ASB Securities Morning Brief for Friday, 24 June 2016
Friday, 24 June 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose as markets speculated the UK will vote to remain in the European Union. Vital Healthcare Property Trust and Summerset Group gained, while Nuplex Industries dropped as its acquisition by Allnex may be delayed The S&P/NZX 50 Index gained 39.6 points, or 0.6 percent, to 6,821.35. Within the index, 23 stocks rose, 17 fell and 10 were unchanged. Turnover was $122.3 million... Read more

The New Zealand dollar was little changed near a 12-month high and may rally further if Britons vote the way the bookmakers are indicating and opt to remain in the European Union. The kiwi traded at 71.80 US cents as at 5pm in Wellington, having earlier gained to as high as 71.88 cents from 71.45 cents late yesterday. The trade-weighted index was at 75.99, having briefly touched a 13-month high of 76.06, from 75.87 late yesterday... Read more

The trade-weighted index of the New Zealand dollar rose above 76 for the first time in 13 months and is now almost 5 percent above the average level the Reserve Bank projected for the second quarter as polls showed the Brexit vote is too close to call and the International Monetary Fund lowered its US growth forecast. The TWI rose as high as 76.06 and was at 75.91 as at 8am in Wellington, from 75.87 late yesterday. The New Zealand dollar climbed to 71.88 US cents, a 12-month high, from 71.45 cents... Read more

Government mulls 'naming and shaming' corporate taxpayers. EY's Tori Sullivan argues introducing the modern equivalents of a town crier and the stocks so the public can throw rotten fruit at some corporate taxpayers isn't the way to improve our tax system... Read more

A deep analysis of mortgage registrations revealed a changing of the guard amongst the city's banks with ANZ set to take over as Auckland's leading mortgage provider. Analysis by the Herald's Insights team has seen mortgage information for all of New Zealand's 1.7 million land titles scanned and sorted... Read more

Auckland’s average weekly rents might be the highest, but new data reveals rental growth in other parts of the country is far stronger. Median weekly rents around most of the country continue to rise steadily, according to the latest Trade Me Property Rental Index. In the year to May, the national median weekly rent went up by 4.8% to hit $440... Read more

Kiwis paying $1000 more a year to rent. The median weekly rent across New Zealand continued to climb steadily in the year to May, but growth was slower than last month according to the latest Trade Me Property Rental Index... Read more

Queenstown Special Housing Areas approved by Nick Smith... Read more

SBS Bank is reporting a solid result for the financial year ending 31 March 2016 with an operating surplus of $27.7 million, a 6% increase on the $26.1 million reported last year. SBS Bank Chairman John Ward said, “In a somewhat difficult financial year we have achieved significant growth – especially in wealth management, consumer finance, insurance and residential lending sectors which is meritorious given the extremely competitive market.”... Read more

Turbo-charged returns can't last: Super Fund. Strong market returns experienced over the past five years are unlikely to continue into the future - but low interest rates are likely here to stay, the NZ Super Fund’s manager of investment analysis, Roland Winn, says... Read more

The NZX has a gold star from the Financial Markets Authority, which reviews the stock exchange operator at least once a year. It found the NZX is carrying out its regulatory role effectively, its markets are well regulated and it is not required to take any specific actions... Read more

Not just the UK to worry about with Brexit. Beef + Lamb New Zealand says those who think Brexit won’t have an impact on trade because the United Kingdom (UK) only takes 2% of New Zealand’s exports, are missing the point, it’s the whole of the European trade we should be looking at. “Access for New Zealand’s biggest exports to the UK are tied to quotas to the EU. Unpicking the quotas if the UK were to vote to leave, would also disrupt trade with the EU and cause major uncertainty,” says Beef + Lamb New Zealand General Manager Trade Policy, Ben O’Brien... Read more

New Zealand Wool Services International Limited’s Marketing Executive, Mr Malcolm Ching reports that the strong New Zealand dollar, restricted off-shore interest and high volumes of one wool category on offer this week saw local prices ease. Of the 12,180 bales on offer from the predominantly short second shear wools in the North Island, 77 percent sold... Read more

