been granted a trading halt by the ASX pending details of an equity funding transaction... Read more

Rio Tinto is still pushing its big suppliers and contractors to accept longer payment time frames despite backflipping three weeks ago on its shock bid to double them to 90 days. Ahead of Rio's annual general meeting in Brisbane today, the resources giant confirmed it would ask larger firms to consider 60 or 90-day terms, up from the current 45 days, as it dealt with lower commodity prices.... Read more

Roy Krzywosinski's long stint running Chevron's Australian business, dominated by the construction of the Gorgon and Wheatstone LNG projects, will finish at the end of this month. Chevron announced this morning that Mr Krzywosinski's deputy, Nigel Hearne, would take over as managing director of the Australian business unit on June 1... Read more

Latin Resources Ltd has been granted a trading halt by the ASX, pending details relating to a Joint Venture. LRS has been a very strong ASX performer, with its shares trading recently at around $0.009, or three times higher than in February of this year... Read more

National Australia Bank has lifted first-half cash earnings 6.5 per cent to $3.31 billion, emerging from the disposal of its unprofitable UK business with the best results of the big four banks. A previously flagged $4.22 billion hit from the demerger and float of Clydesdale Bank dragged NAB to a statutory $1.74 billion loss for the six months to March 31, but cash earnings - the banks' preferred measure of profitability - were up strongly... Read more

Casinos operator Crown Resorts has reduced its exposure to the weakening Macau gambling market, cutting its stake in its Macau joint-venture, Melco Crown Entertainment (MCE). Investors have welcomed the move, with analysts saying proceeds generated from the sale of part of Crown's MCE holding will ease its debt and help it fund big projects in Sydney, Melbourne and Perth. Shares in Crown closed up 58 cents, or 4.9 per cent, at $12.40 on Thursday.... Read more

eServGlobal Ltd , a provider of end-to-end mobile financial services to emerging markets, has won a contract to supply its PayMobile software to a service provider in West Africa. The total contract is valued at €1.6 million (A$2.46 million) over 2 years, with €1.1 million to be recognised within the current financial year... Read more

Australia's corporate regulator Thursday approved brewing giant Anheuser-Busch InBev's buyout of rival SABMiller, which is now awaiting the go-ahead from authorities in other key markets including Europe. The Belgium-based group's US$122-billion acquisition, which was announced in November, would be the third largest in history if it clears all regulatory hurdles... Read more

The owner of Supercheap Auto and Rebel has unveiled strong sales growth and a restructure plan that is expected to boost earnings. The Super Retail Group, which also owns Ray's Outdoors, BCF and Amart Sports, trading update says all three of its divisions - auto, sport and leisure - enjoyed strong like-for-like growth in the 18 weeks to April 30... Read more

Austal has won a $US18.5 million ($25 million) early stage contract towards building a 12th troop carrier for the US Navy. The award came as Austal signed a $305 million Australian Government contract to build and support 19 patrol boats for Pacific island nations... Read more

Australian Vanadium Ltd managing director, Vincent Algar, joined the Proactive Investors Spotlight CEO Roadshow in Melbourne this week providing investors with the latest update on the company... Read more

Future Fibre Technologies Ltd has entered into a distribution agreement with Anixter International to market the company’s FFT Secure Point product globally. FFT Secure Point is a fibre optic ‘perimeter intrusion detection’ system that helps commercial and residential users detect and locate intrusions breaching their fence... Read more

A price war has erupted between Uber and rival GoCatch, which has slashed off-peak fares on its ridesharing app by five per cent. The homegrown taxi booking start-up launched its ridesharing arm GoCar in February, initially charging the same base fare as Uber. “Now we can guarantee that we’re always going to be cheaper,” chief executive Ned Moorfield told Read more

ASC Adelaide shipyards to shed 640 workers by end of 2017... Read more

The Australian Tax Office is getting better at responding to complaints by tax agents with IT systems issues, but it still needs to up its game, according to tax practitioners. Late last year the ATO was criticised for failing to address serious problems with its slow and unreliable online portal for tax agents... Read more

Williams goes from Mojo client to chairman... Read more

Aussie bitcoin ‘creator’ Craig Wright backtracks on providing proof that he invented the currency... Read more

Opinion - Michael Janda: The budget was only released on Tuesday, but already there are doubts about its projected return to surplus in 2021. While the budget actually revised up very slightly the forecast for this year's and next year's deficit, these figures are based on assumptions on the optimistic end of plausibility... Read more

Analysis - Stephen Long: Budget 2016: The sting in the tail of Scott Morrison's small business tax plan. A centrepiece of the budget — the so-called "enterprise tax plan" — is a big con... Read more

International Headlines

U.S. Market Report: Wall Street gave up early gains and slipped into the red in afternoon trading on Thursday, dragged down by consumer discretionary stocks and retreating oil prices. Oil prices had jumped on concerns that a huge wildfire in Canada's oil sands region and escalating tensions in Libya would hit supply, but later slipped well off their highs... Read more

North/South Americas Market Report: Markets closed lower across the region as at the most recent closing prices... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The DAX gained 0.24% and the FTSE 100 rose 0.09%. The CAC 40 lost 0.11%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.22%, while the Nikkei 225 led the Hang Seng lower. They fell 3.11% and 0.37% respectively... Read more

