ASB Securities Morning Brief for Wednesday, 25 November 2015
Wednesday, 25 November 2015

New Zealand Headlines

New Zealand Market Report: New Zealand shares rose, pushing the NZX 50 Index to a new record close, as a2 Milk extended its rally and Chorus gained. Air New Zealand fell after releasing monthly operating statistics. The S&P/NZX 50 rose 23.65 points, or 0.4 percent, to 6101.27. Within the index, 24 stocks rose, 19 fell and seven were unchanged. Turnover was $191 million... Read more

The New Zealand dollar was little changed as investors await US economic data in a shortened trading week to give them a clearer steer on whether the Federal Reserve will start hiking interest rates next month. The kiwi traded at 65.24 US cents at 5pm in Wellington from 65.15 cents at 8am and 65.14 cents yesterday. The trade-weighted index was little changed at 71.04 from 71.01 yesterday... Read more

Drop in OCR to 2 per cent tipped for 2016. Economists are predicting the Official Cash Rate to drop to 2 per cent next year after a cut next month and two further reductions next year. The current Official Cash Rate (OCR) is 2.75 per cent, and economists from ASB Bank and Westpac are predicting it will fall to 2 per cent next year.... Read more

Record migration boosts growth short term, but will it make NZ richer?... Read more

A quarter of NZ food and beverage firms are foreign-owned... Read more

Food and beverage accounts for just under half New Zealand's exports, but the country has significant untapped capacity to export more, according to a Government-commissioned report... Read more

The Bay of Plenty has bumped Auckland off its number one spot in ASB’s ranking of regional economic performance for the September quarter. The bank’s ‘Regional Economic Scoreboard’ ranks the economic performance of New Zealand’s 16 regional council areas, using measures such as employment, construction, retail trade, house prices and new car sales... Read more

Service and staff issues threat to tourism. Lax service and acute labour shortages are a threat to New Zealand's booming tourism sector, says an industry body. Research of tourism businesses done for the Tourism Industry Association shows almost 90 per cent believe service levels are an issue... Read more

If you think servicing one home loan is bad enough, what about two? Growing numbers of New Zealanders are taking out bridging finance to allow them to buy a new house before they sell their old one. In some cases, it is because a hot housing market means they are worried they will not be able to find a suitable property in time, if they sell without a new house already secured... Read more

The Co-operative Bank trims 3 and 4 year mortgage rates; CEO says customers want longer term loans not the short term ones other banks are pushing them towards... Read more

Market faces sharp correction risk. New Zealand housing is over-valued and facing a downturn, warns a new report. First NZ Capital has just released a New Zealand House Prices Strategy Update which estimates that house prices are over-valued by 30% to 40%.... Read more

Auckland CBD retail rents skyrocket... Read more

MJW missed their chance. Michael Naylor, of Massey University, unpicks the Melville Jessup Weaver report into life insurance distribution.... Read more

Life insurers call for banks to get the same level of scrutiny they're receiving, as the industry undergoes a regulatory shake-up. The Melville Jessup Weaver (MJW) actuaries, who yesterday released a controversial report calling for a crackdown on commissions in the life insurance sector, are being slated for letting banks off the hook.... Read more

Insurance consumers would be worse off under changes: adviser body... Read more

New group may replace FSC. Work is under way to form a new industry body that would represent life insurers who distribute product via advisers... Read more

Tower’s bottom line is being hit hard, as it increases its provisions to pay for the remaining Canterbury earthquake claims. The general insurer reports suffering a $6.6 million net loss after tax in the year ended September 30, off the back of it increasing its provisions for the February 2011 quake by $53.2 million before tax. It says the total impact of the increased quakes claims provision was $36.2 million after tax... Read more

Crackdown for cheating doctors. Doctors and specialists have been scamming New Zealand's biggest health insurer, Southern Cross, which has just announced new measures in an attempt to save millions of dollars.... Read more

Green Cross Health, the primary healthcare group formerly known as PharmacyBrands, posted a 20 percent gain in first-half profit on increased returns from its Life Pharmacy and Unichem pharmacy chains and a contribution from its community health businesses... Read more

Kiwisaver HomeStart loan scheme proving extremely popular... Read more

The Sheep, Deer and Cattle Report: Sheep farmers very disappointed at early lamb returns... Read more

Taupo Beef has taken out the top spot as the most sustainable New Zealand business, winning the NZI Greatest Contribution to a Sustainable New Zealand award, as well as the Restorative Impact award for its work in beef farming and water-quality protection... Read more