Tenders for SunGold kiwifruit fetch high bids and boost Zespri profits. Kiwifruit growers have paid out a median price of up to $200,000 each for licences to grow the sought-after variety SunGold. The revenue from the tender for 400 hectares of the variety will boost Zespri's corporate profits to a forecast $70-75 million after tax, up from $35.8m in 2015-16. The closed commercial tender is the first stage in expanding SunGold volumes, with a further 400 ha to be released each year over the next three seasons... Read more

Marlborough has reaped nature's bounty with a bumper harvest, but the hard work has only just begun for some. This year 323,290 tonnes of grapes were harvested in the region, an increase of more than 100,000 tonnes on last year. ... Read more

Motor Trade Finance has rejected all offers from parties looking to acquire all or part of the Dunedin-based auto-financier, saying they undervalued the business. The company said none of the indicative proposals it had received in a market-testing process were good enough to put forward to shareholders... Read more

Hellaby Holdings is to buy maintenance and engineering contractor TBS Group for $45 million plus $6 million of earn-outs in a deal that needed an NZX waiver because of links between TBS's biggest shareholder and Hellaby managing director Alan Clarke. The deal was subject to a waiver from NZX listing rules because TBS chairman Christopher Ross, whose family interests own 46 percent of the company, is also a trustee of the Clarke Family Trust, the family trust of Hellaby's Clarke, and was therefore judged to be a related party. Shares in Hellaby Holdings fell 0.8 percent, or 2 cents, to $2.47. Shares in Hellaby are currently at their lowest level since January 2012 and are down 11 percent on a year ago.... Read more

Marlborough Wine Estates Group, the Chinese-owned maker of O:Tu and Music Bay wine brands, will join the NXT market next week in a compliance listing valuing it at $58.7 million. The Auckland-based company will list 293.3 million shares on June 30 in a compliance listing on NXT, which Tim Preston, a director of NXT Adviser CM Partners, said was at 20 cents a share. The winemaker's listing document has been approved in principle and will likely be formally lodged in the next day or so, he said... Read more

First NZ Capital's long-serving chief executive Scott St John will step down early next year after about 15 years at the sharebroker's helm. He will be replaced by the Auckland-based company's current head of securities James Lee, who will take over as CEO on April 1. Staff were told of the change yesterday... Read more

Hōne McGregor to move on as CEO of Forest & Bird. Forest & Bird President Andrew Cutler says he has accepted the resignation of the organisation’s Chief Executive Officer Hōne McGregor. Mr McGregor will stay at the helm of Forest & Bird until mid-August... Read more

Pumpkin Patch director Josette Prince is the latest resignation from the ailing retailer's boardroom, with the company using her abrupt departure to affirm earnings guidance. Josette resigned her directorship, effective immediately, "due to other business and travel commitments," ending two years on the board, the Auckland-based retailer said in a statement. The shares last traded at 6.5c, and have dropped 46% this year, making it the fourth-worst performer on the NZX All Index. Pumpkin Patch was a member of the NZX 50 Index until October 2013 when it was replaced by petrol station chain Z Energy... Read more

Michael Hill International shareholders have voted overwhelmingly in favour of a restructuring plan that would shift the jewellery chain into a new company incorporated in Australia and listed on the ASX. More than 99 percent of votes cast were in favour of the resolutions to move to Australia by way of a scheme of arrangement involving a new Australian parent company. Michael Hill shares rose 1.7 percent to $1.17 and have gained 16 percent this year. The stock is rated a 'buy' based on the consensus of three analysts polled by Reuters.... Read more

CBL Corp plans to buy France's Securities and Financial Solutions Europe SA (SFS) for 94 million euros, taking over its biggest customer in a deal expected to lift the credit and financial risk insurer's earnings. The Auckland-based company has been granted exclusivity to pursue the acquisition, which would include IMS Expert Europe SA, a related claims management operation, it said in a statement. The deal is subject to regulatory processes and consents and is expected to be wrapped up before Oct. 31. CBL listed on the NZX last year, raising $90 million at $1.55 a share to help fund the acquisition of Australian insurer Assetinsure. Since then, the shares have climbed to $2.49.... Read more

