ASB Securities Morning Brief for Friday, 30 September 2016
Friday, 30 September 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose as global markets were encouraged by reports of a deal to ease the glut of crude oil. Orion Health Group, Fisher & Paykel Healthcare Corp and Auckland International Airport led the index. The S&P/NZX50 Index gained 53 points, or 0.7%, to 7.343.45. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $110.5 million... Read more

The New Zealand dollar was little changed after appearances by top Federal Reserve officials did little to change market perceptions of the timing of interest rate hikes in the US. The kiwi traded at 72.73USc at 8am in Wellington from 72.72USc late yesterday. The trade-weighted index was at 77.06 from 77.11... Read more

The Reserve Bank will pay a $140 million dividend to the Government, using up some of the near $1 billion of investment gains built up from prior years... Read more

GST on all online purchases in New Zealand comes into effect on Saturday, but it's unclear if that will mean a price rise for the likes of subscriptions to Netflix and Apple services. But the price of Skype calls to landlines and mobile phones is expected to go up 15 percent, as well as the prices of Adobe software and some Google consumer services... Read more

New Zealand's national infrastructure and capacity to innovate stand out as two factors that continue to drag on the country's international competitiveness, even as it rose three places in the ranks from last year and 10 places better than in 2012/13, as judged in an annual survey by the World Economic Forum. From 16th place in the 2015/16 Global Competitiveness Report, New Zealand rose to 13th, nine places ahead of Australia at 22nd, and 15 places ahead of the country's other major trading partner, China, on 28th... Read more

Brexit event reassures NZ exporters, says Chamber. The UK will continue to be a key market for New Zealand exporters – that was the main message from a Brexit event held in Wellington today... Read more

New data from Statistics NZ shows investors likely to pay down debt on owner-occupied home, but not their rental properties. New Zealanders have 29c of real estate debt for every dollar of property they own, new data from Statistics New Zealand shows... Read more

Zoning appeal to impact on development. Residential development in Auckland is likely to suffer now that only part of the city’s Unitary Plan will become operative for the foreseeable future. The Auckland Council’s Governing Body is set to make the Auckland Unitary Plan operative only in part today... Read more

Stock Takes: Crash warning - Could your KiwiSaver get hit?... Read more

Research house Morningstar has given faint praise to the KiwiSaver schemes operated by Grosvenor, now rebranded as Booster. The balanced fund, balanced growth, conservative fund, high-growth fund and default saver fund have all been given a neutral rating in the latest update. They were previously rated negative... Read more

Partners reinstates up-front commission on health insurance. Partners Life had reinstated up-front commissions on health insurance business now that it has completed its capital raising with Blackstone... Read more

Niche milk processor Tatua Co-operative Dairy Company has announced a final season payout to farmers for 2015-16 of $6.30 per kilogram of milksolids. The Morrinsville-based company has 113 suppliers. Its payout compares to Fonterra's final payout for the year of $3.90 per kg/MS. Tatua's guidance for the 2016-17 season sits at $5.50-6.00, compared to Fonterra's $5.25... Read more

Rural lending specialist Rabobank expects farmgate milk prices to lift towards the low $6.00 per kg mark, up from its previous forecast of a price in the the mid to high $4s, if world dairy production continues to decline. New Zealand dairy analyst Emma Higgins, commenting ahead next week's quarterly report by the bank on the world's dairy sector, said wholemilk powder prices could reach US$3300 a tonne by early next year... Read more

The New Zealand Merino Company (NZM) has ended one joint venture to start another with a rival meat company for its luxury merino meat brand. Meat processor and exporter Silver Fern Farms parted ways with NZM, announced last week, in the merino meat partnership to concentrate on its own sheepmeat branding and in its place will now be rival, Alliance Group... Read more

The Government is committed to growing New Zealand's aquaculture industry and wants to help reduce the multimillion-dollar costs farmers face re-consenting their farms, Prime Minister John Key says. Key also wants to revise the current national environmental standards to help the industry progress. Speaking to 350 delegates at the New Zealand Aquaculture conference in Nelson this week, Key acknowledged the $400 million aquaculture industry was in a good economic space... Read more

Plexure Group, the digital advertising firm formerly known as VMob, has increased annualised committed monthly revenue (ACMR) by almost a third with a view to reaching $10 million mark by the end of the year, and is considering raising new capital... Read more