Rangatira lifts stake in meat products firm Hellers to 62.5%.... Read more

Shares in A2 Milk surged to a new record yesterday as investors, particularly those in Australia, continue to show bullish appetite for the alternative milk firm that has been the top performer on the S&P/NZX 50 this year. The stock, which is listed on both sides of the Tasman, traded as high as $1.27 - a 16.5 per cent gain on the opening price - before closing up 11.9 per cent at $1.22 last night... Read more

Fonterra chief executive Theo Spierings will meet with Greenpeace next week to discuss concerns New Zealand dairy farmers may be contributing to massive forest fires in Indonesia. Fonterra agreed to the meeting on Friday in the wake of a Greenpeace investigation that suggested Fonterra supplier Wilmar had bought palm kernel expeller (PKE) from at least two plantations that had been involved in burning protected forests and destroying orang-utan habitats... Read more

Fonterra says farmers which supply it with milk have shut off their cows from 98 per cent of the country's "defined" rivers, wetlands and lakes. The total area fenced off amounts to twice the length of New Zealand's coastline, or more than 34,000 kilometres, the dairy giant says... Read more

One News can reveal three people at Fonterra's Pahiatua plant have contracted legionnaires disease. Two contractors and a staff member were sent to hospital last week... Read more

Agriculture excluded from scope of government's Emissions Trading Scheme review... Read more

ETS review an opportunity for forestry... Read more

A shareholder in carpet manufacturer Cavalier Corp has questioned the large termination payment made to former chief executive and managing director Colin McKenzie after the company reported its worst loss in history, stopped paying dividends, and sold assets, to try to turn around the company. McKenzie resigned from his role in May this year, replaced by former chief financial officer Paul Alston, initially as interim chief executive, and now confirmed this month in the role... Read more

Cavalier Corp expects annual earnings to rise this year as the New Zealand carpet maker restructures its business to boost profitability. The stock last traded at 41 cents, valuing the company at $28.2 million.... Read more

Australian media takes aim at New Plymouth council over Van Diemen's Land Company sale... Read more

The High Court has agreed with the Ministry for Primary Industries that Honey New Zealand's international's trademarks Manuka Doctor and Manuka Pharm amount to health claims and cannot be used on the company's products. However, a spokesman for the company said it would appeal the decision, and that it might have implications for other companies... Read more

Craft beer brewing has completely transformed hop growing, helping to support a business with a $20 million a year turnover and $14m a year export returns. The niche industry, which has just 17 grower members belonging to the New Zealand Hops Co-operative, is enjoying a period of growth. At present the harvest is 750 tonnes off 389 hectares, with a target of 900 tonnes in five years'... Read more

National Property Trust, the listed property investor, increased first-half earnings 6.1% as rental income from its retail buildings dragged up revenue, while a lift in the value of its overall property portfolio almost doubled profit. Operating profit before gains and losses, typically the preferred measure for property investors as it removes changes in the value of their portfolios, rose to $3.3 million in the six months ended September 30 from $3.1 million a year earlier, the Auckland-based company said in a statement... Read more

SeaDragon has received the following statement from its major shareholders SDMO Trustee Limited and Merinova Limited, respectively holders of 14.1% and 11.5% of the company’s ordinary shares. The entities are the owners of MerSea Holdings Limited, SeaDragon’s former 25.6% shareholder... Read more

NZ Post may charge people $20 to receive overseas parcels if the Government slashes the threshold under which items can be bought from foreign websites GST-free. The new fee of between $15 and $20 per parcel would cover the cost of red tape associated with collecting tax at the border, NZ Post said in a document obtained under the Official Information Act. People could also expect more delays receiving parcels from overseas, it said... Read more

The government is planning to impose a fee on offshore gaming companies which take in $1 billion a year in bets on New Zealand racing and sports, and may allow the TAB to widen its product range to stem the flow of Kiwis betting online with offshore operators... Read more

Fast-food giant McDonald's will undergo its most dramatic change New Zealand diners have seen this decade, adding an open kitchen, lush living wall and table service to one of its busiest Auckland outlets. The massive Macca'ssite at Greenlane has undergone a $2 million overhaul as part of the restaurant's extreme evolution to keep up with current trends... Read more

Symon Brewis-Weston is standing down as chief executive of Sovereign.... Read more

Kiwi Regional Airlines is cancelling its Dunedin-Queenstown service less than a month after launching. The Hamilton airline will operate its last flight between Dunedin and Queenstown on November 30. Kiwi Air began operating scheduled services on October 27 and on its first day cut back its Dunedin to Queenstown service due to a lack of passenger demand.... Read more