An alternative to government funding agencies handing out cash grants to small-to-medium-sized enterprises would be paying local organisations such as District Health Boards to trial their products so they can get New Zealand customers and data at an early stage, says start-up chief executive Siobhan Bulfin. Bulfin is founder of Melon Health, a patient engagement and behaviour change platform for the prevention and management of chronic disease... Read more

Intueri Education Group must repay $1.47 million plus tax to the Tertiary Education Commission (TEC) after an investigation into its dive school showed some student enrolments between 2009–2014 could not be validated and some courses under-delivered against their funding agreement. The refund exceeds the $1.12 million that Intueri provided for in its 2014 accounts and the balance would be recognised in the company's first-half results for 2016, the Auckland-based company said in a statement. Intueri said it "is actively seeking recourse from the dive school vendors"... Read more

Godfrey Hirst, the Australian carpet maker, has sought leave of the High Court to challenge its June 8 ruling that dismissed an appeal against a merger of New Zealand's wool scouring operations that would give rival Cavalier Corp a monopoly in the domestic industry. The High Court this month rejected Godfrey Hirst's appeal against the merger, which was approved by the Commerce Commission in November... Read more

Cavalier Wool Holdings (CWH) are ‘disappointed but not surprised’ by Australian owned carpet maker Godfrey Hirst’s decision to launch another appeal against its proposal to merge its wool scouring operations with NZ Wool Services International (NZWSI)... Read more

Opinion -David Hargreaves: More houses? Or fewer people? The Government's desire to keep pumping the economy with a flow of immigrants is increasingly at odds with Auckland's housing shortage... Read more

Opinion - Brian Fallow: Uphill struggle to spur growth. The economy's vital signs don't look too bad, at first glance. Economic output grew 0.7 per cent in the March quarter to be 2.8 per cent higher than a year earlier. That compares with annual growth of 1.8 per cent for the OECD as a whole.... Read more

Opinion - Brent Sheather: Property syndicates - bad value, poor disclosure, great fees... Read more

Opinion - John Drinnan: Curious timing for dual roles. As massive upheavals rip through the media, our state broadcaster has shown an extraordinary sense of timing. From July 1, TVNZ CEO Kevin Kenrick will be a director at the Bank of New Zealand, just when TVNZ needs a strong CEO focusing on the company. The bank appointment occurring during upheavals in the media sector shows some unusual aspects... Read more

Australian Headlines

Australian Market Report: Volume was well below average as the Australian sharemarket held firm ahead of Britain’s too-close-to-call Brexit vote today. The S&P/ASX 200 index gained 9.8 points, or 0.19 per cent, to 5280.7 as betting odds favoured Britain remaining in the European Union and polls continued to show deep division.... Read more

Growing confidence that Britain will vote to remain in the EU is keeping the Australian dollar above US75 cents. At noon (AEST), the currency was trading at US75.23 cents, up from US74.86 cents yesterday.... Read more

The Australian government has sold $500 million of October 28, 2016, Treasury notes.... Read more

The powerful financial regulator is "dialling up" its supervision of bank lending to the commercial property sector, which has historically been a bigger threat to banks than the residential housing market. Amid concerns over strong growth in bank lending for commercial property, a senior official from the Australian Prudential Regulation Authority (APRA), Charles Littrell, on Thursday signalled the sector was a key focus for the regulator... Read more

Australian business figures are lobbying US politicians to sign off on the controversial Trans Pacific Partnership trade agreement despite fierce opposition from presidential candidates Hillary Clinton and Donald Trump. The American Chamber of Commerce in Australia is leading the delegation in Washington in an attempt to convince Congress to ratify the TPP this year... Read more

Business body says protectionism on rise. Economic nationalism and protectionism are on the rise, as can be seen in the impending Brexit poll in the UK, according to the Australian vice chairman of the International Chamber of Commerce... Read more