CBL Corp, which sells credit surety and financial risk insurance, plans to raise up to $63 million in a share placement to institutional investors and a share purchase plan, so it can chase acquisitions. The Auckland-based company will raise $60 million in an underwritten placement to institutional investors at $3.45 a share, an 8.2% discount to yesterday's closing price of $3.76, and raise up to a further $3 million in a share purchase plan to eligible investors at the same price... Read more

Education consulting firm Crimson Consulting appears to have raised $US30 million in its latest capital raising round, largely from US billionaire Julian Robertson, according to Companies Office filings.... Read more

Christchurch City Holdings Ltd, the city council's investment unit, has met its target under the city's long-term strategy by paying a $90 million dividend, the first installment of a plan to return $600 million by the end of 2019 via 'capital release'. The council's amended long-term plan was affirmed in June, delaying $110 million of a planned initial $200 million payment until 2017. It got $132 million in total payments for the 2016 year once the ordinary component of the dividend, $42 million, was added. The plan reduced what originally had been slated as a $750 million return... Read more

Wellington City Council boss Kevin Lavery says considering a request to fund Wellington Airport's runway will be "completely different" to a controversial subsidy on flights. In recent days Lavery has come under fire from around the council for the lack of paperwork behind its decisions to provide "marketing support" for Singapore Airlines new service to the capital via Canberra... Read more

Hawaiki Cable has announced Nasdaq-listed telco Alaska Communications as its landing partner in Oregon. Hawaiki is rolling out a $US300 million 14,000km trans-Pacific cable between Australia, New Zealand, Hawaii and Oregon. Its backers include NBR Rich Listers Malcolm Dick and Sir Eoin Edgar.... Read more

HydroWorks, a Christchurch-based hydro-electricity turbine innovator, is going across the Tasman to raise A$1.5 million, having just raised the almost same amount in New Zealand, ahead of an ASX listing slated for the first quarter of next year... Read more

Pumpkin Patch's annual loss widened by 71 percent as the indebted children and babywear retailer's revenue sank with store closures and as its international wholesale business struggled. The Auckland-based company posted a net loss of $15.5 million in the 12 months ended July 31 from $9 million a year earlier, it said in a statement. Revenues dropped 11 percent to $212.4 million, and adjusted earnings before interest, taxation, amortisation and depreciation fell 71 percent to $3.4 million, at the top end of guidance. The shares dropped 8.9 percent to 8.2 cents today and are down 25 percent this year.... Read more

Z Energy has signed contracts to sell 12 of the 20 sites it has to quit as part of its acquisition of Chevron New Zealand and is negotiating contracts for the rest. The Wellington-based service station operator this month signed or was still negotiating contracts for all 20 sites, it said in a statement... Read more

An abandoned site in Wainuiomata partly owned by former Kirkcaldie & Stains chairman Falcon Clouston is up for receivership sale. The 2.2 hectare property at 7a Waiu St is a large undeveloped piece of land that was used by Paddy Hannan Contracting as a clean fill site before it was placed in receivership in 2014... Read more

Intueri Education Group plans to merge six training schools in New Zealand into a single entity in an amalgamation that it says will simplify its relationship with the Tertiary Education Commission and the NZ Qualifications Authority and reduce administration, phasing out the name of a school being investigated by the Serious Fraud Office.... Read more

OIO issues two formal warnings to Grozovsky brothers... Read more

Rafael and Federico Grozovsky respond to Overseas Investment Office review. The owners of Onetai Station, Rafael and Federico Grozovsky, welcome the conclusion of the review by the Overseas Investment Office (OIO) and the principal finding that they are of good character. Bringing this process to an end will now allow them to focus on improving Onetai; implementing their water quality research; and developing their business links with New Zealand... Read more

References to Sealegs' technology removed from rival's website as injunction showdown looms. Auckland-based boat builder Smuggler Marine has removed references to Sealegs Corp's amphibious boat technology from its website ahead of an application for a High Court injunction next month over the alleged infringement of Sealegs' intellectual property. Shares in Sealegs last traded at 8c and have fallen 27% this year.... Read more

Hansa potentially another Ponzi. Regulators are not commenting on claims investment firm Hansa potentially a Ponzi scheme... Read more

High-profile businessman Craig Stobo says he was "completely unaware" he was named as managing director of a company now thought to be a significant ponzi scheme. He also said he has had no association with the man under investigation since the mid-2000s, and was only alerted to the "identity theft" by regulators... Read more