Frucor digs in over tax dispute as other firms settle... Read more

Arnott's, the maker of Shapes crackers, has been slapped with a $56,000 fine in Australia for misleading advertising – but the same product that caused the problem is still on sale in New Zealand.... Read more

ANZ, BNZ, Westpac bosses' multi-million pay packets revealed... Read more

Fruit picker boss fined after failing to pay out nearly $20,000 in holiday earnings... Read more

Hawkes Bay man David McGuffie, founder of Advanced Insurance, is facing four charges of dishonestly using a document between 2011 and 2013... Read more

Locals affected by Westfield St Lukes' expansion have lashed out at a decision to go ahead without public input. Scentre (New Zealand), which owns the 4ha mall, yesterday won the right for its resource consent to be processed on a non-notified basis... Read more

A man who ran hair and beauty salons where a string of women suffered injuries is defending charges for managing other companies while banned from doing so. Yosef Aziz Chtouki, who previously went by the name Joseph Brooks, is facing charges for managing companies while prohibited, the Auckland High Court heard this morning... Read more

Internet mogul Kim Dotcom's marathon extradition hearing ended in New Zealand on Tuesday, edging his four-year battle to avoid being sent to the United States closer to a conclusion. The Auckland District Court hearing involving the Megaupload founder lasted 10 weeks, six weeks longer than scheduled amid protracted legal wrangling... Read more

Opinion - Greg Harris: Don't let the office party get too taxing. The taxman's watchful eye is never far away. Giving Christmas gifts and parties for staff and clients will have tax consequences for employers. Gifts from employers are normally taxable under the fringe benefit tax rules. Generally, gifts to clients are fully tax deductible and no fringe benefit tax liability will arise... Read more

Opinion - David Frame & Adrian Macey: New Zealand needs to peddle faster on climate change... Read more

Australian Headlines

Australian Market Report: The Australian sharemarket has been driven lower after steep falls in BHP Billiton and Woolworths, and smaller declines in the big banks. At the 4.15pm (AEDT) official market close, the benchmark S & P/ASX200 index was down 50 points, or 0.95 per cent, at 5226.4, while the broader All Ordinaries index fell 49.3 points, or 0.93 per cent, at 5277.2. The sharemarket’s fall follows five days of gains... Read more

The Australian dollar is back above 72 US cents as markets wait for a speech from the Reserve Bank governor on Tuesday evening and investment data later in the week. At 1700 AEDT on Tuesday, the local unit was trading at 72.02 US cents, up from 71.77 cents on Monday... Read more

netwealth celebrates $8bn FUM milestone. Australia’s largest non-institutional platform provider, netwealth, has exceeded $8 billion in funds under management, following strong inflows and continued growth across the IFA, private client and wealth management sectors... Read more

Ageing population a global problem: RBA... Read more

The Paris terror attacks and worries about personal finances have hurt consumer confidence. The latest ANZ-Roy Morgan weekly consumer confidence index is down 1.2 per cent to 114.6 points in the week to November 22, but it is still above the 2014 average of 111 points... Read more

Economist expect slow growth pickup. Wages barely keeping up with prices, stagnating unemployment, and a one-in-five chance of recession - that's what we can expect over the coming couple of years according to a roll call of Australia's leading economists. A survey of the executive committee of the Australian Business Economists, coinciding with the group's annual conference in Sydney on Tuesday, found economic growth is expected to pick up... Read more

Treasury has cut Australia's potential economic growth forecast, while predicting a return to a budget surplus will take longer than previously forecast. As the Turnbull Government finally responded to the Harper review into competition law, saying reforms should lift economic growth, Treasury deputy secretary Nigel Ray says potential growth will be about 2.75 per cent over the next few years... Read more

Australia needs to embrace risk and a adopt a certain chutzpah if it's to become an innovation nation, says tech powerhouse Israel. The country's chief scientist Avi Hasson, dubbed by Wyatt Roy as Israel's chief entrepreneur, says that governments should go out on a limb to support startups and entrepreneurs... Read more

Australia failing to commercialise inventions. Bill Ferris is confident the Turnbull government will deliver a much-needed blueprint to lift the innovative standards of Australia and lead to real change. The new chairman of Innovation Australia will say in a speech on Wednesday that in terms of health and medical research Australia is third or fourth in the world... Read more

Federal Opposition’s scare campaign against raising the GST... Read more

Tax rich old men, restrict wealthy pumping pre-tax income into super: report. Wealthy people who reduce their tax rates by pumping money into super should be stopped by severely limiting the amount of pre-tax income they can get concessions on and ensuring earnings in retirement are taxed, a Grattan Institute report says... Read more

