ASB Securities Morning Brief for Friday, 29 April 2016
Friday, 29 April 2016

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose as low interest rates continued to underpin demand for yields on stocks. Sky Network Television and Fletcher Building gained while Air New Zealand dropped on concern a recovery in oil prices will drive up fuel costs. The S&P/NZX50 Index gained 39.58 points, or 0.6 percent, to 6,789.98. Within the index, 28 stocks advanced, 17 fell and four were unchanged. Turnover was $135.9 million... Read more

The New Zealand dollar fell to its lowest level in more than a week against the yen after the Bank of Japan surprised the market by not expanding its monetary stimulus, rounding out a day of volatility tied to central bank actions. The kiwi fell as low as 75.16 yen and was at 75.54 yen at 5pm in Wellington, down from 77.09 yen before the BOJ statement and from 76.37 yen late yesterday. The local currency rose to 69.33 US cents, having surged after the Reserve Bank of New Zealand statement, from 68.81 cents yesterday... Read more

Reserve Bank governor Graeme Wheeler has kept the official cash rate at 2.25%, in a decision traders had said could go either way while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy... Read more

Leaving the OCR on hold today was the right decision, but there will be further cuts down the track, economists say.... Read more

The door remains open to further official cash rate cuts after the Reserve Bank held the OCR steady while predicting inflation will pick up as the impact of low oil prices eases. Governor Graeme Wheeler said monetary policy would remain "accommodative" following yesterday's announcement that the rate would stay at 2.25 per cent... Read more

Rise in investor lending reflects strong market. More evidence of the surging strength of the housing market comes in new data showing mortgage lending, including to investors, is up across the board... Read more

Auckland Council's plans for higher density housing cannot succeed unless the city also expands further into the countryside, says the council's chief economist. Chris Parker said the only way to contain Auckland's runaway house inflation - up $70,000 last month to $820,000 on a median price house - was to open up more rural land to relieve price pressure on a "dysfunctional" urban land market... Read more

Rental price growth is now strongest in outerlying Auckland suburbs, data from the city’s leading real estate agency reveals. Barfoot & Thompson has just released its quarterly rental update and it shows that average weekly rents in Auckland only increased slightly in the first three months of 2016... Read more

Survey reveals fears about KiwiSaver may be founded on misinformation... Read more

People who have previously owned a home will able to access their KiwiSaver funds to buy again under changes aimed at assisting so-called 'second chance' buyers who may be coming back from a major setback in their professional or personal lives. Under the previous rules, an individual who had assets below 20 percent of the house price cap for an area and who earned below $80,000 a year or $120,000 for a couple could access their KiwiSaver funds, as well as a grant of up to $10,000. The house price cap is $550,000 for Auckland, $450,000 in major cities, and $350,000 for the rest of New Zealand... Read more

Fund managers will get more access to Australia, Japan and Korea under new agreement - and international managers will find it easier to offer product in New Zealand... Read more

Fonterra Cooperative Group says milk collection is down in both New Zealand and Australia in the first 10 months of the season. Milk collection across New Zealand fell 3% to 1.39 billion kilograms of milk solids in the 10 months ended March 31, mostly in the North Island with no change in the south... Read more

Federated Farmers is thrilled the Ruataniwha Water Storage scheme in Hawkes Bay has made another significant step towards hitting the go button, after it was confirmed sufficient water sign-up will make the scheme cash positive... Read more

Specialty milk marketer A2 Milk has bolstered its push to sell more products in China through a recently completed human clinical trial comparing the gastrointestinal and cognitive effects of consuming milk containing the A1 beta casein with that of the A2 variant on people with self-reported lactose intolerance. The results of the Chinese study were published this month in the Nutrition Journal and are due to be released at a Beijing press conference late tomorrow by the company... Read more

New Zealand Wool Services International Limited’s C.E.O, Mr John Dawson reports that targeted buying saw some types well supported at the North Island auction with others either holding steady or easing slightly.... Read more

Rakon - this time lucky? Getting saddled with the "market darling" label can be a tough cross to bear. It tends to accompany a rallying share price, lashings of media hype and high hopes on the part of investors, brokers and financial analysts. It also sets up a stock for an almighty fall if those great expectations are not met... Read more