Getting clarity on market manipulation. Guidelines intended to provide brokers with more clarity on market manipulation are currently being worked on by the NZX, it has emerged at the Mark Warminger trial at the Auckland High Court... Read more

Media company NZME has warned some details of competition entrants may have been accessed by a cyber attack on a third-party cloud server used by the company. Initial investigations show information relating to about 76,000 people was held on the overseas cloud server... Read more

Opinion - Siah Hwee Ang: Observing regulations in international markets... Read more

Australian Headlines

Australian Market Report: Wall Street rose 0.5 per cent last night, but the S&P/ASX 200 climbed 59 points, or 1.09 per cent, to 5471.3 as miners followed energy stocks higher. Brent crude oil lept 6 per cent to $US48.60 a barrel oil after OPEC oil producing nations reached an unexpected preliminary agreement to cut crude oil production... Read more

The Australian dollar has been boosted by rising commodity prices and market expectations of no change to interest rates when the Reserve Bank meets next week. At 1200 AEST on Thursday, the local unit was trading at 76.98 US cents, up from 76.85 cents on Wednesday.... Read more

Reserve Bank governor Lowe to take 'sharper' view on rising house prices: Westpac chief economist... Read more

The number of job vacancies has risen to the highest level since May 2012. Vacancies rose by 7,700, or five per cent in seasonally adjusted terms, between May and August, according to quarterly survey data from the Australian Bureau of Statistics released on Thursday. The number of vacancies counted in August was 177,300, the highest since May 2012... Read more

The mortgages of thousands of battling West Australians have been sold to a private bank as the State Government moves to clear $1.3 billion from its balance sheet. Bendigo and Adelaide Bank has cherrypicked 6000 home loans worth $1.35 billion held by the WA Government’s housing trust Keystart... Read more

Australia's big superannuation funds are under pressure to veto bonuses to energy company executives who are rewarded for expanding traditional fossil fuel or carbon emitting projects. A report from the environmental advisory firm Market Forces says super funds are "hoodwinking" investors by voting for multi-million-dollar bonuses despite committing themselves to climate-friendly policies... Read more

The Green Climate Fund, which aims to channel billions of dollars to help poorer nations tackle global warming, is not yet backing the right kind of projects to bring about a sea change in low-carbon development, said its recently departed executive director.... Read more

Parts of South Australia may be without electricity until the end of the weekend as the power network is repaired and gradually brought back online, ElectraNet has said. ElectraNet, which provides electricity infrastructure across Australia, is continuing to assess damage after yesterday's storm which lead to the entire state plunging into darkness... Read more

Credit cards are rapidly becoming one of the most common causes of personal bankruptcy, and there are indications that the major banks have been granting inappropriate credit limits, possibly breaching responsible lending laws... Read more

PNX Metals Ltd has received an ASX Price Query after the company's shares hit $0.025 intra-day today, or 46% higher than the close on Monday... Read more

Zamia Metals Ltd has been granted a trading halt by the ASX pending a material change in the nature of the business... Read more

Gold Road to build $18m worker camp at Gruyere... Read more

Thundelarra Ltd has received a notice of initial substantial holder from Chin Nominees Pty Ltd & Associate, with a 7.65% holding. Thundelarra is set to increase exploration news flow across in the near-term... Read more

Gold hopeful Echo Resources has launched a $38.9 million takeover of Metaliko Resources in a move which could lead to the restart of the Bronzewing processing plant. The merger is aimed at bringing Echo’s Julius project — touted as one of the richest gold discoveries in the northern Goldfields for many years — into production by mid-2017... Read more

Jameson Resources Ltd is heading to market with a capital raising, and the ASX has granted the company a trading halt to prepare.... Read more

South Australia's Whyalla steelworks has been crippled by the statewide blackout caused by severe storms and operators are now racing to restore power to save further costly damage and production losses. The vast steelworks owned by Arrium, which went into administration in April, is one of a number of businesses disrupted by the widespread power outage... Read more

Breaker Resources NL has received binding commitments to raise $12.4 million through a share placement at $0.50 per share to institutional and sophisticated investors. The capital raising was oversubscribed several times over due in large part to overwhelming demand from institutional investors... Read more

Incitec Pivot has completed construction of its ammonia plant in Waggaman, Louisiana.... Read more

Clive Palmer has lost a bid to sue the liquidators of Queensland Nickel for not returning assets to his possession when the company collapsed, with a judge saying the proposed lawsuit would be a "startling affront to justice". QN, which went into liquidation earlier this year, was in charge of the assets and property belonging to two other companies owned by Mr Palmer - QNI Metals and QNI Resources - as set out in a joint venture agreement... Read more