RBA in no rush to trim rates... Read more

Sydney has almost no affordable rental housing for low-income earners east of Blacktown, 35km west of the CBD, according to an affordability index. The Rental Affordability Index described Sydney as the most unaffordable city for renters, but said low-income earners were "in an absolutely dire situation" across the country... Read more

Mantle Mining Corporation heads to market... Read more

BC Iron says it's doing okay in the face of falling iron ore prices and might even diversify into gold or other metals in the future. The price of iron ore is approaching a 10-year low, trading just below $US45 a tonne due to weak steel demand in China. BC Iron shares were flat at 25 cents.... Read more

BC Iron will take the first steps to diversify beyond its iron ore business next year, with plans to launch drilling campaigns across a suite of gold and base metals projects in WA. BC Iron shares were steady at 25 cents at the close.... Read more

Swala Energy has repaid an interim loan facility of US$1.1 million to 9.2% cornerstone shareholder Hayaat International that was struck in June 2015. No interest was payable by Swala under the loan facility. Abu Dhabi-based Hayaat International has been an investor in Swala since November 2013 with an initial A$3.3 million holding... Read more

Standard & Poor's has reaffirmed BHP Billiton's credit rating but warned its risk profile was likely to worsen next year. In comments that will do little to dampen expectations BHP is headed for a ratings downgrade, S&P said 2016 would likely be more difficult for the miner than 2015... Read more

Viking Mines shares were up 37.5% today as money began to flow into the company again from the previously stalled sale of its Akoase gold project in Ghana... Read more

Poseidon Nickel has signed an offtake contract with China’s Tsingshan, covering 2.5 years of output from its Silver Swan nickel mine north east of Kalgoorlie. Shares in Poseidon were up 0.1 cents, or 1.96 per cent, to 5.2 cents at the close.... Read more

Shares in Billabong have plunged after the surfwear and skateboards retailer revealed the lower Australian dollar and weakness in the North American market had dented earnings in the first four months of fiscal 2016. Billabong shares closed 16.0 cents, or 22.9 per cent, lower at 54.0 cents.... Read more

Telstra Super stuck by the head of its $1.5 billion property portfolio Greg Lee after an internal investigation in mid-2014 revealed he was then an undischarged bankrupt. Mr Lee has since paid the debt in full and had the bankruptcy annulled. The superannuation fund has defended its failure to take any action or to disclose Mr Lee's former bankrupt status... Read more

Chris Corrigan confident of deal with Brookfield if Qube wins $9b Asciano duel... Read more

Logistics company Qube Holdings is bracing for difficult trading conditions as it battles for control of takeover target Asciano. Earlier this month, ports and rail operator Asciano received a $9.02 billion offer from a consortium that includes Qube, Canada Pension Plan Investment Board fund and infrastructure investor Global Investment Partners. Asciano shares fell seven cents to $8.81 and Qube dropped three cents to $2.37.... Read more

Nemex Resources tracks testing progress in biometrics transition... Read more

Transurban has acquired the AirportlinkM7 in Queensland for $2 billion, whilst also looking to raise $1.025 billion to pay for the acquisition... Read more

Ex-NRW boss joins indigenous firm. NRW Holdings co-founder and former managing director Jeff McGlinn has been coaxed out of retirement to lead contractor Indigenous Construction Resource Group (ICRG).... Read more

Insurer IAG has added to its growing digital ranks by hiring former Deloitte digital technology director Peter Bonney as a new deputy to chief information officer Claire Rawlins. Bonney spent the past seven years at Deloitte, working on the consultancy's IT and digital capabilities... Read more

A training college which collected more than $100 million in government fees by enrolling disadvantaged students into expensive online courses has become the second company to face the wrath of the competition watchdog. The Australian Competition and Consumer Commission and the Federal Government have instituted proceedings in the federal court against Phoenix Institute of Australia Pty Ltd and Community Training Initiatives Pty... Read more

Brisbane's troubled Airportlink sold for $2.8 billion less than construction cost... Read more

A cleaner who blew the whistle on an exploitation scandal at retail giant Myer has been sacked. Rafael Colobon, the source behind an ABC 7.30 investigation into alleged "sham contracting" at Myer, was fired on Friday... Read more

Opinion - Malcolm Maiden: Infrastructure Game of Thrones: Transurban has the crown... Read more

Opinion - Geoff Wade: Port of Darwin: This is about more than China's economic interest... Read more

International Headlines

U.S. Market Report: US stocks opened lower as worries over global tensions outweighed news of faster US economic growth. The Dow Jones fell 50.84 points to 17,741.84, the S&P 500 dropped 7.37 points to 2,079.22, while the Nasdaq shed 20.07 points to 5,082.40.... Read more