Moa Group narrowed its full-year loss after the beer company increased sale volumes and cut operating costs. The loss was $2.9 million in the 12 months ended March 31, from a loss of about $5.6 million a year earlier, the Auckland-based company said in a statement. Sales rose 35 percent to $8.2 million... Read more

NXT-listed mail operations and document manager G3 Group held its profit margins above target in the fourth quarter of the financial year, made two acquisitions and lifted volumes by 29%. The company processed 16.7 million items in the three months ended March 31, up from 12.9 million in the December quarter. It reported a gross margin of 21.5% and an operating margin of 19.4%, both slightly lower than in December... Read more

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating for an extra two years, after wringing a high price from other electricity generators who wanted to keep them as back-up. The two power stations were due to close in 2018... Read more

PledgeMe CEO Anna Guenther announced today that their licence application to provide peer-to-peer lending has been approved by the Financial Markets Authority, with the licence to be granted once the final prerequisite conditions are met. “We’re very excited to have completed this important step towards launching PledgeMe.Lend, which we believe will democratise debt in New Zealand,” said Guenther... Read more

In a behind closed doors meeting, the Hawke's Bay Regional Council has invited KiwiRail to run a reopened Wairoa to Napier rail line as well as maintain the tracks.... Read more

Wellington International Airport has lodged an application to extend its runway with the Wellington City Council and the Greater Wellington Regional Council. The airport is seeking permission to build a 350-metre runway extension in a bid to attract long-haul flights from Asia and the United States, at a cost of $300 million... Read more

Former Lifetime boss Warren Stephens says he hopes his newly-launched financial services firm will help him achieve his vision of “Uber-ising” financial services.... Read more

The Overseas Investment Office has released documents relating to the sale of the Onetai station in Taranaki which appear to show a Uruguayan connection to the land purchase. The station was bought for $6 million in 2014 through a trust, Coel & Muir, which was established in Panama by law firm Mossack Fonseca... Read more

Spark has made its $12.99 Lightbox service free to all of its broadband customers – again. On January 20 last year, Lightbox was made free to all Spark's 675,000 or so residential broadband customers... Read more

A group of 98 Canterbury homeowners has won a landmark settlement with the Earthquake Commission that may cost millions of dollars and result in hundreds of reappraisals of home earthquake repairs. The settlement follows a declaratory judgment in the High Court that came only after a group of Christchurch homeowners asked the EQC to change its reliance on Ministry of Business Guidelines and instead pay for repairs that would bring homes back to an as new condition... Read more

Three of Wicked Campers' most offensive vehicles have been banned from New Zealand's roads, following a landmark ruling. In a ruling from the Classification Office - the first time it has made a decision about a vehicle - the organisation ruled that slogans on three o... Read more

Documents show John Key's personal lawyer successfully lobbied him and Revenue Minister Todd McClay to stop IRD review of Foreign Trust regime, despite IRD concerns Foreign Trusts may hurt NZ's reputation... Read more

Opinion - Corin Dann: Did the housing market force RBNZ's hand? While it's not explicitly made clear by the Reserve Bank Governor today, it's hard not to think that a leading factor in his keeping Official Cash Rate on hold today was the resurgence of the Auckland housing market this year... Read more

New Zealand Herald Editorial: Reserve Bank in quandary over housing... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket finished a volatile session in the black after the Bank of Japan disappointed Asian markets by not announcing new monetary policy measures. The S&P/ASX 200 index climbed one per cent in morning trade after the US Federal Reserve did nothing to spook investors last night. But it slipped to close up 37.7 points, or 0.73 per cent, at 5225.4 following a strong rebound in miners and the single-stock options expiry as a catalyst for trade.... Read more

The Australian dollar has been hit by a double dose of negativity following a drop in iron ore prices and a disastrously benign inflation print. At noon (AEST), the currency was trading at US75.90 cents, down from US76.11 cents yesterday... Read more

Global accounting giant KPMG is urging the Federal Government to stop focusing on getting re-elected and think deeply on how to cut the deficit. KPMG has offered 30 recommendations on health, welfare, super and education spending, which it said could save taxpayers $12 billion a year... Read more

Treasurer's limited budget options. It's probably quite normal for treasurers to feel they have little room to move when framing their budgets, but Scott Morrison must feel positively claustrophobic right now. To a significant extent, it's a prison of the coalition's own making... Read more