Avita Medical has struck a distribution deal in Iran for its 'spray on skin' products for the treatment of burns, wounds and skin defects, potentially paving they way for a new major market for the the group. The distribution deal with Iranian-based Teb Sanaat Lotus will also include a dedicated clinic for Avita's products in Iran, which emerged from international sanctions over its nuclear program earlier in 2016... Read more

Shares in Programmed Maintenance Services have slid more than 10 per cent after the labour hire and maintenance group slashed its earnings guidance for the current financial year. The company now expects earnings before interest, tax, depreciation and amortisation (EBITDA) in the year to March 31 to be about $100 million, down from its previous forecast of $120 million... Read more

A continued drastic decline in Programmed's marine services business has led the company to cut its earnings forecast by $20 million. The news sent Programmed's share price down sharply at the open to an intraday low of $1.48. But the stock recovered some lost ground throughout the day, closing down 25 cents, or 13.12 per cent, at $1.655.... Read more

Aurora Labs Ltd has lodged a new patent application in relation to a novel metal powder production process for 3D metal printing. The Perth-based company garnered attention after developing a range of metal 3D printers that are cheaper than its competitors... Read more

Farmers in catch-22 as WA milk hits the road for SA. Dairy processor Lion will start trucking milk into South Australia from this weekend as it tries to manage oversupply issues in the WA market.... Read more

Shares in a Perth-based company have skyrocketed after it announced a deal to roll out its security monitoring technology at the gaming tables of one of Las Vegas’ biggest casinos. The unnamed casino will use BrainChip’s technology, called Game Outcome, at its baccarat tables to detect errors by card dealers and cheating by players.... Read more

East coast handler GrainCorp will buy more equipment for loading grain as forecasters tip a record harvest this year. The company said it was spending $21 million preparing for this season's grain harvest, to try and load grain into receival sites at a faster rate... Read more

NBN Co’s decision to ditch Optus’s ageing HFC network was always a possibility given the parlous health of the infrastructure but the $800 million price tag attached to the network is the least of NBN Co’s worries. Optus was always going to pocket the $800m no matter what path the National Broadband Network (NBN) took after it sealed a deal with the Labor government in 2011... Read more

Foxtel chief executive Peter Tonagh has defended the pay-television company's prospects, saying it generated more earnings than the nation's three major commercial television networks combined. Mr Tonagh - who took over the reins at Foxtel in March - says there have been negative media and industry reports on the pay TV operator amid the rising popularity of streaming services Netflix, Stan and Presto... Read more

A Perth real estate agent has successfully staved off a cyber attack that tried to steal $500,000 from a trust account. In a worrying trend, the real estate agency is the latest in a string of businesses targeted by cyber thieves, after a $615,000 payment to one of businessman Andrew Forrest’s agricultural companies was recently fraudulently diverted by a virus on a home laptop... Read more

A Perth-developed start-up pitching itself as the “Airbnb for campers” has collapsed, with its founders telling investors and users it ran out of time and money... Read more

Could face 45 years in jail if found guilty. The Commonwealth Bank's former head of IT operations Keith Hunter has been charged in his home country of the United States with two counts of fraud after pleading guilty to bribery in Australia.... Read more

A Supreme Court judge says there is a strong arguable case that former West Coast footballer Andrew Donnelly knowingly assisted “serious dishonesty” in the transfer of $5.1 million of trust money. In refusing an application by Mr Donnelly to lift a Supreme Court freeze on his assets, Justice Peter Martino said there was a real risk that the former Eagle would dispose of assets if he was not restrained... Read more

International Headlines

U.S. Market Report: Wall Street was lower in choppy trading late Thursday morning after two straight days of gains, pulled lower by Apple and healthcare stocks. The S&P healthcare index dropped 1.04 percent as shares of Merck and Johnson & Johnson booked losses. Apple fell 1.23 percent after Barclays cut its price target. The stock was the biggest drag on Wall Street... 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 FTSE 100 gained 1.02% and the CAC 40 rose 0.26%. The DAX lost 0.31%... Read more

Asian Market Report: Asian markets finished broadly higher today with shares in Japan leading the region. The Nikkei 225 is up 1.39% while Hong Kong's Hang Seng is up 0.51% and China's Shanghai Composite is up 0.36%... Read more