Brexit: Australian businesses warn against leaving EU as vote draws closer... Read more

Orica keeps growth on agenda. Orica chief executive Alberto Calderon says there are serious challenges in the markets in which the mining services provider operates but says his company will continue to invest in growth because it is optimistic about the long-term future... Read more

BPH Energy Ltd poised to response to ASX price query... Read more

Fortescue Metals will lop off another $US500 million ($A665 million) from its debt pile next week, after issuing a repayment notice for part of its 2019 term loan. The iron ore miner said the repayment to be made at par from accumulated cash and scheduled for June 28 will save about $US21 million in interest each year. Fortescue shares were up 19 cents at $3.45 at 1250 AEST.... Read more

Manas Resources Ltd has some interesting news on the horizon in the form of a capital raising and a proposed asset acquisition.... Read more

Alcoa has loaded its first shipment of WA bauxite destined for a Chinese alumina refinery, describing the event at Kwinana today as a milestone moment. The 47,000 tonne parcel of bauxite, from the Alcoa of Australia joint venture’s Darling Range mines, is the start of an export trial approved by the WA Government... Read more

Telstra to boost its business in Aussie mining sector. Telstra is making a play for the operational technology budgets of Australia’s miners with the creation of a new mining services division... Read more

Telstra has completed the sale of a 47.4 per cent stake in Chinese car website Autohome, giving it funds for a $A1.5 billion capital management program... Read more

Pioneer Resources Ltd to increase cash ahead of lithium exploration program... Read more

Job website Seek has reaffirmed its guidance for full-year underlying net profit of about $195 million, and says that should increase to as much as $220 million in FY17... Read more

Telstra has completed the sale of a 47.4 per cent stake in Chinese car website Autohome, giving it funds for a $A1.5 billion capital management program... Read more

Drug development company Bionomics has received US$736,815 (A$979,000) in licensing funds as part of an agreement between MSD and Cancer Research Technologies (CRT) on behalf of the Australian Cooperative Research Centre for Cancer Therapeutics (CTx)... Read more

Aldi has moved to cement its price-leading position with cuts to lamb legs and other fresh meat products, as a new basket comparison reveals Woolworths still lagging behind Coles. From Wednesday, Aldi has slashed its lamb legs by 50c to $9.49 per kilo, its chicken drumstick 2kg packs by 50c from $6.49 to $5.99 per kilo, and its whole chickens by 20c from $3.99 to $3.79 per kilo... Read more

The workplace watchdog has switched its attention from Woolworths’ trolley collectors to its cleaners, taking legal action against former contractors for allegedly underpaying four workers more than $21,000. The Fair Work Ombudsman has commenced Federal Court legal proceedings against subcontractor OzKorea and owner Sung Gun Hwang for short-changing the workers at four Woolies supermarkets in Tasmania between January 2014 and January 2015... Read more

There wasn’t much new to be heard in Wesfarmers’ annual strategy day for investors, but analysts walked away from Wednesday’s presentations feeling more comfortable about the group’s plans for its UK hardware expansion and troubled discount retailer Target. “The strategy to turn around Target seems sound and the new managing director (Guy Russo) has a great track record,” Deutsche Bank’s Michael Simotas said... Read more

CBL Corporation is planning to buy Securities and Financial Solutions Europe (SFS), France's largest specialist producer of construction sector insurance and CBL's largest single client. The price is expected to be EUR94m (A$143m).... Read more

Micro-donations platform Activistic Ltd is aiming for an increase in visibility and downloads of its Veterans Call app, after formalising a contract with U.S sports blogging platform SportsBlog. The promotion of Veterans Call App to the SportsBlog community is underway with advertisements being placed in time for the July 4 Independence Day celebrations... Read more

Specialist debt purchaser Pioneer Credit has strengthened its relationship with one of Australias big 4 banks, purchasing a parcel of customer accounts. Perth-based Pioneer will spend $20 million annually over the next two years acquiring debt from the bank. Its business model involves working with customers who have defaulted on personal loans or credit cards to assist them in rebuilding their finances... Read more