Most Australians believe they pay the right amount of tax, and an overwhelming majority would prefer to pay more if it meant better health and aged care services, a pre-election survey has found. The latest Per Capita tax survey finds 64 per cent would pay more tax for better health and aged care, up 12 percentage points from last year. Almost half of those surveyed said they would pay a higher tax to get better schools, universities and technical education colleges, up 9 points from last year... Read more

The number of Australians in financial distress is on the rise, with new figures showing an increase in the number of people entering insolvency in first three months of 2016... Read more

The residential housing market remains strong, with owner-occupiers representing more than three quarters of buyers, property developer Stockland says. Stockland says its residential business generated a high number of sales in the three months to March, with net deposits of 1,706 for the quarter... Read more

While the country debates the pros and cons of negative gearing, one industry insider says there is another property tax that is of “some concern”. Cameron Kusher, senior analyst of property data firm CoreLogic, said in his latest Property Pulse newsletter out today that stamp duty needs to be scrapped in favour of a universal land tax.... Read more

Premiere Eastern Energy Ltd’s wholly owned subsidiary, Guangzhou King-Win Enterprise Management & Services Co Ltd (King-Win), has entered into a binding agreement to acquire petrol station operator Guangzhou Universal Energy Management & Consulting Co Ltd (Universal) for RMB 35.2 million (A$7.1 million). Eastern is an integrated supply chain manager of petrochemical products in China, based in the Guangdong Province... Read more

The World Bank has revised its iron ore forecast higher, though it is still gloomy news for WA producers. The bank now sees iron ore at $US50 a tonne this year, $US51.50/t in 2017 and extending gains to $US56.20/t by 2020. This is against its January outlook of $US42/t this year, $US44/t in 2017 and $US51/t by 2020... Read more

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

Goldfields Money Ltd has outlined it is heading to market with a capital raising, in the form of a share placement to professional and sophisticated investors... Read more

YPB Group Ltd's revenue to grow after new sales secured in Mexico... Read more

Alcoa’s heavy focus on cost cutting and a decision to shut the struggling Port Henry aluminium smelter has paid handsome dividends in Australia where it has recorded a three-fold lift in full-year profit. Accounts filed with the corporate regulator reveal the Alcoa of Australia venture — owned 60 by US giant Alcoa and 40 per cent by locally listed Alumina — made a $645.5 million net profit in the year to December 31, up from $215.7 million in 2014... Read more

Iconic Aussie underwear brand Bonds could soon end up in American hands. Pacific Brands, owner of Bonds, has backed a $1.1 billion takeover offer from US group HanesBrands which has offered $1.15 cash per share.... Read more

Shares in WA multi-commodity miner Independence Group have been hammered this morning, as weak commodity prices hit its operational cash flow which dropped to $4.1 million... Read more

Chinese conglomerate HNA will buy US-based Carlson Hotels, owner of the Radisson brand, the companies announced, as it looks to build its presence in the American market. It is the third overseas acquisition announced by HNA in as many months and the latest in a long line of foreign forays by cashed up Chinese companies... Read more

Telstra has begun wholesaling 4G mobile services to its mobile virtual network operator (MVNO) partners, but speeds will be capped below those available to the carrier’s retail customers. The launch will see a number of retail service providers including AldiMobile, Woolworths, Telechoice and Better Life progressively enable 4G on customers' existing 3G accounts from today... Read more

Bank earnings face multiple challenges. It is not the best time to be the boss of a big Australian bank. Years of at best sharp, and at worst scandalous, behaviour have morphed into reputational disaster and, even more worrying from the banks' point of view, a full-blown election issue... Read more

Blackmores more than doubled its profit in the first nine months of the financial year as sales in Australia and Asia continue to soar. The vitamins and supplements maker made a net profit of $76 million in the nine months to the end of March, up from $31 million a year earlier, as sales rose 63 per cent. Blackmores shares closed up $4.55, or 3.08 per cent, at $152.29.... Read more

A controversial State Government rail project contract awarded to a joint venture including NRW Holdings has been valued at $1.18 billion. Premier Colin Barnett today said the contract with Italian engineering firm Salini Impregilo and NRW to design, construct and maintain the Forrestfield-Airport Link had been signed... Read more

Household name Colgate has been found guilty of conspiring with two rivals and supermarket giant Woolworths to manipulate the laundry detergent market and rip off customers, in what its executives called "project mastermind". The Federal Court on Thursday slapped an $18 million penalty on Colgate-Palmolive, saying it breached Australia's competition laws in its attempts to limit the supply and control the price of detergents... Read more