OPEC agreed to the outline of a deal that will cut production for the first time in eight years, surprising traders who had expected a continuation of the pump-at-will policy the group adopted in 2014 at the instigation of Saudi Arabia. Oil jumped more than 5 percent in New York after ministers said the group agreed to limit production to a range of 32.5 to 33 million barrels a day.... Read more

Why OPEC's oil deal won't mean a spike in gas prices. A surprise deal by major oil producers to cut output is unlikely to make a big difference to the crazy low gas prices consumers have been enjoying at the pump. Oil prices jumped more than 5% after OPEC announced the proposed cut, but shed some of those gains later.... Read more

U.S. economic growth was less sluggish than previously thought in the second quarter as exports grew more than imports and businesses raised their investments, hopeful signs for the economic outlook... Read more

Elizabeth Warren says government is forcing student borrowers to pay ‘fraudulent debts’. Tens of thousands of borrowers who were victims of fraud by their college are losing their tax refunds, Social Security benefits, and facing other debt collection practices over their student loans, according to Senator Elizabeth Warren... Read more

Music streaming company Spotify is reportedly in talks to take over $700m (£535m) rival Soundcloud. The two sides are in advanced negotiations, according to the Financial Times. The talks come at a time when competition in the streaming music sector is intensifying... Read more

Electric carmaker Tesla Motors Inc. (TSLA.O) Chief Executive Elon Musk told employees in an email to follow company policy of not offering discounts on new cars, responding to some investors' concerns about the practice.... Read more

Can anything stop Amazon? Don't rule out a little retailer based in Arkansas. What's its name again? Oh yeah. Walmart. Yes, Amazon hit another new all-time high Thursday. Shares are now up 23% this year. The company's market value is $395 billion. Billion. With a capital B. Just like Bezos... Read more

Wells Fargo & Co chief John Stumpf's second trip to Capitol Hill on Thursday went no better than his first as lawmakers from both parties angrily rebuked him for the handling of sales abuses and said the bank has damaged customer trust as well as the broader banking system... Read more

HP has backtracked on a software update that blocked some ink cartridges made by third parties. A controversial firmware change made earlier this month meant HP printer owners using unofficial, usually cheaper, cartridges discovered they would no longer work. A campaign calling on HP to reverse the move was launched, backed by rights group the Electronic Frontier Foundation (EFF)... Read more

The UK's trade with the European Union will be "at least as free" after Brexit as it is now, Liam Fox says. The International Trade Secretary said it was in other countries' interests to avoid tariffs which he said would "harm the people of Europe"... Read more

Shares have plunged in Capita, the outsourcing company that operates the London congestion charge. The FTSE 100 firm said profits would be hit by one-off costs of up to £25m after it was late to implement new IT systems for the congestion charge. A slowdown in other parts of its business and delays in client decision-making also contributed... Read more

London's mayor Sadiq Khan will launch an inquiry into foreign ownership of property in the British capital which has helped push up housing costs, the Guardian newspaper cited him as saying on Thursday. "It's clear we need to better understand the different roles that overseas money plays in London's housing market, the scale of what's going on, and what action we can take to support development and help Londoners find a home," the Guardian quoted Khan as saying... Read more

UK signs long-awaited Franco-Chinese nuclear project behind closed doors... Read more

Taxpayers are paying more than £400,000 a year to subsidise a farm where a billionaire Saudi prince breeds racehorses. The Newmarket farm of Khalid Abdullah al Saud - owner of the legendary horse Frankel - is among the top 100 recipients of EU farm grants in the UK... Read more

Central London’s best offices may lose as much as 30 percent of their value by the end of next year before the U.K. bounces back to beat continental Europe for the rest of the decade, according to Deutsche Bank AG... Read more

A number of funds that clear derivatives trades with Deutsche Bank AG have withdrawn some excess cash and positions held at the lender, a sign of counterparties’ mounting concerns about doing business with Europe’s largest investment bank... Read more

Germany's second largest bank says it will slash thousands of jobs and stop paying a dividend amid a broad restructuring of its business. Commerzbank announced Thursday that total job cuts will reach 7,300 as it cuts back on investment banking activities and merges other parts of its business.... Read more

Ferrari’s Sold-Out $2.1 Million Aperta Underpins Growth Push... Read more

Hot Mess: How Goldman Sachs Lost $1.2 Billion of Libya’s Money. When Wall Street’s most aggressive bank took on the world’s most incendiary client, someone was going to make a killing... Read more

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