ASB Securities Morning Brief for Friday, 31 July 2015
Friday, 31 July 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose. Heartland NZ advanced after the bank affirmed its profit guidance. Kathmandu Holdings gained on the back of a positive earnings forecast by its would-be acquirer, Briscoe Group. The S&P/NZX 50 Index rose 21.08 points, or 0.4%, to 5891.85. Within the index, 25 stocks rose, 17 fell and eight were unchanged. Turnover was $102 million... Read more

The New Zealand dollar fell as a combination of Reserve Bank governor Graeme Wheeler's message that the currency needs to depreciate and a more optimistic US labour market view from the Federal Reserve weighed on the local currency. The kiwi declined to 66.39USc at 5pm in Wellington from 66.62USc at 8am and 66.98USc yesterday. The trade-weighted index dropped to 70.74 from 71.31... Read more

Dollar's slump boosts exporters... Read more

Expectations of rising house prices have hit a record high in ASB's quarterly survey of housing market confidence, a net 65 per cent of respondents expecting them to rise over the next year. In Auckland the figure is a net 71 per cent, also a record in the survey's 19-year history... Read more

Building consents up - but not enough. New dwelling consents are up in Auckland - but economists doubt the growth is enough to ease the city’s supply shortage.... Read more

New Zealand residential building consents fell 4.1 per cent in June as construction intentions in Canterbury tapered off, with the region's housing rebuild nearing a plateau... Read more

Dairy's decline here to last? As milk prices fall, farmers keep waiting for the cycle to turn. But what if Fonterra's problems are longer term, asks Jamie Gray... Read more

Morningstar has given silver ratings to a range of AMP KiwiSaver funds.... Read more

Jetstar, the low-cost offshoot of Australian owned Qantas Airways, will add a sixth domestic route with a new Wellington/Dunedin schedule and bolster its trans-Tasman flights as it looks to win passengers from dominant rival Air New Zealand. The Wellington/Dunedin route will begin in October and see the airline fly between the capital and Otago's largest city three times a week, Jetstar said in a statement... Read more

An extra air connection with Dunedin via a three-times-a-week Jetstar service is likely to bring more people through the capital, says Wellington Employers’ Chamber of Commerce Chief Executive John Milford... Read more

Craft beer maker Moa Group will give workers another chance to get shares in the company, with a long-term employee option scheme issuing up to 1.2 million share options. Chairman Ashley Waugh told the annual meeting that the company would offer 2.5 per cent of its stock to employees at yesterday's share price, which closed down 0.5c at 28c... Read more

CDL Investments lifts 1H profit 3.6% on 'satisfactory' property sales... Read more

Turners, formerly known as Dorchester Pacific, has bought Southern Finance for $5 million, giving the finance company greater exposure in the South Island as it continues to expand its loan book. Turners shares closed up 1c yesterday at 28c.... Read more

Millennium & Copthorne Hotels New Zealand, the hotel operator and property developer, boosted first-half profit by 93 percent as it lifted the performance of its hotel operations and its property developments turned profitable in the period. Net profit after minorities rose to $12 million, or 7.59 cents per share, in the six months ended June 30, from $6.2 million, or 1.4 cents, a year earlier, the Auckland-based company said in a statement... Read more

New Zealand Oil & Gas says exploration drilling of the Barque prospect in the Canterbury Basin, which has the potential to be the nation's biggest-ever hydrocarbon discovery, is expected to start in 2017, subject to securing suitable partners and a drilling rig. The Wellington-based oil and gas company is a 50-50 joint venture partner in the prospect with Beach Energy.... Read more

Ron Brierley's Mercantile Investment has won over the board of takeover target Ask Funding after sweetening its offer last week. Brisbane based Ask Funding today said its board has reconsidered the upgraded offer of 8 Australian cents per share and will recommend it to shareholders... Read more

Massey calls for Act overhaul. Industry regulations are cumbersome and reduce the number of advisers operating in the New Zealand market, a group of Massey University academics say.... Read more

If your home was to be destroyed in a disaster tomorrow, are you confident your insurer will cover the full cost of rebuilding it? Following the Canterbury quakes, insurers changed their policies for home cover from full-replacement to sum insured.... Read more