Hardwood manufacturer Australian Solar Timbers (AST) is letting go of workers at Kempsey on the New South Wales mid-north coast because it cannot secure the timber it needs. Company director Douglas Head said NSW timber contracts gave favourable treatment to competitor, Boral... Read more

Slater and Gordon is investigating a potential investor class action against Murray Goulburn in the wake of its shock profit downgrade this week. The claim, which Slater and Gordon is investigating together with litigation funder IMF Bentham Limited, relates to guidance provided by Murray Goulburn in its Product Disclosure Statement (PDS) issued last July ahead of its $500 million capital raising. Those forecasts have since been slashed... Read more

Old insurance policies costing customers. Customers are being slugged with higher fees for life insurance as companies struggle to administer outdated and sometimes ineffective cover, the Australian corporate regulator says... Read more

ANZ Bank has described the interchange fee deal it has brokered with Apple as "fair" after many months of negotiations for the Apple Pay payments platform. ANZ today claimed the status of the first major bank in Australia to offer Apple contactless payments to its customers.... Read more

The federal government has asked the Productivity Commission to examine options for overhauling the universal service obligation (USO), including potentially eliminating the subsidy altogether. The USO currently requires Telstra to provide all Australians a basic telecommunications service, along with access to payphone services, subsidised by the federal government and through a levy on telecommunications providers... Read more

Airbnb test case headed for Victorian Supreme Court as landlord seeks to evict short stay host. A test case on the legality of Airbnb could soon be heard in the Victorian Supreme Court. The landlord of a Melbourne apartment listed on the accommodation sharing site is set to appeal a VCAT decision allowing tenants Barbara Uecker and Michael Greaves to continue offering their home to paying guests, the Herald Sun reports... Read more

The federal government has released draft guidelines for use of its controversial section 313 website blocking laws in an attempt to avoid a repeat of a 2013 blunder by the Australian Securities and Investments Commission. ASIC used section 313 of theTelecommunications Act to block access to fraud sites but inadvertently shuttered over 250,000 sites in 2013. It later revealed it "wasn't aware" a single IP address could host multiple websites... Read more

The whistleblower at the centre of the Commonwealth Bank's life insurance scandal has revealed that he raised concerns about the business with one of the bank's most senior executives, wealth boss Annabel Spring, who he says dismissed the incidents as "bad apples"... Read more

Opinion - Michael Pascoe: Federal budget 2016: Getting ready for an RBA v ScoMo showdown.... Read more

International Headlines

U.S. Market Report: The Nasdaq rose on Tuesday as strong results from Facebook and a flurry of dealmaking helped offset the impact of the Bank of Japan's surprising decision to hold off from expanding monetary stimulus. The Dow, however, remained lower as IBM (IBM.N) and Home Depot (HD.N) fell about 1 percent... Read more

North/South Americas Market Report: North and South American markets are mixed. The Bovespa is higher by 2.55%, while the IPC is leading the S&P 500 lower. They are down 0.82% and 0.28% respectively... Read more

European Market Report: European markets finished mixed as of the most recent closing prices. The DAX gained 0.21% and the FTSE 100 rose 0.04%. The CAC 40 lost 0.04%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.12%, while the Nikkei 225 led the Shanghai Composite lower. They fell 3.61% and 0.27% respectively... Read more

United Parcel Service Inc. warned it may have to take a charge of as much as $3.8 billion related to a potential pension-fund obligation. The cost would be triggered if the U.S. Treasury Department approves benefit cuts to protect the solvency of the Central States Pension Fund, UPS executives said Thursday. UPS pulled out of the fund in 2007 but agreed to make up any losses its remaining members experienced... Read more

America nearly ground to a halt at the start of 2016. The U.S. economy only grew 0.5% in the first quarter of the year. Tepid consumer spending, global headwinds, a struggling manufacturing sector and weak business investment all weighed down growth... Read more

Billionaire Icahn Exits Apple Stake After Three Years... Read more

Mark Zuckerberg Gets to Control Facebook a While Longer... Read more

Facebook shares have jumped after reporting a tripling of first quarter profits from a year earlier to $1.51bn. Advertising revenues rose to $5.2bn, with more than 80% coming from mobile... Read more