North/South Americas Market Report: North and South American markets are lower today with shares in Mexico off the most. The IPC is down 0.33% while Brazil's Bovespa is off 0.29% and U.S.'s S&P 500 is lower by 0.10%... Read more

European Market Report: European markets finished broadly lower today with shares in Germany leading the region. The DAX is down 1.43% while France's CAC 40 is off 1.41% and London's FTSE 100 is lower by 0.45%... Read more

Asian Market Report: Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.23% and the Shanghai Composite rose 0.16%. The Hang Seng lost 0.35%... Read more

What it costs to produce a barrel of oil... Read more

The crash in oil prices is fanning the flames of revolt against Saudi Arabia inside the walls of OPEC. A war of words has broken out between OPEC kingpin Saudi Arabia and disgruntled smaller oil producers like Venezuela and Algeria. The smaller countries want the cartel to hit the brakes on production to help lift depressed oil prices -- and their own struggling economies... Read more

Iron ore plunges to 10-year low... Read more

Yellen defends near-zero rates to consumer advocate Nader... Read more

US economic growth for the third quarter has been revised up, helped by stronger investment and house building. The Commerce Department said gross domestic product rose at an annual pace of 2.1%, not the 1.5% rate it reported last month. Consumer spending was revised down slightly, although this was offset by growth in other economic areas... Read more

US house price growth gains momentum. Home price growth accelerated in September, according to a report released Tuesday, underscoring concerns that lofty price gains are helping to keep some buyers out of the market. The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.9 per cent in the 12 months ended in September, stronger than a 4.6 per cent increase in August.... Read more

Yahoo is preventing some Yahoo Mail users from seeing their emails until they turn off their ad-blocking software. Users started complaining late last week on social media and ad-blocking forums that a message prompting them to disable ad-blocking software appeared when they tried to view their email... Read more

Jeff Bezos' rocket ship achieved a breakthrough Monday by traveling 329,839 feet into outer space and then landing upright upon its return to earth. In the past, rockets were disposed of after launching space craft into outer space. Reusable rockets would substantially reduce the cost of space flight... Read more

Pfizer's $160bn Allergan deal under pressure in the US... Read more

DIY retailer Kingfisher has reported a drop in third-quarter profits after being hit by a "soft" market in France and by adverse currency movements. Kingfisher, which owns B&Q and Screwfix in the UK and Castorama and Brico Depot in France, said retail profits for the quarter fell 6.6% to £223m. Underlying UK and Ireland sales were up 4.6%, but rose just 0.1% in France... Read more

Bank of England officials have signalled they are in no hurry to raise interest rates in the UK, citing concern about whether price pressures are strong enough yet to meet their inflation goal... Read more

Jaguar Land Rover is set to hire hundreds of new workers as the car manufacturer announces plans to double the size of its site near Wolverhampton. It will invest £450m in its engine manufacturing centre, doubling its size to 200,000 sq ft (18,581 sq m)... Read more

Rolls-Royce's chief executive has said the company will be more transparent about the risks it faces and will cut up to £200m of costs a year. Warren East said the engineering group had developed an "accounting fog" which had left investors unclear about the direction it was going. He said investor "confidence was not in a good place", and the company must make shareholder returns a priority.... Read more

German prosecutors have launched an investigation into suspected tax evasion in connection with cheating on emissions tests by Volkswagen, adding to the intense scrutiny of Europe's biggest carmaker. Read more at Reuters Read more

China's Earliest Monthly Economic Indicators Flash Warning Sign.... Read more

Why China's Steel Mills Won't Cut Back Production Extend and pretend, commodities style... Read more

The Hong Kong subsidiary of one of China's largest brokerages said Monday that it can't find its CEO, sending shares of the company tumbling. Guotai Junan International has been unable to reach its top executive, Yim Fung, since Nov. 18, according to a stock exchange filing. The company's board has appointed Wong Tung Ching, currently deputy CEO, to take the reins until further notice... Read more

Nestle finds labor abuse among its Thai seafood suppliers... Read more

Indian budget carrier SpiceJet Ltd. has surged more than 340 percent in the past year after surviving a crisis. Chairman Ajay Singh said the best performing airline stock in the world remains undervalued. SpiceJet’s market capitalization of about 41 billion rupees ($621 million) is too low given the $5.7 billion valuation for the operator of IndiGo, India’s biggest airline, following its listing this month, Singh said in an interview Monday... Read more

Opinion - Adnan Z. Amin and Fatih Birol: World at tipping point for renewable energy... Read more

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