Murray Radford to stay on Bethunes board, after founder John Mowbray walks. Bethunes Investments' outgoing chairman Murray Radford will stay on the board of the auction house formerly known as Mowbray Collectables after founder John Mowbray declared his resignation as director yesterday... Read more

Harmoney founder and CEO Neil Roberts leaves board... Read more

Ngai Tahu Property chief to step down after 21 years. Ngai Tahu Property boss Tony Sewell is stepping down from the company he grew from small beginnings to a big South Island player. Sewell announced on Thursday he will leave the iwi business at the end of next year, two decades after being hired to set up the property development arm... Read more

Record 15 new names join New Zealand's rich list worth more than $55 billion... Read more

Sir John Todd, the patriarch of New Zealand's wealthy Todd family, has died aged 88 after a period of illness.... Read more

Southland does not appear to be a fly-in fly-out destination for permanent workers, but accommodation providers are benefitting from increasing numbers of contractors coming south. Surrey Court Motel co-owner Shona King said she had not had clients who worked in Invercargill full-time and lived elsewhere, but she had hosted contractors who stayed for a few months at a time while they worked on projects in the south... Read more

Without more councillors Auckland's growth will reduce quality of Super City democracy, says governing body... Read more

Auckland Mayor Len Brown is refusing to say if he will follow two of his councillors and say no to a 2.3 per cent pay rise, which will lift his salary to $265,500. Councillors Calum Penrose, Sir John Walker and Bill Cashmore yesterday called on their colleagues to reject the pay rise from the independent Remuneration Authority... Read more

Hundreds of thousands of bottles of Phoenix organic range soft drinks are being recalled over fears that some of them may contain fragments of glass. The Better Drinks Company is recalling 25,000 cases of Phoenix-branded Cola, Lemonade, Light Cola, Orange Fizz and Raspberry Fizz, carrying a best-before date of or between April 13, 2016, and July 7, 2016... Read more

The government is cracking down on borrowers who have fallen behind on their student loan repayments. Inland Revenue says it is monitoring and considering the arrest of 20 students who have kept defaulting on loan payments.... Read more

WhaleOil blogger Cameron Slater tells NBR Radio former Conservative party leader Colin Craig has no chance of beating him in court. “I can stack up every single allegation I have made against him with documents and with sources.”... Read more

Opinion - Gareth Morgan: Could the TPP become Key’s most embarrassing moment? On Tuesday our Prime Minister admitted that the Trans Pacific Partnership (TPP) would raise the cost of medicines purchased through Pharmac... Read more





Australian Headlines

Australian Market Report: Australian stocks have finished the day stronger for a second straight session, buoyed by a rise in the iron ore price overnight and a positive reaction to the US Federal Reserve’s latest remarks on interest rates. At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 was up 45.3 points, or 0.81 per cent, at 5669.5, while the broader All Ordinaries index rose 43.5 points, or 0.78 per cent, to 5653.1.... Read more

The Australian dollar again traded in a narrow range today, with the US Federal Reserve policy meeting overnight affirming a rate increase looked likely in September. At 5pm, the local unit was trading at US73.01c, down from US73.21c yesterday... Read more

While the world looks on aghast at the carnage on the Shanghai and Shenzen exchanges, a new breed of Chinese investor has begun to wield power on the Australian Securities Exchange. In the past fortnight, three locally listed companies have been stung by a concerted attack from hostile Chinese interests who have adopted the tactics of western style activist investors to achieve their ends... Read more

The purchasing power of Australian households has taken a severe battering with the nation's terms of trade collapsing in the past three months. International trade data shows Australia's terms of trade - the ratio of export prices to import prices - fell 5.8 per cent in the June quarter, the largest quarterly decline since 2009, when export prices crashed in the midst of the GFC... Read more

Free trade: Tony Abbott warns Labor against 'short-term xenophobic politics' over China deal... Read more

Billionaire mining magnate Andrew Forrest has thrown his weight behind the Australia-China Free Trade Agreement in the face of a union-led advertising campaign calling for changes to the bilateral deal... Read more