Canada's oil-rich province of Alberta is under siege from a massive wildfire. And that's creating turmoil in the global oil markets. The huge forest fire has already torched at least 1,600 homes and forced the evacuation of about 88,000 people in the region, including everyone from the oil sands town of Fort McMurray... Read more

A debt-fueled disaster could be coming to the U.S. and China. That's what legendary money manager Stanley Druckenmiller warned a roomful of top investors on Wednesday in New York City... Read more

U.S. jobless claims rise; planned layoffs surge... Read more

Abercrombie & Fitch Co. Chief Operating Officer Jonathan Ramsden announced plans to leave the apparel chain next month, a sign the race to pick the company’s next leader may be narrowing. Ramsden, who has worked at Abercrombie since 2008, informed the company that he plans to resign on June 15, according to a statement Thursday... Read more

Cue the Run-DMC. Adidas is tearing it up on Wall Street this year -- and leaving rivals Nike and Under Armour in its dust. Shares of the German athletic apparel giant are up more than 30% this year. Nike and Under Armour are both down more than 5%.... Read more

Forget drones. Jeff Bezos continues to invest in a 20th century flying innovation that helps deliver all of its packages -- airplanes. Amazon announced a deal with cargo freight airline Atlas Air Worldwide on Thursday. Atlas will lease 20 Boeing B767-300 jets to Amazon. And Amazon will also receive warrants in Atlas that could potentially give Amazon a nearly 30% stake in the company.... Read more

A majority of the five-member U.S. Federal Communications Commission has voted to approve Charter Communications Inc's acquisitions of Time Warner Cable Inc and Bright House Networks, two sources briefed on the matter said on Thursday. The deals, which would create the second-largest U.S. broadband provider and third-largest video provider, won the backing of FCC Commissioners Jessica Rosenworcel and Michael O'Rielly this week, the sources said on condition of anonymity... Read more

How Puerto Rico’s $70 Billion Crisis Is About to Get Catastrophic... Read more

The Excalibur Steel management buyout has emerged as the frontrunner to rescue Tata Steel UK, although concerns about funding and pensions could still derail the bid. Sources close to the sale process said the proposed buyout, supported by Welsh billionaire Sir Terry Matthews, is the most credible business plan, but questions over funding and the pension scheme need to be resolved... Read more

France's Sanofi said it could raise its proposed $9.3 billion deal to buy Medivation if the U.S. cancer drugmaker engaged in talks, threatening to go directly to shareholders to oust the board if not. Sanofi Chief Executive Olivier Brandicourt wrote in a letter to the board of Medivation published on Thursday that the transaction was a priority for the French drugmaker and it was committed to seeing it through... Read more

Housing Is Job Number 1 for London's Next Mayor... Read more

London Home Prices See Parents Risking Finances to Help Kids... Read more

Rolls-Royce Holdings Plc said it’s working on plans to eliminate as many as 300 more management posts as the maker of engines for Airbus Group SE and Boeing Co.’s biggest jets steps up a cost-cutting drive amid sputtering first-half earnings. The U.K. company, which has already announced the elimination of 200 senior positions in two tranches, is in the process of informing employees of the next steps in its savings program, and will reach a decision on the number of jobs to go by the end of the first half... Read more

Services sector slump fans fears of UK economic slowdown. PMI/Markit survey shows business activity at lowest level since February 2013 as EU referendum and global slowdown fears take hold... Read more

Sainsbury's has reported a fall in annual profits as the supermarket price war continued to hurt the retailer. Underlying profits, which strip out one-off charges, fell to £587m for the year to 12 March. That was down from £681m in the previous year. Pre-tax profits for the year were £548m, reversing last year's £72m loss. That result was hit by charges related to the falling value of its properties... Read more

The rand weakened below 15 per dollar to the lowest in almost a month amid increasing expectations among economists that South Africa’s credit rating will be cut by the end of this year as growth falters. The rand fell as much as 1.2 percent to 15.1568, the weakest since April 7 on a closing basis, before paring its losses to be little changed at 14.9659 by 1:59 p.m. in Johannesburg... Read more

Alibaba Group Holding Ltd. posted a 39 percent surge in revenue as China’s dominant e-commerce operator shrugged off a slowing economy with promotions to woo cash-rich consumers. Asia’s largest Internet company posted better-than-expected sales of 24.2 billion yuan ($3.7 billion) in the March quarter and said it will start providing annual forecasts. Alibaba shares jumped 5.2 percent to $79.75 as of 9:31 a.m. in New York... Read more

Is China fueling a new commodities bubble? Remember the massive plunge in commodity prices last year? For some investors in China, it already appears to be a distant memory... Read more

China troubles for Apple and Disney have western media on edge. If Apple and Disney can't crack China's market for online content, who can? The recent shutdowns of Chinese services from both companies have set nerves jangling about who might fall foul of the censors next... Read more

Hong Kong property stocks were downgraded by Goldman Sachs Group Inc., which predicts a 20 percent decline in home prices as borrowing costs rise... Read more

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