Shares in Fleetwood Corp have leapt in the wake of a deal to make so-called affordable housing for WA's National Lifestyle Villages' estates. The exclusive five-year supply deal included an option for NLV to extend the agreement for a further five years, Fleetwood said... Read more

E-recruitment company ApplyDirect listed on the ASX today, opening at 27c, a 35% premium to the 20c issue price. The company's search engine channels job candidates into employers' recruitment systems, eliminating the role of intermediaries and allowing employers to control the recruitment process... Read more

Perth MAX Light Rail revival forms heart of Greens' $9.65b transport vision. The WA Government's dumped MAX Light Rail project would be brought back to life to help form of a 65-kilometre Perth light rail network under a 15-year transport vision unveiled by the Greens. The $9.65 billion blueprint comes just days after the Government confirmed its decision to axe MAX Light Rail, with no reference made to the proposal in a yet-to-be released transport blueprint... Read more

The Australian Signals Directorate will contribute $12 million to a new Australian National University facility focused on data analytics and cyber security. The innovation centre will be located in a new $45 million, five-story building on the ANU’s main campus in Canberra, expected to be completed in 2018. The building will also bring together the university’s Research School of Computer Science and Mathematical Sciences Institute... Read more

The Australian Securities and Investments Commission says it has launched legal action against Macquarie Group after it admitted it failed to properly manage a fund that made a $30 million investment into a Cayman Islands-based account. ASIC said Macquarie Investment Management failed to address the risks associated with the van Eyk Blueprint International Shares Fund, which it managed, pouring millions into the Cayman Island-based Artefact Partners Global Opportunities fund in 2012... Read more

Feminist Anne Summers closes online publication after racking up thousands in debt... Read more

Jeep is recalling almost 50,000 vehicles in Australia because they can roll away when the automatic transmission is left in the “park” position — a fault that has been linked to the death of Star Trek actor Anton Yelchin in the US this week. According to US reports, the actor was found “pinned” against a gate post by his Jeep Grand Cherokee after it rolled backwards down a steep driveway... Read more

The number of complaints lodged against West Australian builders has increased by nearly 60 per cent in just two years, a report has found. The finding was revealed in the auditor-general's report on building regulation, which urged the Building Commission to improve its use of proactive audits to probe operators and ensure they are acting properly... Read more

International Headlines

U.S. Market Report: The three major U.S. stock indexes rose about 1 percent each to record their biggest percentage gains in a month as investors grew confident that Britain would choose to remain in the European Union in Thursday's referendum. Markets across the globe have been rattled over the past two weeks as investors speculated about the consequences of Britain's exit, including the unraveling of the bloc... Read more

North/South Americas Market Report: North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 2.41% while U.S.'s S&P 500 is up 0.94% and Mexico's IPC is up 0.54%... Read more

European Market Report: European markets closed sharply higher today with shares in France leading the region. The CAC 40 is up 1.96% while Germany's DAX is up 1.85% and London's FTSE 100 is up 1.23%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 1.07% and the Hang Seng rose 0.35%. The Shanghai Composite lost 0.47%... Read more

OPEC's 13 member countries saw oil export revenues slump to their lowest level in a decade last year. Crude revenues fell nearly 46% to $518 billion in 2015, according to OPEC's annual bulletin published Wednesday. Collapsing world oil prices also meant that OPEC countries spent more importing goods than they raised from exports for the first time in 17 years... Read more

Copper Is Just a Bystander in Commodities’ Best Start Since 2008... Read more

The number of Americans filing for unemployment benefits fell last week to near a 43-year low, suggesting labor market resilience even though hiring slowed sharply in May. Other data on Thursday also gave a fairly upbeat assessment of the economy after it stumbled in the first quarter... Read more

Prices for entry-level homes in the U.S. are rising at twice the pace of the costliest properties as competition among first-time buyers intensifies, according to an analysis by Zillow. Values in the top third of the market climbed 4 percent in May from a year earlier, compared with an 8 percent increase for the least-expensive houses, Zillow said in a statement Thursday. The supply of starter-home listings plunged 9 percent, while the number of top-tier offerings was little changed... Read more