A Nobel Prize laureate is the latest to warn Sydney and Melbourne's real estate markets are showing every sign of being in a dangerous price bubble. Professor Vernon Smith, who was honoured in 2002 for his work in experimental economics, said Australia needs to learn lessons from the subprime mortgage bubble in the United States which sparked a housing crash and ultimately the global financial crisis... Read more

Official figures show that a steep drop in the volatile apartment sector has led a bigger-than-expected fall in building approvals. The Bureau of Statistics data show an 8.2 per cent slump in building approvals during June, much worse than the 0.8 per cent typically expected by economists in a survey by Reuters... Read more

This month has been one of the worst on record for iron ore, but producers finally had something to smile about overnight. The price rose for the third day in a row, hitting $US55.89 a tonne — its highest mark for four weeks.... Read more

Foyson Resources shares are in pre-open this morning following the ASX granting the company a trading halt... Read more

King Solomon Mines has some interesting news on the horizon with a material business acquisition to reveal.... Read more

Alcoa has called time on its eight-year dream of securing a gas supply from Buru Energy. Alongside celebrating the official opening of its Ungani oil field east of Broome today, Buru also announced it and Alcoa had agreed to axe a supply deal for up to 500 petajoules of gas... Read more

Estrella Resources is heading to market with a capital raising, with the ASX granting the company a trading halt to prepare. The company had $400,000 in cash at the end of June 2015... Read more

A Queensland coal mining company has bought the recently mothballed Isaac Plains mine in the Bowen Basin for just $1. Stanmore Coal plans to re-start production at Isaac Plains in the first half of 2016, more than a year after about 300 jobs were lost when production was halted... Read more

NAB to pour $50m into innovation fund... Read more

Nab gets its mojo back as business lending division returns to growth. National Australia Bank chief executive Andrew Thorburn says the company has its "confidence back" as its returns to growth in its crucial small and medium business banking division, and works through the sell-off of its problem US and UK assets... Read more

Location-aware apps in shopping centres a major challenge. Westfield will trial a location-aware special offers app developed by the Commonwealth Bank which interacts with beacons inside its shopping centres later this year. Westfield parent Scentre Group will be the first company to use the Commonwealth Bank’s new Offers app, launched today... Read more

Metcash accused of trying to thwart Coles deal... Read more

Cheap no-frills mobile phone company is snatching customers from the big boys. Telstra pulled another customer retention trick from its sleeve this week with the launch of Telstra TV, which will sweeten its media offer by giving customers the opportunity to easily stream the super-fashionable new video services Netflix, Stan and Presto... Read more

BluGlass Limited has been granted a trading halt by the ASX pending details of a proposed capital raising / offer for investment in the company... Read more

Milk shaken by Chinese demand rollercoaster... Read more

Qantas long-haul pilots have backed plans for an 18-month pay freeze, putting the airline a step closer to expanding its fleet of hi-tech Dreamliner planes. The pay freeze was part of a new wages deal which was backed by 82 per cent of 1,165 pilots who voted in an electronic ballot that closed on Thursday... Read more

Qantas has dropped two daily flights between Perth and Melbourne and decreased capacity on some of its services between Western Australia and Sydney. An evening flight from Melbourne to Perth, and a morning service heading in the opposite direction, would be axed from late October, the airline said... Read more

Criminal gangs are using WA bank branches as part of a new effort to launder millions of dollars and send the cash offshore. A special investigation by AUSTRAC, the agency charged with detecting irregular movements of cash that may be used to finance crime or terrorism, has found more than half of 200 large, questionable deposits were into WA bank branches... Read more

Post and parcel drivers have claimed they are being paid well below award rates by Australia Post contractors, and that drivers are missing out on superannuation and sick pay because they are being classified as subcontractors, rather than employees... Read more

Opinion - Callam Pickering: A growth concern won't stop the Fed... Read more

Opinion/Analysis - Helen Hodgson: Buffett rule a proxy for real tax reform... Read more

Opinion - Alan Kohler: The way I buy sausages could really hurt the banks. My butcher no longer accepts cash, it only accepts card payments. And the simple action of the tap-and-go as I buy my meat could spell big trouble for the banks, writes Alan Kohler. About a year ago our local butcher, Cannings Free Range Butchers, went cashless... Read more