Warren Buffett, who pitched newspapers as a teenage delivery boy, may be entering the final stretch of his "Woodstock for Capitalists," after cutting back his involvement in the event and opening it up for an online audience. This weekend's gathering of Berkshire Hathaway Inc shareholders in Omaha, Nebraska for the company's annual meeting likely won't be the last... Read more

Ford Motor's profits more than doubled during the first three months of the year, giving the 113-year old automaker its best first quarter in its history. Ford's results were lifted by strong U.S. sales and a continued turnaround in Europe. Ford's European profit during the first quarter topped all of the company's European earnings collected during the entirety of 2015... Read more

Comcast is about to get more animated. The company's NBCUniversal division is acquiring the DreamWorks Animation studio for about $3.8 billion. On Thursday, Comcast said shareholders in DreamWorks will receive $41 in cash per share of stock -- a roughly 50% premium from where the stock was trading before the merger talks were reported earlier this week.... Read more

Abbott Laboratories said on Thursday that it would buy St. Jude Medical Inc in a $25 billion deal to expand its heart device business, but investors worried that the acquisition would not pay off as promised. Medical equipment makers are under pressure to offer a wider portfolio of products to hospital customers, which have also been through a wave of mergers that have increased their power to negotiate on pricing... Read more

Domino’s Pizza Inc. fell the most in almost four years after heightened competition from fast-food rivals slowed its sales growth... Read more

Barclays has sent letters to 10,000 of its customers, offering refunds for Payment Protection Insurance (PPI). It follows the bank's failure to send out thousands of annual statements, which would have reminded customers of their right to cancel... Read more

UK house price growth slowed in April, following the surge of buying in March, according to the Nationwide Building Society. The annual pace of house price growth slowed to 4.9% in April, compared with 5.7% in the previous month... Read more

Obama, the IMF and OECD are all wrong about Brexit, these economists say... Read more

WPP chief executive Sir Martin Sorrell has defended his pay package worth up to £70m. Sir Martin, who has previously faced shareholder revolts over his pay, said he was "not embarrassed" by the success of the company he founded... Read more

Volkswagen's former boss took home $8.2 million in 2015, while the company struggled with its biggest loss in its history. Martin Winterkorn, who was forced to resign in September as Volkswagen's giant cheating scandal unfolded, received total of €7.3 million ($8.2 million) in 2015, including a €1 million ($1.1 million) bonus... Read more

VW sees light at end of tunnel after U.S. emissions deal... Read more

Potential buyers of Tata Steel UK have said they would not be willing to take on the company's pensions liabilities, Business Secretary Sajid Javid has told MPs. The pension fund has more than 130,000 members and a deficit of £485m. He told the Business select committee: "It's not unreasonable ... to say 'look we're interested in the assets but this would be an issue'."... Read more

Consolidation is continuing in the pharmaceutical industry with Abbott Laboratories and Sanofi both announcing multibillion dollar expansion efforts. Abbott is beefing up its cardiovascular device business after agreeing to buy St Jude Medical for $25bn (£17bn)... Read more

Airbus shares have fallen 6% after it warned investors of mounting costs on its A400M military aircraft programme. It also said delays in deliveries of its new A350 and A320neo airliners were creating a drain on cash... Read more

Credit Suisse investors want answers from CEO Tidjane Thiam about his turnaround plan in the wake of $1 billion of unexpected trading writedowns at the bank, which has lost more than a third of its value since he joined 10 months ago. Thiam joined last July from Prudential (PRU.L), with investor hopes high that he could repeat the successful Asian expansion strategy he oversaw at the British insurer and that his modest banking experience would bring fresh perspective... Read more

A little-known cancer-fighting biotech firm with little revenue and no approved drugs has lavished a $148 million pay package on its billionaire CEO. NantKwest, which last year became the most valuable biotech IPO ever, is rewarding CEO and majority shareholder Patrick Soon-Shiong with $132.2 million in stock options and $15 million in stock awards for 2015... Read more

Bank of Japan shocks investors with vote against more stimulus... Read more

Analysis - Paul R La. Monica: Why Facebook could one day be worth $1 trillion. If they make a sequel to "The Social Network," Justin Timberlake's Sean Parker should say this to Jesse Eisenberg's Mark Zuckerberg. "A $350 billion market valuation isn't cool. You know what is? $1 trillion."... Read more

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