Kroger Co. said Thursday that it raised its quarterly dividend by 14% to 12 cents per share, to be paid on Sept. 1 to shareholders of record as of the close of business on Aug. 15. Kroger said it expects to continue to increase the dividend "over time."... Read more

The US department store giant Macy's has said that its chief executive Terry Lundgren will step down in 2017. Mr Lundgren will be replaced, in the first quarter, by Jeff Gennette, who is currently the firm's president... Read more

Bank of America Corp's Merrill Lynch unit will pay $415 million in the largest customer protection settlement in the Securities and Exchange Commission's history and admit to wrongdoing to settle charges that it misused customer cash, the U.S. regulator said on Thursday... Read more

BlackBerry Ltd. rose as much as 4.6 percent after forecasting better-than-expected profit and insisting there was a way to make its ever-shrinking phone business profitable again... Read more

Planemaker Boeing Co could include civil aviation work opportunities for Canadian firms if the country were to purchase F/A-18E/F Super Hornets to replace its aging fighter jets, company executives said on Thursday. The new Liberal government promised during last year's election that it would launch an open competition to replace Canada's CF-18 fighter aircraft and pledged not to buy Lockheed Martin Corp's (LMT.N) F-35 jets as the previous Conservative government had planned to do... Read more

Bill Gross has become the latest investor to bet big on Argentina after the nation ended its decade-long debt dispute with hedge-fund manager Paul Singer. Argentina’s bonds emerged as one of the top 10 holdings in Gross’s $1.44 billion Janus Global Unconstrained Bond Fund in May... Read more

Volkswagen AG will pay nearly $10.3 billion to settle claims stemming from its diesel emissions cheating scandal with U.S. regulators, a source briefed on the agreement said on Thursday. The settlement includes offers to buyback nearly 500,000 polluting U.S. vehicles and to set aside billions of dollars for green energy projects and a program to offset excess diesel pollution, the source said... Read more

Tesco boss forced to defend bank chief's taxi bill before shareholders. Scrutiny of executive pay comes as retailer reports second consecutive quarter of UK underlying sales growth... Read more

Heathrow’s new runway plans are a “rip off”, according to airline boss Willie Walsh, and billions could be saved by extending an existing runway instead. The outspoken chief executive of IAG, which owns British Airways, has called for the airport to shelve plans for a third runway and double its northern runway instead, claiming that it is the best way to create extra capacity at Heathrow... Read more

Software firm Twilio has seen its share price rise more than 60% on its first day of trading on the public markets. Its performance has revived investors' hopes in the US tech sector. Twilio's stock market listing is the first this year by a so-called technology "unicorn", the term for a start-up valued at over $1bn (£700m)... Read more

Deutsche Bank to shut 188 German branches and cut 3000 staff... Read more

Elon Musk Is Squaring Off Against China for the Future of Tesla. “The world is going to need a lot more lithium ion batteries.” How important are metals to Tesla? Just check out the names of some conference rooms at its new $5 billion gigafactory in Nevada: Lithium, Nickel, Cobalt, Aluminum. They’re used to make lithium ion batteries, and Chief Executive Officer Elon Musk needs unprecedented quantities of the metals to reach an ambitious goal: producing 500,000 electric vehicles a year by 2018... Read more

Asian millionaires now control more wealth than those in North America, Europe and other regions, according to a report from finance firm Capgemini. Driven by China and Japan, Asia's millionaires saw their wealth jump by 10% in 2015, the firm's World Wealth Report found... Read more

India's Big New Reform Should Be Just the Start. In opening up sectors from aviation to defense to 100 percent foreign ownership this week, India's government is clearly hoping to signal that its reform drive is revving up again... Read more

Opinion - James Quinn: The Brexit campaign has been a war of numbers as much as words - but there are only four that really count... Read more

Opinion - Paul R. La. Monica: Uh-oh. Is the stock market a bubble again? Will the term "well above" turn out to be Janet Yellen's "irrational exuberance?"... Read more

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