International Headlines

North/South Americas Market Report: North and South American markets are lower today with shares in Brazil off the most. The Bovespa is down 0.82% while Mexico's IPC is off 0.60% and U.S.'s S&P 500 is lower by 0.09%... Read more

European Market Report: European markets finished higher today with shares in France leading the region. The CAC 40 is up 0.58% while London's FTSE 100 is up 0.57% and Germany's DAX is up 0.40%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 1.08%, while the Shanghai Composite led the Hang Seng lower. They fell 2.20% and 0.49% respectively... Read more

The world's big energy groups have shelved US$200 billion ($298 billion) of spending on new projects in an urgent round of cost-cutting to protect dividends as the oil price slumps for a second time this year. The sell-off in oil has been matched by a broader slump in copper, gold and other raw materials, pushing the Bloomberg commodities index to a six-year low over concerns of weaker Chinese growth and rising supplies... Read more

Oil price slump costs another 12,500 jobs... Read more

Prepare for gold prices to plunge...as low as $350... Read more

America's economy picked up some momentum this spring and summer, but it didn't wow. It grew 2.3% between April and June compared to the same time a year ago, according to the Commerce Department's first estimate of gross domestic product, the broadest measure of economic activity... Read more

Burden to bear: Fewer companies, sectors supporting U.S. stocks... Read more

U.S. Asks Supreme Court to Review Insider Trading Ruling... Read more

Global drinks company Diageo has released full-year trading figures showing comparable sales remained flat for a second year. The firm, which controls two-fifths of the Scotch whisky industry, reported Scotch sales down 5% by volume... Read more

Amazon signs Top Gear team for new car show... Read more

Europe's bailed out economies are booming. Except Greece, of course... Read more

IMF warns Greece bailout will take time... Read more

The UK has become Santander's most profitable market, generating just over a fifth of the bank's profits in the first half of 2015. Pre-tax profits in the UK rose £74m to £928m, while revenues were up 5%. The results eclipsed the €1bn (£700m) posted by the Spanish bank's Brazilian operation, which saw its revenues jump by 9%... Read more

Centrica cuts 6,000 jobs as Conn unveils 'customer-facing' strategy. British Gas owner says it will 'never' be a global player in oil and gas exploration and production, and should focus on its strengths in energy supply and services... Read more

Royal Dutch Shell says it plans to reduce its headcount by 6,500 this year owing to sliding oil prices and as it looks to complete a mega takeover.... Read more

Travel firm Thomas Cook has said its full-year profits will be hit by about £25m because of the impact of recent events in Tunisia and Greece. It said bookings for the July-to-September quarter had been affected by last month's attack on a tourist beach on Tunisia... Read more

RBS profits 'like groundhog day' says chairman. The banking group, part-owned by the UK taxpayer, warned it will be hit by more legal costs and compensation payouts in the coming years... Read more

Internet auctioneer Catawiki raises $82m as Dutch start-ups take off. The online auction house is the recipient of the third-largest investment ever into a Dutch internet start-up... Read more

Russia seeks Japanese participation in Kuril developmental projects... Read more

China is trying to save its market with failed policies. If financial history repeats itself, that's not good for China. China's stock market is in a meltdown. The main Shanghai Index has fallen about 30% since it's peak on June 12. The Chinese government is freaking out, and it's responding like a frightened momma bear lashing out at just about anything... Read more

South Korean giant Samsung Electronics posted an 8.0 percent fall in second quarter net profit Thursday and promised "flexible" pricing of its new flagship smartphone after less than stellar sales contributed to a slump in its mobile unit's earnings... Read more

Japan's factory output turned positive in June, reversing a decline from the previous month, official data showed Thursday, but the world's number-three economy was still struggling to cement a recovery. The industry ministry said industrial production expanded a better-than-expected 0.8 percent, beating a median forecast for a rise of 0.3 percent in a survey of economists by Bloomberg News. It also reversed 2.1 percent decline in May... Read more

Sony's April-June profits more than triple to $664mn... Read more

Indian E-Commerce Firm Snapdeal Aims for Profitability Within Three Years... Read more

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